Top 10 Laws and Regulations Affecting Employers in 2021, Part II

Here is the second half of the top 10 laws and regulations affecting California employers in 2021, changes that organizations need to keep on their radar and prepare for.

6. Wildfire smoke safety regulations

With wildfires becoming the new normal in California, Cal/OSHA has set about working on permanent wildfire smoke regulations to protect outdoor workers when the air worsens during major events.

An emergency regulation is set to expire on Jan. 31, 2021, at which time Cal/OSHA hopes to introduce the permanent replacement that would require employers to protect their outdoor workers from smoke if the Air Quality Index (AQI) exceeds 150.

Workplace safety pros expect the permanent regs to mostly mirror the emergency rules that have been in place since August 2019.

The regulations apply when the AQI for airborne particulate matter 2.5 microns (PM2.5) or smaller is 151 or greater in an area where employees are working outdoors.

The permanent regulations are expected to cover training and methods for protecting workers (like moving them inside or providing N95 respirators during high-smoke conditions).

7. Rating Bureau’s new classification for telecommuters

California employers will get a new workers’ compensation class code to assign to employees who work from home, an outgrowth of the coronavirus pandemic which thrust so many people into working from home.

The new class code, (Clerical Telecommuter Employees ― N.O.C.), will apply to employees that work from home or “away from any location of their employer,” doing office clerical work.

This class code, available on policies effective Jan. 1, 2021 or later, is to be used for employees who would have been classified under class code 8810, Office Clerical employees, that are doing work at home 50% or more of the time.

8. Sick leave and kin care law

Under the current Labor Code, an employee is entitled to use up to half of their annual accrued sick leave to care for a family member, but not the full amount of sick leave they have.

AB 2017 amends Labor Code Section 233 to give employees the sole discretion to use as much of their sick leave as they want to care for a family member, with no approval from their employer required. The law takes effect. Jan. 1, 2021.

A “family member” is defined as the employee’s child, parent or guardian, spouse or domestic partner, grandparent, grandchild, or sibling.

9. Data protections strengthened further

California voters this year passed Prop. 24, which established a new law: the California Privacy Rights Act of 2020. The CPRA amends and strengthens the state’s current data protection privacy law, the California Consumer Privacy Act (CCPA), which governs how organizations have to protect personal data that they collect.

The CPRA gives additional rights to consumers and places additional obligations on businesses. It provides additional protection for sensitive personal information, expands the CCPA’s opt-out rights to include new types of information-sharing, and requires businesses to provide additional mechanisms for individuals to access, correct, or delete data, with a particular focus on information used by automated decision-making systems.

While the law doesn’t take full effect until Jan. 1, 2023, it has a 12-month look-back period. Privacy experts advise companies to start working on their data protection infrastructure in 2021 in order to be ready for this expansive new law.

10. State minimum wage increases

As of January 1, 2021, California’s minimum wage increases to $14 for employers with 26 or more employees, and to $13 for those with 25 or fewer employees. Local minimum wages may also increase. Check your local rules for other minimum wage requirements.

Top 10 Laws and Regulations Affecting Employers in 2021

Every year starts with a bevy of new laws and regulations affecting employers and businesses in California, and many of the new rules this time around are an outgrowth of the COVID-19 pandemic and its effects on workers.

Employers in California in the year ahead have a number of changes they have to contend with, some of which were enacted near the end of 2020 as emergency regulations or legislation.

In this issue, we’ll cover the first five of the top 10 rules and regulations affecting employers in 2021.

1. COVID-19 workers’ compensation rules

AB 1159, which took effect in September, is an expansive law requiring that workers’ compensation benefits be extended so that any employee who reports to a workplace and contracts COVID-19 is presumed to have contracted it at work, making them eligible for workers’ comp benefits.

But the law also imposes sweeping reporting rules for employers that have outbreaks in their workplaces (it’s considered an outbreak if 4% of an employer’s workers test positive for COVID-19). Under new rules by the Workers’ Compensation Insurance Rating Bureau, though, COVID-19 illness claims will not count against employers’ experience modifiers (X-Mods).

When reporting a COVID-19 claim to their insurance carrier, employers must provide the following information:

  • The date the worker tested positive,
  • The address of the worker’s place(s) of employment during the 14 days preceding the positive test, and
  • The highest number of employees who reported to work in the 45 days preceding the last day the employee worked in the workplace.

The above must be reported for each COVID-19 case in the workplace. The law sunsets on Jan. 1, 2023.

2. Cal/OSHA COVID-19 rules

Cal/OSHA in November enacted emergency regulations that impose strict rules on employers to implement safeguards in order to reduce the risk of COVID-19 spreading in the workplace.

The sweeping regulations extend the reach of protections to employer-provided housing and transportation, as well as imposing new reporting requirements on employers who have workers that contract the coronavirus. Yes, these are more reporting requirements on top of the ones for workers’ compensation cases.

The rules require employers to take a number of steps to ensure the safety of their workers, including creating a COVID-19 prevention plan, requiring masks, social distancing and other ways to reduce the likelihood of virus spread.

Also, employers must investigate coronavirus cases in their workplace. If they discover one of their staff has contracted COVID-19, they must notify all employees at a worksite who might have been exposed, within one day. Workers who may have been exposed must be offered COVID-19 testing at no cost. Employers must report coronavirus cases in their workplaces to local health authorities.

3. Cal/OSHA authority on stop-work orders

Before Cal/OSHA came out with its emergency COVID-19 regulations, Governor Gavin Newsom signed into law AB 685, which expands the agency’s authority to issue stop-work orders to workplaces it deems a COVID-19 “imminent hazard.”

But many in the regulated community say the new law is duplicative and conflicts with the emergency regulations, and that it will confuse employers as to their obligations.

The new law also requires employers to send notices to a number of parties (state agencies, local authorities, employees, contractors and more) if they have coronavirus infections in any of their facilities. All of these notices have a number of requirements that employers will need to follow to avoid penalties.

Notice to employees must include information regarding COVID-19-related benefits the employee may be eligible for under federal, state and local laws, such as:

  • Workers’ compensation benefits,
  • COVID-19-related leave,
  • Company sick leave,
  • State-mandated leave, and
  • Supplemental sick leave.

4. Expansion of California Family Rights Act

SB 1383, which takes effect Jan. 1, 2021, will expand the California Family Rights Act to cover even small employers ― those with five or more staff.

The CFRA, which requires covered employers to provide up to 12 weeks of unpaid leave a year for family and medical leave purposes, currently only applies to employers with 50 or more workers.

The new law also expands the scope of “family members” for whom employees can take leave to help care for them to include siblings, grandparents, grandchildren and domestic partners. Also, the law expands the definition of “child” to include all adult children (regardless of if they are dependents) and the children of a domestic partner.

5. Independent contractor law tweaked

AB 2257, which took effect in September 2020, revises the controversial AB 5 independent contractor law by adding a number of exceptions for certain classes of workers.

If you remember, AB 5 created a new standard for discerning what workers should be classified as employees or independent contractors and it swept up a number of professions in its net, causing some consternation and hand-wringing among both employers of those contractors and the independent contractors themselves.

The professions that are now exempt include:

  • Graphic designers
  • Web designers
  • Consultants
  • Freelance writers
  • Translators
  • Editors and content contributors.

New Law Imposes New COVID-19 Reporting Requirements

covid-19

California employers already have a lot to digest after Cal/OSHA issued sweeping new COVID-19 safety regulations in November.

Now they face additional requirements starting Jan. 1, 2021, thanks to a new law that expands notification requirements and gives Cal/OSHA the authority to issue stop-work orders on workplaces that have COVID-19 outbreaks. Here’s what you need to know to be prepared in case your workplace sees a flare-up.

California employers already have a lot to digest after Cal/OSHA issued sweeping new COVID-19 safety regulations in November. Now they face additional requirements starting Jan. 1, 2021, thanks to a new law.

AB 685 expands Cal/OSHA’s authority to issue stop-work orders to workplaces it deems a COVID-19 “imminent hazard.” It also requires employers to send notices to a number of parties (state agencies, local authorities, employees, contractors, and more) if the employer has coronavirus infections in any of its facilities.

The law, which takes effect on January 1, 2021, covers a lot of territory and employers need to understand their obligations if any of their employees test positive to avoid penalties, fines or possible legal action. Here are the main points to be aware of:

Employee notice requirements

The new law requires employers who learn of an employee’s COVID-19 infection to send out notifications to all employees and subcontracted workers who were on-site at the same time as the infected employee. An infected employee (or qualifying individual in the law) is defined as any person who has:

  • A laboratory-confirmed case of COVID-19,
  • A positive COVID-19 diagnosis from a licensed health care provider,
  • A COVID-19-related order to isolate provided by a public health official, or
  • Died due to COVID-19, determined by a county public health department.

The notice must provide information regarding COVID-19-related benefits the employees may be eligible for under federal, state, and local laws, such as:

  • Workers’ compensation benefits,
  • COVID-19-related leaves,
  • Company sick leave,
  • State-mandated leave, and
  • Supplemental sick leave.

The notification must also include the employer’s COVID-19 disinfection and safety plan.

Public health agency notification

The new law also requires that employers notify their local public health agency within 48 hours of learning of an “outbreak” among its workers. An outbreak is defined as: At least three probable or confirmed COVID-19 cases within a 14-day period at a worksite.

Notifications must include:

  • Information about the worksite – name of company, business address, and North American Industry Classification System (NAICS) industry code.
  • Names and occupations of workers with COVID-19.
  • Additional information requested by the local health department as part of their investigation.

If there are additional laboratory-confirmed COVID-19 cases at the workplace, the employer will once again need to send notice to the local health department.

Expanded Cal/OSHA authority

AB 685 grants Cal-OSHA authority to close workplaces that “constitute an imminent hazard to employees” due to COVID-19.

But the stop-work order must be limited to the immediate area in which an “imminent hazard exists.” Cal-OSHA is not authorized to bar entry to any areas outside the hazard area.

When issuing a stop-work order the agency must post a notice in the workplace. Entry will only be permitted for cleaning, disinfecting, and eliminating the danger.

The timeline for issuing serious citations is also greatly reduced. Typically, whenever Cal/OSHA plans to issue a serious citation it has to provide notice and give the employer 15 days to provide additional evidence to refute the need for a serious citation.

For COVID-19 serious citation, Cal/OSHA will not have to provide this notice, meaning that will not have 15 days to mount a defense.

Your to-do list

You should start drafting employee COVID-19 notices, particularly what would be boilerplate information, the preamble about the outbreak as well as benefits the employees can tap.

Also, you need to be prepared to notify public health authorities if you have an outbreak.

Finally, if you are being investigated for COVID-19-related safety violations, it would be wise to produce all backup documents to inspectors during the probe as you won’t have the usual 15 days to mount a defense if you are cited for a serious violation.

Commissioner Rejects Coronavirus Workers’ Comp Surcharges

workers' comp,

Despite the state’s rating agency asking for a 2.6% increase in workers’ compensation rates due to costs related to the coronavirus pandemic, California’s insurance commissioner has instead ordered that benchmark rates be cut 4.6%.

Besides the rate increase, the Workers’ Compensation Insurance Rating Bureau had recommended that all policies be subject to a COVID-19 surcharge that ranged from 1 cent per $100 of payroll for the least risky professions to 26 cents per $100 of payroll for the riskiest (such as health care workers).

Insurance Commissioner Ricardo Lara rejected that filing as well, saying both the request for rate hikes and the surcharges were not borne out by the claims statistics.

“The WCIRB’s thorough efforts to estimate COVID-19 costs are noted and appreciated but I am not persuaded that there is sufficient and reliable data upon which to base an adjustment for COVID-19 costs,” he said in a statement.

The Rating Bureau had made a big deal about the COVID-19 surcharges in anticipation of certain industries being adversely affected by high work-related coronavirus infections. However, overall workplace injuries in California have dropped precipitously since the start of the pandemic and all the fallout has put a major dent in economic activity.

The pandemic has led to an overall 20% decrease in workers’ compensation claims in the state, even though COVID-19 claims surged during the summer months.

Under California law, insurers are not allowed to count COVID-19 claims when calculating employers’ workers’ compensation experience modifiers (X-Mods). Another law extends a presumption that any worker who reports to a workplace and comes down with coronavirus will be eligible for workers’ comp benefits.

Commissioner Lara adopted an average advisory benchmark rate of $1.45 per $100 of employer payroll and adjusted the pure premium rates for individual classifications — excluding additional adjustments for COVID-19 — based on the benchmark rate effective Jan. 1, 2021. That’s compared with the $1.50 average benchmark rate as of Jan. 1, 2020.

The benchmark rate — or pure premium rate — is a base rate that insurers use to price policies. It excludes overhead and profits. The rate is advisory and final rates will vary based on each carrier’s specific rate filing and the individual employer’s claims experience.

Lara also said that if insurers want to include any additional COVID-19-related surcharges on their policies, they will need to clearly identify the adjustments in their rate filings with the Department of Insurance.

Additionally, while rejecting the COVID-19 surcharges, the commissioner’s proposed decision includes a Table of Recommended COVID-19 Additive Adjustment per $100 of Payroll that averages $0.05 per $100 of payroll.

The Story Behind Increasing Commercial Auto Insurance Rates

auto insurance rates

Commercial auto insurance rates have been on the rise since 2011, increasing often by more than 10% a year as accidents and claims costs have soared.

The trucking industry has been the hardest hit by the steep increases, and there are a number of factors contributing to the rate hikes, according to a recent study by Risk Placement Services. One of the biggest factors is that insurers have had trouble keeping up with increasing accidents and spiraling claims costs, leaving them in the red for most of the past decade.

Huge court verdicts, higher maintenance expenses, reduced freight demand, and poor infrastructure, compounded by an aging workforce and a driver shortage, have all resulted in higher insurance rates, according to the study. Here’s what’s in play:

Good drivers are aging and there are fewer of themHalf of all long-haul truck drivers are over 46 years old. The minimum age for obtaining an interstate commercial driver’s license is 21, and many insurers prefer drivers no younger than 24.

As the industry rushes to hire more drivers, who are often in their 20s, they have to contend with having more inexperienced drivers who are more likely to be involved in accidents.

Jury verdicts are huge, and growingThe number of transportation industry damage awards exceeding $10 million for injuries and property damage has been increasing since 2012. Claims for bodily injuries can sometimes take years to resolve, causing insurers to initially underestimate the eventual loss amounts.

High maintenance costsWhile advanced technology has made trucks safer, that tech is expensive to maintain, repair, or replace. The equipment is costly and mechanics with the technical skills to fix it can be hard to find.

However, poor maintenance makes accidents more likely and insurance more expensive.

Distracted drivingTruck drivers and those they’re sharing the road with continue looking at their phones, eating, looking at their navigation systems, and taking their eyes off the road with increasing regularity. This increases the frequency of accidents.

Crumbling infrastructureAmerica’s crumbling roads and bridges are increasing wear and tear on the trucks traveling on them, making accidents more likely.

Expensive cargo — The goods inside the trucks are also requiring larger amounts of insurance at higher rates. For example, shipments of electronics and medicine are magnets for thieves. And if a flatbed trailer carrying expensive machinery flips over, the cargo will likely be damaged beyond repair and the insurer has to pay to replace it.

Products like food, flowers, and some medicines must be refrigerated; if the driver makes a mistake, the entire lot may be ruined.

The takeaway

Because of these high costs, some companies are opting to forgo buying essential coverages such as excess liability (which can protect against those $10 million lawsuits) and cyber insurance. Modern vehicles are increasingly automated and are vulnerable to cybercriminals.

The Risk Placement Services report concludes that businesses with larger vehicle fleets, someone responsible for the safety and that hire quality drivers and practice regular maintenance, will find insurance more affordable and readily available.

For the rest, the rate increases will likely continue.