Do You Need Workers’ Comp Coverage for Family Members?

One question we get often from small business owners is whether they have to secure workers’ comp coverage for family members that work for them. The short answer is “yes,” in most cases.

Under California law, every employer in the state that uses employee labor, including family members, must secure workers’ comp coverage, as per California Labor Code Section 3700. When we talk about family members we usually mean children, spouses, nieces, nephews, uncles, aunts, grandparents and cousins.

If you fail to include a working family member on your workers’ comp policy, you could risk a fine, so it’s wise to understand the regulations.

Here are a few scenarios:

Your nephew helps in your business for a few hours a day, but you don’t consider him an employee. – Under labor law he is considered an employee. An “employee” is defined as someone you engage or permit to work. Even though your nephew is part of your family, he is considered an employee and hence must be covered by workers’ comp insurance in case he is injured on the job.

If the state finds out that you don’t have the necessary workers’ comp insurance, you could face serious consequences including fines ($1,500 per employee or twice the amount you would have paid in insurance premiums, whichever is more) and even misdemeanor charges.

Also, if your nephew got hurt at the store, he (or his parents) could file a personal injury lawsuit against you if you don’t have him covered on your policy.

You run a diner and your daughter works 25 hours a week in the kitchen< – Your daughter would be considered an employee subject to workers’ comp laws and she would not be able to be excluded on your workers’ comp (unless of course she was an owner/officer, member or partner).

You have a small business and your husband helps out about 10 to 15 hours per week – Your workers’ comp policy may not have to cover you and your husband.

But it could depend on whether your business is a sole proprietorship (which can be owned by a married couple in California), a partnership or a limited liability company.

If you are a married sole proprietor, in the state of California, typically your insurance company will consider your spouse a co-owner and exclude them without any question. But different insurance companies will handle this situation differently, so it’s important to know how yours handles it.

If you’re a corporation, LLC or partnership, your spouse cannot be excluded merely because he/she is your spouse. If you formed a corporation, your spouse would have to own shares and be a titled officer in the corporation in order to be excluded.

If you formed an LLC, your spouse would have to be member of the LLC in order to be excluded. If you formed a partnership, your spouse would have to be one of the partners to be excluded.

 

 

Vacant Buildings Pose Risks, Insurance Challenges

According to the website Statista.com, the average 2018 average vacancy rate for offices nationwide was to 12.2%, while 12.1% of retail spaces and 7.8% for industrial spaces were vacant.

Unfortunately, when buildings stand vacant they become susceptible to a variety of problems.

There are approximately 31,000 fires in vacant buildings annually, resulting in dozens of deaths, hundreds of firefighter injuries, and an average $642 million in property damage.

Vacant buildings receive little or no maintenance, attention, or security. This can lead to problems such as:

  • With no security on the premises, the building becomes a target for vandals. Vacant buildings frequently wind up with broken windows and graffiti-covered walls.
  • Fixtures and materials inside the building, such as copper piping, may attract thieves.
  • Vacant buildings can become convenient hang-outs for young people or shelters for homeless people; they also can become centers of criminal activity such as drug dealing.
  • Trespassers smoking on the premises, decayed wiring, arson, and production of illegal drugs like methamphetamines may cause fires in vacant buildings. In addition, automatic sprinkler systems may be shut off, allowing fires to spread, and lack of security prevents early detection.
  • Toxic substances remaining on the premises may leak and contaminate soil and groundwater.

 

Owners of vacant properties can take many steps to prevent these problems or make them less likely.

  • Visit the property at least weekly or hire a property management company to do so.
  • Clear the exterior of the building of scrap wood, paper, cardboard, and brush.
  • Remove any toxic substances that could contaminate the area or harm police or firefighters.
  • Maintain sidewalks and parking areas in good condition, and clear them of snow and ice.
  • Erect obstacles to keep vehicles and pedestrians out of the parking areas.
  • Hire security guards to watch the building at night and have exterior lighting turned on.
  • Maintain the heat or drain the plumbing system to keep pipes from bursting, but maintain at least a minimum temperature in areas protected by automatic sprinkler systems.
  • Maintain electricity to emergency lighting and exit signs.
  • Shut off utilities except where necessary to power desired lighting and alarm systems.
  • Maintain fire detection systems and link them to a central station monitoring service.

 

Insurance implications

Buildings that are more than 70% percent vacant for more than 60 days also lose some important insurance coverage. If the building is largely vacant, the standard commercial property insurance policy reduces loss payments by 15% for most causes of loss and does not cover others at all, including vandalism, water damage, glass breakage, and theft.

For an additional premium, the building owner may be able to purchase vacancy permit coverage which reinstates some or all of this coverage for a specific period of time. An alternative, vacancy changes coverage, can reduce the minimum occupancy that the building must have before the insurance company will consider it vacant from the standard 31%. We can work with you to get the coverage you need.

A vacant building is never a good situation, but with the proper precautions, the owner can maintain its value and keep it secure until new tenants move in.

 

Smartphones and the Wage and Hour Dilemma

Do you ever wonder if your non-exempt employees are sneaking a peek at work e-mail off the clock? Ever suspect their bosses of pressuring them to respond to calls and e-mails after the workday ends?

If those thoughts keep you up at night, it’s time to make sure your employees’ smartphones aren’t putting your organization at risk of violating wage and hour laws.

The proliferation of smartphones has led to a rapidly rising number of lawsuits by employees claiming they were required to work uncompensated on evenings and weekends when not on the clock. The lawsuits are often class actions stemming from overtime-eligible employees using smartphones to extend their workday without those after-hours tasks being compensated.

The problem for employers is that when one employee complains to the Labor Department that they are not being compensated for time working on their smartphones when away from work, the agency’s investigators won’t stop with the complaining employee. They also look at how many others are “similarly situated.”

A single employee’s complaint can turn in to a class action when all the other similarly situated employees are included.

Just a few minutes a day over months or years can add up to financial disaster if an employer has a number of employees regularly using their phones for uncompensated work.

In the last several years, the courts have seen a flood of lawsuits in which groups of employees claim the time they spend reading and responding to e-mail should be considered work time, and therefore paid.

The danger is that when a boss sends a worker a message off-hours and asks them to read something or send an e-mail, the employee will usually feel compelled to do as they’re told, even if they don’t want to. It’s unlikely a subordinate will refuse to a superior for many reasons, such as job security and also advancement possibilities. Who wants to look lazy when the go-getters are the ones who are recognized?

Employees often are expected to check their work e-mail, and it’s not too much of an overstatement to say many employees today are under pressure because they are required to respond to after-hours messages.

You might think that just a few minutes of after-hours work won’t cause a problem because the time is minimal. But when employees sue claiming they should be compensated for after-hours smartphone work, the employer typically uses the de minimis defense.

De minimis means very little, perhaps just a minute or two. The employer maintains that the time spent is de minimis, but it isn’t. Just five minutes a day adds up to almost a half hour a week. But there are precedent-setting court decisions that have said that even 30 minutes extra a week is not de minimis.

Also, besides federal law, you have our own state law to contend with.

Additionally, you may not even know that some employees are checking work e-mail at home whether they’re told to or not.

Just because the employer doesn’t require employees to stay tied to their phones doesn’t eliminate legal risk. The law defines work time as the time an employee is “suffered or permitted” to work.

So, an employer doesn’t have to require employees to answer e-mail and perform other tasks off the clock to run into trouble. Merely permitting that work without counting it as compensable time, puts the employer at risk.

 

What should you do?

The extension of work time made possible by smartphones and other electronic devices poses a new danger for employers.

To ensure you don’t’ find yourself the target of a wage and hour lawsuit, you need to put in a place a solid policy about non-exempt employees working on their smartphone after hours.

You should put the policy in place, communicate it to your staff in a meeting, as well as include the policy in your employee handbook. Passing out a memo on the matter is also helpful.

Once the policy has been communicated, you have to monitor and survey staff to make sure they are not breaching the rules.

Does Your Business Have to Comply with GDPR?

On May 25, 2018, a major rules change that impacts millions of businesses took effect. The European Union’s General Data Protection Regulation (GDPR) is the most significant change to European data security standards in two decades.

While the regulation has a direct impact on enterprises located or doing business directly in EU countries, it can also apply to U.S.-based businesses. GDPR gives consumers more control over how companies use their personal data. In particular, European consumers now have the right to:

  • Be informed about when companies are collecting their information.
  • Access the information companies possess about them, via a “subject access request.” Companies must provide the requested information within one month and correct any inaccuracies.
  • Have their information erased (this is known as “the right to be forgotten”).
  • Ask for restrictions on the use of their data.
  • Move or copy their data from one source to another (this is known as “data portability”).
  • Object to how companies use their data, including for direct marketing and when companies make automated assumptions about what an individual might want to buy.

Companies outside the EU are subject to GDPR if they collect personal data or behavioral information on individuals located in an EU country, even if no financial transaction takes place. A simple survey can trigger compliance requirements. Any businesses with websites that target-market to international customers may also have to comply.
A business is bound by the requirements if it specifically targets consumers in an EU country. For example, if the web pages use the particular country’s language and refer to users and customers in that or other EU countries, the EU regulators would consider that target marketing. Target marketing does not include a web page written in English that makes no such references, but that a European consumer could possibly access.
Any company selling goods and services via the Internet, and that targets EU customers, may have to comply. If your company fits the bill, you should:

  • Obtain clear and explicit customer consent for collection and use of their data for each type of processing done on the data. For example, one permission is required for sending e-mail marketing messages, another for sharing with third parties, and others for additional types of processing.
  • Protect collected customer data. The protection requirements are similar to standards in place in the U.S.
  • Notify the EU or other supervising authority within 72 hours of some data breaches. A breach must be reported if it involves “accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access to, personal data transmitted, stored or otherwise processed” that can cause “risk to the rights and freedoms” of EU customers.
  • Notify the individuals within the EU when a breach presents a “high risk” to basic property and privacy rights, such as when account passwords are compromised

The EU can fine a company 2% of its global revenue for failing to report a breach on time. Other penalties can be up to the larger of 4% of revenue or €20 million (about $24.4 million.)

Prioritize your compliance efforts
Experts advise companies that are just starting their compliance efforts to identify the most important thing they need to do, and tackle that first. Lesser priorities follow from that.
As Chris Combemale of the Direct Marketing Association said, compliance is an ongoing process: “GDPR is a way of thinking about your customer, a way of thinking about your business that is permanent and long term.”

 

 

 

 

 

 

 

Preventing Heat Illness as Temperatures Soar

With temperatures rising, employers with outdoor workers need to take steps to protect them from heat illness.

California employers need to be especially mindful as Cal/OSHA has workplace safety regulations governing the prevention of heat illness. The heat illness standard came into effect about seven years ago as the number of deaths due to heat illness started climbing, particularly among, agricultural, construction and landscape workers, among others.

Heat illness occurs when the body’s temperature control system cannot maintain an acceptable level. Under normal circumstances, the body cools itself by sweating. However, when high temperatures and high humidity prevent the body from releasing heat efficiently, a person’s body temperature can rise quickly.

Progression to serious illness can be rapid. If left untreated, very high body temperatures might damage the brain and other vital organs – and ultimately cause a person’s death

You should take immediate action to seek treatment for a worker if they start exhibiting one or more of the following signs:

  • Headache
  • Fatigue
  • Dizziness
  • Confusion
  • Cramps
  • Exhaustion

 

Workers with existing health problems or medical conditions – such as diabetes – that reduce tolerance to heat, need to be extra vigilant. Some high blood pressure and anti-inflammatory medications can also increase a person’s risk for heat illness.

To ensure you are in compliance with California workplace safety regulations, you need to ensure the following:

 

Access to water

Staying hydrated is probably the single-most important step in heat-illness prevention. Water must be “fresh, pure, suitably cool” and located as close as practicable to where employees are working (and enough to provide at least one quart per employee per hour for the entire shift).

Employers should encourage workers to stay hydrated and drink water.

 

Access to shade

When temperatures reach 80 degrees, you must have and maintain one or more areas of shade at all times, when employees are present. Locate the shade as close as practical to the area where employees are working and provide enough to accommodate the number of employees on meal, recovery or rest periods.

Even if temperatures are less than 80 degrees, you must permit access to shade for workers to rest.

 

Preventative cool-downs

If an employee starts feeling unwell, they must be allowed to take a “preventative cool-down rest,” during which they must be monitored for symptoms of heat illness.

They should be encouraged to remain in the shade and not ordered back to work until symptoms are gone. Employees with heat illness symptoms must be provided appropriate first aid or emergency response.

 

Weather monitoring and acclimatization

Instruct supervisors on-site to monitor the weather so they can institute the correct procedures (like erecting shade at 80 degrees).

Acclimation procedures include close observation of all employees during a heat wave —defined as at least 80 degrees. New employees must be closely observed for their first two weeks on the job.

 

High-heat procedures

High-heat procedures (which are triggered at 95 degrees) must include:

  1. “Effective” observation and monitoring of employees, including a mandatory buddy system.
  2. Regular communication with employees working by themselves.
  3. Designating one or more employees to call for emergency services, if needed.
  4. Giving more frequent reminders to drink plenty of water.
  5. Holding pre-shift meetings on prevention.
  6. During high heat, agricultural employees must be provided with a minimum 10-minute cool-down period every two hours.

 

Employee and supervisory training

Ensure appropriate training of both your workers as well as supervisors. Nobody should be working outside in heat if they have not been trained in heat illness prevention and emergency procedures.

Employee training should cover:

  • The company’s heat illness prevention procedures.
  • Their rights to take regular water and rest breaks.
  • Importance of frequent consumption of small quantities of water.
  • Signs and symptoms.
  • Appropriate first aid or emergency response.
  • Importance and methods of acclimatization.
  • Importance of immediately reporting signs or symptoms of heat illness to a supervisor.
  • Procedures for responding to possible heat illness.
  • Procedures to follow when contacting emergency medical services, providing first aid.

 

Supervisors must be trained on the following:

  • The heat standard requirements.
  • The procedures they must follow to implement the requirements.
  • Procedures to follow when a worker exhibits or reports symptoms consistent with possible heat illness, including emergency response procedures and first aid.
  • How to monitor weather reports and how to respond to hot-weather advisories.

 

Emergency response and written procedures

Emergency response procedures include:

  • Effective communication.
  • How to respond to signs and symptoms of heat illness.
  • Instructions on what to do when employees exhibit severe heat symptoms.
  • Procedures for contacting emergency responders to help stricken workers.

 

Written procedures form part of an effective heat illness prevention plan that should include, but not be limited to your responsibility to provide:

  • Water
  • Shade
  • Cool-down rests.
  • Access to first aid.
  • The employees’ right to exercise their rights under this standard without retaliation.

 

 

How to Retain Your Fleet Coverage

As insurers continue tightening their underwriting for commercial auto insurance, they are inquiring about companies’ fleet management programs.

If a company lacks a program, some insurers are asking them to implement one if they want coverage. With this trend likely to continue as the number of traffic accidents and injuries continues to rise, it’s imperative for any company with a fleet – or even just a few vehicles – to identify opportunities for improvement and take any appropriate remedial action.

Areas to focus a fleet management program on include:

 

Driver training

One key element that’s often overlooked is senior leadership support, the lack of which can manifest itself in a variety of ways, including getting mixed messages from what is emphasized in training and performance feedback provided to drivers from supervisors. You should also:

  • Continually reinforce safety priorities in regular driver feedback.
  • Use annual performance reviews as training opportunities.
  • Have employees sign off on areas targeted for improvement or development.

 

Focus on distracted driving

If you have a fleet or any individuals driving for you, it’s of utmost importance that you have a strict policy for avoiding distracted driving. In your fleet manual, you should document that you continually reinforce rules on avoiding distracted driving.Focus on the use of hand-held mobile devices, the use of which increases the potential for accidents by 23%, according to the National Highway Traffic Safety Administration.

You have a choice to make:

  • Use technology-based measures, such as those used to prevent vehicles from starting when mobile devices are in use, or
  • Establish strict protocols on the use of mobile phones or other hand-held devices.

 

The latter may be sufficient in your case.

Tracking systems and litigation defense

Enhanced tracking systems, including video and telemetry, can help strengthen litigation defense, improve outcomes and reinforce training. Companies implementing telemetry systems with dash cams can verify what caused an accident. By using these systems, some operators have reduced litigation costs and court awards by 90%.

Logistics software

Logistics software can be used to enhance safety and improve efficiency in routing and job distribution. Even field vehicles can be equipped with shock sensors, operator requirements to complete inspections prior to movement, tracking and other features.

Review your coverage

On an annual basis, you should talk to us to ensure your insurance levels for drivers are adequate and appropriate.For contractors with fleet operations, commercial automobile insurance policies should have a minimum of $1 million in liability limits. Higher limits of $3 million to $5 million are typically required for transporting passengers or hazardous materials.

Driver screening and safety

Screen and monitor drivers by:

  • Obtaining an annual motor vehicle record for each driver with a points qualification system.
  • Administering DOT 7- or 10-panel drug tests with standard cut-off levels for pre-employment, random, reasonable suspicion and incidents that warrant testing.
  • Requiring that drivers complete online or in-person driving courses annually.
  • Requiring that drivers wear high-visibility reflective vests when outside the vehicle.
  • Identifying personal protective equipment for drivers in the right situation (plan for rain, snow, footing, etc.).
  • Supplying polarized sun/safety glasses to reduce glare.

Generally, from a risk management perspective, candidates applying for driver positions that have DUI offenses, reckless operations and suspended licenses are considered unacceptable, as are those with two tickets and one accident in a five-year period. Many firms try to keep drivers to below three minor tickets in a five-year period.

Incident management

All fleet drivers must be trained on what do after an accident. The top priority is to ensure all people are safe and taken care of. The next aspect is to collect all necessary information and take as many photographs of the accident as possible.

Subsequently, there should be follow-up to ensure everyone is safe and the incident report is completed correctly. Require that all incidents must be reported by the end of the shift, and set a 24-hour deadline for getting the claim into your system.

Inspections

Inspect vehicles prior to each usage. Pre-trip inspections typically include visual checks of tires and lug nuts, windshield, windows, wipers, lights and mileage.

Oil levels and tire pressure should be inspected weekly or more often, depending on weather conditions and vehicle utilization.

 

Don’t Get Caught without a Business Succession Plan

Many business owners may be good at running their companies, but the majority of them are failing to address essential long-term planning that is critical to sustaining their businesses.

The one area that the majority of business owners often neglect is planning for business continuity if they die or become disabled, according to the “2015 MassMutual Business Owner Perspectives Study”.

While the question of your death or disablement is not one that’s fun to ponder, it makes good sense for business owners to put plans in place in case the worst happens. One of the key ways to ensure that is to have in place a buy-sell agreement, which would essentially sell your company in the event that you are unable to run it any longer.

Business owners in the survey identified these concerns:

  • The effect on the business of the death or disability of the owner or key employee.
  • Protecting the business from disability and death of an owner or key employee had the second and third highest levels of importance (44% versus 42%, respectively). However, these two pillars were not very top of respondents’ minds, with 55% saying they rarely or never think about the effect of disability and 59% saying they rarely or never think about the effect of death.
  • Of those with a buy-sell agreement in place, just over half said it was funded with life insurance, but only 5% said it was funded with disability buy-out insurance. The rest were either funded with cash flow from the business or not funded at all.

 

What’s a buy-sell agreement?

A buy–sell agreement, also known as a buyout agreement, is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business. If the business has just one owner, then the agreement should specify who would be buying the company and continue its operation.

A buy-sell agreement should be designed to protect the business from the five D’s – death, disability, divorce, departure and disqualification.

When properly executed, a buy-sell agreement can help ensure the continuity of the business when ownership needs to change hands for any reason. It is a legally binding agreement that requires one party to sell and another party to buy ownership interest in a business when a triggering event occurs, such as the death, disability or retirement of an owner.

This agreement structures the method and manner in which the business will continue in the event of the owner’s death.

In a 2003 article for Franchising World magazine, Patrick Olearcek explains: “The proprietor and one or more key employees [or partners] enter into an agreement which provides that the proprietor’s estate will sell the business to the employee at death.”

By agreeing to buy the company, the key partner, employee or associate relieves the owner’s family of the responsibility, and instead provides them with a lump-sum payment. A key employee, as opposed to the owner’s family, is in a much better position to continue the business operations properly.

 

Funding the agreement

The majority of buy-sell agreements are funded with life insurance. In the case of a sole proprietorship, a policy covering the life of the owner is typically bought and paid for by the key employee who has agreed to purchase the business.

The employee is also the beneficiary of the policy, which has a death benefit equal to the pre-determined purchase price of the business. Upon the death of the owner, the employee would receive the proceeds of the life insurance policy, then transfer that money to the owner’s heirs in exchange for all interest in and assets of the business.

 

 

Tips on Hiring Teens for Summer Employment

You may be considering taking on some extra workers for the summer months, and often many employers will gravitate towards hiring teenagers looking for temporary work.

If you are planning on hiring any workers under the age of 18, you should familiarize yourself with federal and any state laws on child labor restrictions.

The Fair Labor Standards Act contains rules for employing minors, including that they are entitled to the prevailing minimum wage and overtime. But it also includes provisions for when minors can work and what kind of work they can do.

The FLSA’s child labor restrictions are heavily enforced and management bears the burden of abiding by these rules, so it’s best to study up on the restrictions.

 

Hazardous work
Minors are prohibited from any occupation that’s on the U.S. Department of Labor’s list of hazardous occupations. This includes, among many others:

  • Driving a motor vehicle
  • Trenching and excavation work
  • Roofing work
  • Bailing
  • Using power-driven tools and machinery

 

The above are the only laws that apply specifically to 16- and 17-year olds. There are some additional provisions for 14- and 15-year-olds, who can generally do jobs like:

  • Office and clerical work
  • Intellectual and creative work (like design)
  • Cashiering
  • Stocking shelves

 

The federal youth employment provisions limit the times of day, number of hours, and industries and occupations in which 14- and 15-year-olds may be employed. If it’s summer and school is out of session, you have leeway to let them work eight hours a day. But if they stay on during school, consult the child labor section of the Department of Labor’s website.

 

Tips

Get a USDOL-sanctioned age certificate – This will help you avoid misjudging a minor’s age and advertently violating child labor laws.

Clearly describe job duties – This will help you ascertain whether the work you are expecting the minor to perform does not conflict with regulations on prohibited work. Take extra care when hiring someone younger than 16.

Tell other workers the exact tasks the minor can do – This will avoid “mission creep” if another employee decides to ask the minor to perform additional tasks that were not in the original job description. This will avoid a situation where they may be asked to do something they are prohibited from doing.

Proper supervision – Make sure that your minor employees are properly supervised. A good idea is to assign a more experienced employee to work with them to ensure they are doing their job properly and safely. This also frees up supervisors from having to constantly monitor the young employee.

 

Rating Agency Calls for 7.2% Workers’ Comp Rate Cut

Thanks to reforms enacted in 2014, California’s workers’ comp rating agency is recommending that the average benchmark rate be cut by 7.2% for policies effective July 1 and onward.

The filing made by the Workers’ Compensation Insurance Rating Bureau is for the state’s pure premium rates, which are essentially the base rates to cover expected costs of claims and claims-adjusting expenses across all worker class codes.

The rates are advisory only and insurers can price their policies as they wish, so there are no guarantees that any particular employer will see a rate decrease when their policy renews.

The rate reduction is a recommendation and Insurance Commissioner Dave Jones will have the final say on whether to accept it or propose a different rate change based on analysis by Insurance Department actuaries.

If Jones adopts the rate change, it will be the seventh straight cut since rates started declining in 2015. Should the latest recommendation be approved, benchmark rates will have dropped an average of 35% since then.

 

Why is the rate falling?

The benchmark rate is falling due to the effects of SB 863, which took effect in 2014. Besides increasing permanent and temporary disability payments to injured workers, the legislation has gone a long way towards reducing claims costs by:

  • Significantly reducing the number of spinal surgeries.
  • Reducing bureaucratic tie-ups, leading to increases in claim settlement rates. At the 48-month mark, 77.1% of claims had been settled in 2017, up from 71.1% in 2011. At the 36-month mark, 66.8% of claims had been settled, up from 58.5% in 2011.

The Rating Bureau attributes these improved settlement rates to SB 863, which it says has accelerated the rate in which claims have settled as a result of quicker medical-treatment resolution through the use of independent medical review, reduction in the volume of liens and the drop in spinal surgeries.

  • The higher claims settlement rates have also decreased the cost of adjusting claims.
  • Setting requirements for lien filings and simplifying the lien system, which significantly reduced lien filings. Before new rules on liens took effect, in 2016 the Workers’ Compensation Appeals Board was receiving 25,500 liens per month. After the rules took effect, lien filings from March 2017 to February 2018 had fallen 40% to a monthly average of 15,500.

Another factor the Rating Bureau cited is the new Medical Treatment Utilization Schedule drug formulary, which took effect Jan. 1, 2018. It says it adds 0.5 percentage points to the rate-decrease proposal.

 

The black marks

The one area of concern is cumulative injury claims, which continue to grow in numbers mostly in the Los Angeles area and San Diego.

The ratio of cumulative injury claims in the LA area had grown to 15.5 claims per 100 indemnity claims in 2016, up from 8.7 in 2011. In San Diego, they accounted for 11.2 claims per 100 indemnity claims in 2016, up from 6.6 claims in 2011.

In addition, the average cost of medical treatment is also on the way up, but at a relatively low rate of 3% a year.

 

Protecting Your Important Data When Employees Leave

When is a business most susceptible to losing data, intellectual property and important records? No, not during a cyber attack or a break-in, but during lay-offs.

With employees maybe feeling disgruntled after being let go, it’s common for some of them to pocket important company data – usually client lists, old e-mails, vendor contacts and even intellectual property that is essential to the company’s competitive advantage.

During lay-offs or termination, you need to take steps to protect your data and intellectual property, but there are legal implications as well for how far you can go. Consider the following:

Non solicitation agreements – These protect from a departing employee taking with them proprietary, confidential information like client and vendor lists. A non-solicitation agreement bars an ex-employee from going to a competitor and contacting your clients for business.

These are not legal in all states, so check your state laws and consult with your attorneys. In California, for example, non-solicitation agreements are not enforceable.

Non-disclosure agreements – These are different than the above and no states bar them. They focus instead on company data that a competitor can use to harm the business.
These agreements spell out the employee’s fiduciary obligations under the law by identifying protected company proprietary and confidential information. The agreement requires that the employee keep such information secret for a certain period of time.

Before huddling with your lawyer, your management team should identify all of your company’s protected data that you feel is worth protecting.

Return and inventory all company property – Before your employee leaves the premises, make sure they have returned all of your property that may contain company information. That would include:

  • Originals and copies of company documents the employee has made.
  • Data on the worker’s personal phone or home computing devices (this may be difficult to enforce, but you should make them aware that they are required to delete it).

 

Passwords and access – On their last day, remember to delete from your database and systems their user names and passwords and access codes. This could include:

  • E-mail passwords
  • Voicemail passwords
  • Teleconference and intranet passwords
  • VPN access and passwords
  • Building or office coded lock-access codes.

 

Make sure to also collect any company ID cards. If you have concerns they may try to contact your current customers or vendors for any reason that could be detrimental to your firm, you can consider notifying them that the employee is no longer with you.

Conduct an exit interview – During this interview, you should go over boilerplate information like why they were let go and the importance of not taking with them any physical or intellectual property.
Ask questions to determine what, if any, company data they may have been privy to or had access to. Also, if you have non-disclosure or non-compete agreements in place, use this time to reiterate the consequences for violating those agreements.

 

What to look for

It’s more difficult to avoid data misappropriation by an employee that is planning on quitting, as they can make preparatory moves unbeknownst to you.

When employees are planning to take corporate data or are in the process of doing so, there are often one or more signs, which can be monitored with the right systems in place:

  • A spike in an employee copying information to the cloud, USB drives, personal devices, e-mail accounts, and more. An increase in such activity could mean that an employee is planning to leave or has gotten wind of an impending dismissal and wants to copy useful information before they go.
  • A surge in documents being deleted from an employee’s laptop or desktop computer. Files may also be deleted from corporate file shares.
  • Sudden spikes or drops in e-mail activity.
  • An employee accessing your customer relationship management system or financial accounts during late nights or very early mornings. This could mean they are scraping your files.
  • The employee is sending and/or receiving e-mails from a competitor.