Don’t Overlook Equipment Breakdown Insurance

Imagine it’s a typical July day. You own a 30,000-square-foot office building that is 85% occupied. And the air conditioning and ventilation systems stop working. The outside temperature is in the 90’s and the humidity is high. It doesn’t take long before the tenants start to complain.

The contractor you summon determines that an electrical arc fried the circuit board that controls the systems.

The board must be replaced, but it will take up to five business days for it to arrive. In the meantime, the building is unfit for people to work in, and the leases oblige you to credit tenants’ rents for periods when the building in uninhabitable for more than a day. In short, you face thousands of dollars in repairs and much more in lost rents.

While your property insurance policy will cover the resulting property damage from fires or explosions, it will not cover the equipment or lost income from the downtime during repairs.

But equipment breakdown insurance will.

Equipment breakdown insurance

This form of insurance is not a substitute for other property coverage. It will not pay for damage caused by fire, lightning, explosions from sources other than pressure vessels, floods, earthquakes, vandalism, and other causes of loss covered elsewhere.

Equipment breakdown policies are designed to fill in the gaps left by other policies, not to replace them. Also, they do not cover mechanical breakdowns that result from normal wear and tear as a device ages.

A number of events can trigger a claim for equipment, such as:

  • Mechanical breakdown in equipment that generates, transmits or uses energy, including telephone and computer systems.
  • Electrical surges that damage appliances, devices or wiring.
  • Boiler explosions, ruptures or bursts.
  • Events inside steam boilers and pipes or hot water heaters and similar equipment that damages them.

Business owners often overlook equipment breakdown coverage. Bur, virtually all of them have some need for this insurance.

What equipment breakdown insurance covers:

  • The cost of repairing or replacing the equipment.
  • Lost business income from a covered event.
  • Extra expenses you incur due to a covered event.
  • Limited coverage for losses like food spoilage in freezers that break down.

Most businesses rely heavily on machines in their daily operations, from computers to refrigeration equipment and elevators to manufacturing equipment.

For some, the cost of repairs to this equipment and resulting downtime can have a serious impact. Such businesses should seriously consider buying equipment breakdown insurance.
Call us if you would like to discuss this crucial form of coverage.

Workers’ Comp Audit Mistakes: What to Look For

calculate

No company owner wants to undergo a workers’ compensation audit, but they are a fact of life if you run a business and have employees.

Unfortunately, many audits don’t go smoothly and sometimes your insurer may make mistakes. Missouri-based Workers’ Compensation Consultants, which helps employers through the workers’ comp audit process, recently listed the 10 most common audit mistakes that insurance companies make.

The list highlights a common problem and how you can detect the mistakes to avoid being stuck with a massive audit bill. Insurance companies allow you to review the audit with your broker. If you notice that you have received an audit bill that is obviously overstated, you should contact us.

Here are the things to look for when reviewing an audit by your insurance company:

Wrong class code – Misapplication of job classifications occurs in many workers’ comp audits. With hundreds of job classes to choose from, mistakes can happen. Talk to us and review your old policies to see if any of your class codes have changed.

X-Mod is changed – After your insurer finishes the audit, it will use the information to calculate your premium. When that happens, it has to include your X-Mod to get the right rate. But sometimes the insurer may use an incorrect X-Mod. Check carefully.

Subcontractors are counted – Sometimes insurers will include subcontractors as employees, which results in a new audit bill to account for the additional “employees.” But if they are genuine subcontractors, they should not be counted. Often, uninsured contractors will be included as employees. Make sure to use insured contractors only.

Disappearing credits – Most policies will have some sort of premium credits or other modifiers. Sometimes during audits, the insurer will remove them when recalculating the premium they think you owe. Watch out for missing credits and other modifiers if you get an audit bill, like:

  • Premium discount
  • Schedule credits
  • Deductible credits
  • State-specific credits

 

Audit worksheets missing – If the auditor fails to provide you with audit worksheets, which are used do compile your payroll and other audit information, you should ask to check their work. They will provide you with the information you need to carry out such a check.

Your rates changed – The rates you are charged at the beginning of your policy period must remain the same for the entire policy period. If your base rates have changed, the insurer may have made a mistake. 

Separation of payroll – Depending on your industry, you may or may not be able to split your employees’ payroll between job classifications (like cabinet installers and sheetrock hangers). This is a pinch point when errors can occur. If the auditor says you are not allowed to split job classifications even though you have in the past, your audit may be in error.

Unexpected large premium due – If you get a significant bill for your insurance company after your audit, the auditor may have made mistakes, particularly if you know that your employment has remained relatively stable and you’ve had no significant claims, if any. If it seems out of whack, call us.

Payroll data doesn’t match – If there is a discrepancy between your payroll data and what you see on the audit, a mistake may have been made. Try to match the payroll on the audit with that generated from your accountant. If the insurer made a mistake, you could end up paying for phantom payroll numbers.

No physical audit – There are three types of audits:

  • Mail audit
  • Phone audit, and
  • Physical audit

 

The mail and phone audits are prone to errors, since neither you nor your staff likely have any experience in premium auditing. If you have a big bill after a mail or phone audit, mistakes could have been made.

As Cyber Attacks Rise, Is Your Business Protected?

Complex Circuit Board With Security Message

Cyber attacks on companies’ information systems and data have reached unprecedented proportions, and are growing with each passing year.

The biggest threat to an organization is if there’s been a breach of personally identifiable data or credit card information that it stores. That results in a number of costs, including notification costs, providing those whose data was compromised with credit monitoring, potential fines, legal costs if sued – and even reputational costs. If data is stolen, there are also restoration costs.

The threat is largest for smaller organizations. Because larger companies can afford to hire teams of technicians to thwart attacks, cyber criminals are increasingly targeting small and mid-sized organizations as they may not have the same resources to defend their data. The “2019 Internet Security Threat Report” by Symantec found that:

  • 48% of cyber attacks target small business.
  • Just 14% of small businesses rate their ability to mitigate cyber risks, vulnerabilities and attacks as highly effective.
  • 60% of small companies go out of business within six months of a cyber attack.

Ransomware

According to the Symantec report, in 2018, enterprises accounted for 81% of all ransomware infections. While overall ransomware infections were down, enterprise infections were up by 12% from the 2017 level.

With ransomware, hackers gain access to your IT system, lock it down and demand a ransom to release it. The ransom usually has to be paid in bitcoin or other cryptocurrency so that the criminals can avoid detection.

Phishing and malware

One of the most common ways for criminals to compromise an organization’s data is through phishing, a process through which employees are sent e-mails with links, which if they are clicked, gives the hackers entry into the company’s computer systems. Malware is usually the code that is inserted into the computer system to either slow systems down or to access the information.

What you can do

  • Install anti-malware software – This can weed out the latest malware before it does damage.
  • Keep your software up to date – Using up-to-date versions of operating systems, applications, firmware and browser plug-ins helps protect against the latest threats by patching security vulnerabilities.
  • Use strong passwords – Use a password manager tool to generate unique passwords and securely store your log-ins.
  • Lock down your devices – If your staff uses company-owned devices, or you allow them to use their own, require that the devices are locked with a password, fingerprint or other method.
  • Think twice before downloading – Remind staff to be cautious about downloading new software or browser plug-ins.
  • Click carefully – Teach your staff to look for telltale signs of phishing e-mails that prompt them to click on malicious links.

The ultimate protection

Cyber-liability insurance covers losses that result from data breaches and other cyber events.

While cyber-liability policies vary among insurers, there are some common threads:

Loss or damage to data – Many policies cover the costs to restore or recover lost, stolen or corrupted data, and may also cover the cost of outside experts or consultants you hire to preserve or reconstruct your data.

Loss of income or extra expenses – Many policies cover income you lose and extra expenses you incur to avoid or minimize a shutdown of your business after your computer system fails due a covered peril. The perils covered may be the same as those covered under damage to electronic data.

Cyberextortion losses – Cyber-extortion coverage applies when a hacker or a cyber thief breaks into your computer system and demands a ransom to unlock it, or to not damage the data. Extortion coverage typically applies to expenses you incur (with the insurer’s consent) to respond to an extortion demand, as well as the money you pay the extortionist.

Notification costs – Policies may cover the cost of notifying parties affected by the data breach by government statutes or regulations. They may also include the cost of hiring an attorney to assess your firm’s obligations under applicable laws and regulations.

Network security liability – This covers lawsuits that individuals or companies file against your organization alleging negligence on your part for failing to adequately protect data belonging to customers, clients, employees or other parties.

OSHA Stays Serious About Temp Worker Safety

While the Trump administration has eased off a number of regulations and enforcement actions during the past two years, Fed-OSHA continues focusing on the safety of temporary workers as much as it did under the Obama presidency.

This puts the onus not only on the agencies that provide the temp workers, but also on the companies that contract with them for the workers.

As evidence of its continued focus on temp workers, OSHA recently released guidance on lockout/tagout training requirements for temporary workers. This was the third guidance document released in 2018 and the 10th in recent years that was specific to temp workers.

One reason OSHA is so keen on continuing to police employers that use temporary workers, as well as the staffing agencies that supply them, is that temp workers are often given some of the worst jobs and possibly fall through the safety training cracks.

OSHA launched the Temporary Worker Initiative in 2013. It generally considers the staffing agency and host employer to be joint employers for the sake of providing workers a safe workplace that meets all of OSHA’s requirements, according to a memorandum by the agency’s office in 2014 to its field officers.

That same memo included the agency’s plans to publish more enforcement and compliance guidance, which it has released steadily since then.

Some of the topics of the temp worker guidance OSHA has released since the 2014 memorandum include:

  • Injury and illness record-keeping requirements
  • Noise exposure and hearing conservation
  • Personal protective equipment
  • Whistleblower protection rights
  • Safety and health training
  • Hazard communication
  • Bloodborne pathogens
  • Powered industrial truck training
  • Respiratory protection
  • Lockout/tagout

Joint responsibility

OSHA started the initiative due to concerns that some employers were using temporary workers as a way to avoid meeting obligations to comply with OSHA regulations and worker protection laws, and because temporary workers are more vulnerable to workplace safety and health hazards and retaliation than workers in traditional employment relationships.

With both the temp agency and the host employer responsible for workplace safety, there has to be a level of trust between the two. Temp agencies should come and do some type of assessment to ensure the employer meets OSHA standards, and the host employer has to provide a safe workplace.

Both host employers and staffing agencies have roles in complying with workplace health and safety requirements, and they share responsibility for ensuring worker safety and health.

A key concept is that each employer should consider the hazards it is in a position to prevent and correct, and in a position to comply with OSHA standards. For example: staffing agencies might provide general safety and health training, and host employers provide specific training tailored to the particular workplace equipment/hazards.

Successful joint employer relationship traits

  • The key is communication between the temp agency and the host to ensure that the necessary protections are provided.
  • Staffing agencies have a duty to inquire into the conditions of their workers’ assigned workplaces. They must ensure that they are sending workers to a safe workplace.
  • Ignorance of hazards is not an excuse.
  • Staffing agencies need not become experts on specific workplace hazards, but they should determine what conditions exist at the host employer, what hazards may be encountered, and how best to ensure protection for the temporary workers.
  • The staffing agency has the duty to inquire and verify that the host has fulfilled its responsibilities for a safe workplace.
  • And, just as important, host employers must treat temporary workers like any other workers in terms of training and safety and health protections.

For a look at all 10 of the guidance documents OSHA has issued in the last few years, visit the agency’s temp worker page: www.osha.gov/temp_workers/

Top 10 Laws and Regulations for 2019

Every year comes with new laws and regulations that affect employers.

It pays to stay on top of all the new requirements, so we are here to help you understand those that are most likely to affect your business. The following are the top 10 laws, regulations and trends that you need to know about going into 2019.

1 Sexual harassment training

Since 2005, California law has required employers having 50 or more employees to provide at least two hours of sexual harassment training to supervisors every two years. SB 1343 changes this by requiring employers with five or more employees to provide non-supervisory employees with at least one hour by Jan. 1, 2020.
In addition, this training must be held every two years. Employers with five or more workers must provide (or continue to provide) two hours of the biennial supervisory training, as well.

2 Data privacy

Companies that collect data on their customers online should start gearing up in 2019 for the Jan. 1, 2020 implementation of the California Consumer Privacy Act of 2018, which is the state’s version of the European Union’s General Data Protection Regulation.

The law gives consumers the following rights in relation to their personal information:

  • The right to know, through a general privacy policy and with more specifics available upon request, what personal information a business has collected about them, where it was sourced from, what it is being used for, whether it is being disclosed or sold, and to whom it is being disclosed or sold;
  • The right to “opt out” of allowing a business to sell their personal information to third parties;
  • The right to have a business delete their personal information; and
  • Not be discriminated against by opting out.

The law applies to businesses that:

  • Have annual gross revenues in excess of $25 million,
  • Annually buy, receive for their own commercial purposes, or sell or share for commercial purposes, the personal information of 50,000 or more consumers, households or devices, and/or
  • Derive 50% or more of their annual revenues from selling consumers’ personal information.

    3 Independent contractors

While this legal development happened in 2018, now is a good time to go over it. In May, the California Supreme Court handed down a decision that rewrites the state’s independent contractor law.

In its decision in Dynamex Operations West, Inc. vs. Superior Court, the court rejected a test that’s been used for more than a decade in favor of a more rigid three-factor approach, often called the “ABC” test.

Employers now must be able to answer ‘yes’ to all three parts of the ABC test if they want to classify workers as independent contractors:

  • The worker is free from the control and direction of the hirer in relation to the performance of the work, both under the contract and in fact;
  • The worker performs work that is outside the usual course of the hirer’s business; and
  • The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hirer.

The second prong of the ABC test is the sentence that really changes the game. Now, if you hire a worker to do anything that is central to your business’s offerings, you must classify them as an employee.

4 Electronic submission of Form 300A

In November 2018, Cal/OSHA issued an emergency regulation that requires California employers with more than 250 workers to submit Form 300A data covering calendar year 2017 by Dec. 31, 2018. The new regulation was designed to put California’s regulations in line with those of Federal OSHA.

Starting in 2019, affected employers will be required to submit their Form 300A data by March 2. For instance, the 2018 summary would have to be posted before March 2, 2019. The law applies to:

  • All employers with 250 or more employees, and
  • Employers with 20 to 249 employees in specified high-risk industries.

    5 Harassment non-disclosure

This law, which takes effect Jan. 1, 2019, bars California employers from entering into settlement agreements that prevent the disclosure of information regarding:

  • Acts of sexual assault;
  • Acts of sexual harassment;
  • Acts of workplace sexual harassment;
  • Acts of workplace sex discrimination;
  • The failure to prevent acts of workplace sexual harassment or sex discrimination; and
  • Retaliation against a person for reporting sexual harassment or sex discriminat

The big issue employers will need to watch out for, according to experts, is that the new law could actually keep the employer and employee from reaching resolutions for disputes.

We will cover the five other top laws and regulations in our next blog post. 

Safety Risks Soar as Job Market Tightens

One by-product of a strong economy is more employment, but the increased activity usually results in more workplace injuries.

That’s because there are more inexperienced people on worksites and when a company is busy and there is more activity, the chances of an incident occurring also increase. This is especially the case in manual labor environments from production facilities, warehousing and logistics to construction and other trades.

The September USG + U.S. Chamber of Commerce Commercial Construction Index found that 80% of contractors said that the skilled labor shortage is affecting jobsite safety and it’s the number one factor increasing safety risk on the jobsite.

As business activity grows and the job market tightens, many companies are forced to hire more inexperienced workers who are not skilled at understanding all safety hazards.

Experienced personnel have the know-how to identify workplace hazards and understand the safety protocols for all aspects of their work. While training can help new hires, nothing beats experience.

Additionally, with many businesses working hard to fulfill orders, workplaces are busier, which can cause some workers to cut corners or take risks. Amidst all that hustle and bustle and people moving quickly, the speed and activity can also contribute to accidents in the workplace.

Also, aggressive scheduling may cause employers to use workers with less experience or training, and can push employees to work longer hours, which can lead to shortcuts and compromised processes. If employees are working overtime, they may also be tired and fatigued, which can contribute to poor judgment and workplace incidents.

One other issue that’s affecting workplace safety and is related to the tight job market is that employers are often having to settle for workers they may not normally hire in other times. As you know, the scourge of opioid addiction has been rampant and unfortunately if someone who has an addiction is hired, they may be a serious liability for the employer.

Not only that, but more states are legalizing recreational marijuana and nearly 40 states have medical marijuana laws on the books. In many cases, people can easily get their hands on a medical marijuana card without an affliction that would require a prescription.

Here’s what’s concerning construction employers on the worker addiction front, according to the USG + U.S. Chamber of Commerce Commercial Construction Index:

  • 39% were concerned about the safety impacts of opioids.
  • 27% were concerned about the safety impacts of alcohol.
  • 22% were concerned about the safety impacts of cannabis.

The report showed that while nearly two-thirds of contractors have strategies in place to reduce the safety risks presented by alcohol (62%) and marijuana (61%), only half have strategies to address their top substance of concern: opioids, which is a growing issue.

What you can do

In this environment of labor shortages and high competition for workers, employers should focus on:

  • Creating a culture of safety.
  • Improving the safety climate in the worksite.
  • Improving the firm’s safety culture.
  • Providing more leadership training for supervisors.
  • Tracking near misses and injuries, and identifying the factors that led to the near miss or accident.
  • Ensuring accountability at all levels.
  • Demonstrating management’s commitment to safety.
  • Empowering and involving employees in the safety process.

Tackling substance abuse safety risks

The top strategies employers are using to reduce safety risks caused by substance abuse are:

  • Testing
  • Prescreening before hiring
  • Education
  • Communication oversight by supervisors
  • Zero tolerance policies
  • Counseling
  • Access to rehab.

Raft of Sexual Harassment Laws Puts Pressure on Employers

California Gov. Jerry Brown has signed into law a number of bills that will drastically change the landscape for employers trying to resolve sexual harassment and discrimination claims.

Brown signed three bills that will make it easier for workers to bring claims of harassment and discrimination in the workplace, and curtail the ability of employers to resolve the claims with motions for summary judgment.

They will also prohibit non-disclosure agreements, and will expand the number of employers that will be required to provide anti-sexual-harassment training to their staff.

Any organization with employees needs to be aware of the new laws to avoid any future legal quagmires, as failing to comply with some of these laws could drastically increase an employer’s liability.

Here’s a rundown of what you need to know:

SB 1343

Existing law requires that organizations with 50 or more employees provide two hours of sexual-harassment prevention training to supervisors every two years. This was mandated two years ago under another piece of legislation, AB 1825.

The new law expands this training requirement to all employers in California with five or more employees.

But SB 1343 goes beyond requiring only supervisors to be trained by also requiring that it must be provided to all employees every two years.

SB 820

This law takes effect Jan. 1, 2019 and will bar California employers from entering into settlement agreements that prevent the disclosure of information regarding:

  • Acts of sexual assault;
  • Acts of sexual harassment;
  • Acts of workplace sexual harassment;
  • Acts of workplace sex discrimination;
  • The failure to prevent acts of workplace sexual harassment or sex discrimination; and
  • Retaliation against a person for reporting sexual harassment or sex discrimination.

The big issue employers will need to watch out for, according to experts, is that the new law could actually keep the employer and employee from reaching resolutions for disputes.

SB 1300

This new law bars other nondisclosure agreements related to claims of sexual harassment, and also overturns prior court rulings that have limited harassment lawsuits.

SB 1300 bars employers from requiring an employee to sign a release of a Fair Employment and Housing Act claim or signing a non-disparagement or nondisclosure agreement related to unlawful acts in the workplace, including sexual harassment in exchange for a raise or bonus, or as a condition of employment or continued employment.

One good thing, the prohibition does not apply a “negotiated settlement agreement to resolve an underlying claim under [FEHA].”

The new law will also make it more difficult to collect attorneys’ fees and costs. Now they will only be granted if the court finds that the action was “frivolous, unreasonable, or totally without foundation when brought or the plaintiff continued to litigate after it clearly became so.”

SB 1300 also expands current law under which an employer can be held responsible for sexual harassment committed by non-employees like clients, vendors and other third parties, if the employer knew or should have known of the conduct and failed to take immediate and appropriate corrective action.

Now employers can be held responsible for all forms of unlawful harassment committed by non-employees, not just sexual harassment.

The law also includes an unusual section on “legislative intent,” which is language that was designed as guidance for the courts but is not legally binding. It includes:

  • Single incident grounds for a claim – The new law declares that a “single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment.”
  • Stray remarks doctrine – Even a single discriminatory remark, even if not made directly in the context of an employment decision or uttered by a non-decision-maker, may be relevant and circumstantial evidence of discrimination.
  • Summary judgments – Harassment claims are “rarely appropriate for summary judgment.” According to the law, summary judgment is a motion usually filed by the defendant to have the case thrown out before trial.

Employers Failing to Report Serious Injuries to OSHA, DOL finds

Workplace Injury

A recent federal government report has urged the Occupational Safety and Health Administration to take steps to ensure that employers report fatalities and injured worker hospitalizations.

Many employers may not be aware, but in 2015 OSHA amended its severe-injury reporting rule to require that employers report the inpatient hospitalization of a single injured employee. Prior to the new rule, they only had to report to OSHA if three or more workers were hospitalized.

Other parts of the rule were left unchanged, including:

  • The requirement that employers report to OSHA workplace fatalities within eight hours.
  • The requirement that employers report any amputations or the loss of an eye within 24 hours.

 

Amputations are defined by OSHA as: “… the traumatic loss of all or part of a limb or other external body part. This would include fingertip amputations with or without bone loss; medical amputations resulting from irreparable damage; and amputations of body parts that have since been reattached.”

Inpatient hospitalization is defined as: “A formal admission to the in-patient service of a hospital or clinic for care or treatment. Treatment in an emergency room only is not reportable.”

Between January 2015 (when the new rule took effect) and April 2017, employers reported 23,282 severe injuries to OSHA in addition to 4,185 workplace fatalities, according to the report by the U.S. Department of Labor’s Office of Inspector General.

OSHA shortcomings

But the report found that OSHA had no assurances that employers reported hospitalizations, amputations and losses of an eye – and that only about half of those injuries were reported.

It also found that the agency was not consistent in citing employers that failed to make the reports in a timely manner.

Overall, the report found that OSHA had not been consistent in monitoring employers that it had authorized to conduct their own investigations into what had caused the incidents.

The report had sampled 100 severe injuries and found that OSHA had made inspections in only 37 of the cases and allowed employers to investigate in 63 of the cases.  But in 50 of the 63 cases that employers were supposed to investigate, the report found that OSHA failed to document its decision to allow employers to perform an investigation.

In about 87% of employer investigations, OSHA lacked justification for its decisions to allow employers to perform an investigation or closed investigations without sufficient evidence that the employers had abated the hazards that caused the accident, according to the report.

Employer takeaway

Safety specialists predict that the report could spur OSHA to take a tougher stance and improve its policing.

The report recommendeds that OSHA develop guidelines and train its staff on how to detect non-reporting of these incidents, and issue citations for late reporting or failure to report.

As an employer, you should be diligent about always following OSHA regulations, and now in particular, by following the rules on reporting serious injuries or fatalities.

If you do have a serious injury as defined above, here’s what you need to know:

 

To make a report:

  • Call the nearest OSHA office;
  • Call the OSHA 24-hour hotline at 800-321-6742; or
  • Report online, at www.osha.gov/pls/ser/serform.html.

Be prepared to supply:

  • The name of your business;
  • Names of employees affected;
  • Location and time of the incident;
  • Brief description of the incident;
  • Contact person and phone number.

NLRB Moves to Restore Joint-Employer Standard

The National Labor Relations Board has issued a proposed rule that would roll back an Obama-era board decision on joint-employer status for companies that hire subcontractors or use staffing or temp agency workers.

The decision by the NLRB in 2015 overturned a long-time precedent (a standard in place since 1984) that a company must have “immediate and direct” control over a worker to be considered a joint employer. The board ruled instead that a company need have only “indirect” control of a worker and not even exercise that control to be considered a joint employer.

Under the 2015 standard, a company could be deemed a joint employer even if its “control” over the essential working conditions of another business’s employees was indirect, limited and routine, or contractually reserved but never exercised.

The ruling was roundly criticized by businesses as it put both the hiring employer and its contractor or staffing agency on the hook for labor violations. The decision also applied to franchisors that were suddenly liable for labor issues at individual franchisees’ operations.

The ruling also spread plenty of confusion in the employer community, and it sent companies that used contract or temp labor to set strict written procedures of where their responsibility ended and the subcontractor’s began.

 

The proposed rule

The proposed rule affects businesses:

  • That are franchisees or franchisors,
  • Use temporary staffing agencies to supply manpower, or
  • Hire outside or subcontractors to work on their sites.

 

Under the proposal, an employer may be found to be a joint employer of another employer’s employees only if it possesses and exercises “substantial, direct and immediate control” over the essential terms and conditions of employment “and has done so in a manner that is not limited and routine,” according to a statement issued by the NLRB.

“Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship,” the statement said.

In announcing the proposed standard, the NLRB included a number of examples of how it would apply. Here are two:

Example 1: Red Line Staffing supplies line workers and first-line supervisors to Sporting Apparel at Sporting Apparel’s manufacturing plant. On-site managers employed by Sporting Apparel regularly complain to Red Line Staffing’s supervisors about defective products coming off the assembly line.
In response to those complaints and to remedy the deficiencies, Red Line Staffing’s supervisors decide to reassign employees and switch the order in which several tasks are performed.
Sporting Apparel has not exercised direct and immediate control over Red Line Staffing’s line workers’ essential terms and conditions of employment.

Example 2: Temp Worker Plus supplies line workers and first-line supervisors to Breadstone Enterprises at Breadstone’s baking plant. Breadstone also employs supervisors on site who regularly require the Temp Worker Plus supervisors to relay detailed supervisory instructions regarding how employees are to perform their work. As required, Temp Worker Plus supervisors relay those instructions to the line workers.
Breadstone possesses and exercises direct and immediate control over Temp Worker Plus’s line workers.
The fact that Breadstone conveys its supervisory commands through Temp Worker Plus’s supervisors rather than directly to Temp Worker Plus’s line workers fails to negate the direct and immediate supervisory control.

The proposed rule is currently up for a 60-day comment period, after which it may be amended following input from stakeholders. For now, you should stick with the contracts you have had since the Obama-era decision until this new rule is set in stone.