California Enacts Strict Updates to Lead Exposure Regulations

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Recently, the Cal/OSHA Standards board approved stricter standards for occupational lead exposure in both the construction industry and general industry.

Effective January 1, 2025, the standards lowered the Permissible Exposure Limit (PEL) by 80% and the Action Limit (AL) by 93%, a vastly stringent policy compared to previous regulations.

The Permissible Exposure Limit is the legal limit that an employee can be exposed to a chemical substance or physical agent. The previous PEL for lead was 50 micrograms per cubic meter of air, and has now been reduced to 10 micrograms per cubic meter of air. 

The Action Limit is the maximum value that can be reached before an action is needed to correct the issue. The previous lead level AL was 30 micrograms per cubic meter of air and is now only 2 micrograms per cubic meter of air.

With these limits reduced, employers must make changes in order to comply, such as updating their written program, conducting further exposure monitoring, and providing medical surveillance.

• Employers must give workers exposure assessments to determine lead exposure in the blood. If employers do not perform these assessments, they are required to provide respiratory protection, protective work clothing and equipment, medical surveillance, training and posted warning signs.

• If employee exposure reaches the new Action Limit, companies are required to implement a medical surveillance program. This includes medical examinations and procedures at no cost to the employees.

• Employees who have been exposed to lead levels at or above the Action Level must be temporarily removed from work. These employees will have “medical removal protection benefits,” and will not lose earnings, seniority and other employment rights.

In addition to these requirements, exceeding Action Levels of exposure requires employers to provide employees respirators and protective work clothing and equipment, enact hygiene and housekeeping practices, offer lead exposure prevention training, and maintain monitoring and medical records of exposed employees for a minimum of 40 years.

To prepare for these new standards effective next year, clients should conduct new air monitoring tests and exposure assessments soon to ensure they are still compliant with the new exposure limits. If results exceed the new PEL and AL, they have until the end of the year to reduce exposure and remain in compliance. 

For more information regarding these changes, clients can visit the Cal/OSHA website.

Dual Wage Thresholds Set to Increase Again

Author, Matt Gorham, Account executive, Rancho Mesa Insurance Services, Inc.

In an effort to keep up with wage inflation, California’s Workers’ Compensation Insurance Rating Bureau (WCIRB) has recommended increases to all 16 construction dual wage thresholds, which, if approved, would impact policies beginning on September 1, 2024 and could drive up insurance premiums for those unaware.

Dual wage thresholds help carriers evaluate risk of employee injury by correlating average hourly wage with experience on the job. The general notion is that employees with more experience command higher wages and are less likely to get injured at work, while employees with less experience are paid a lower wage, are less familiar with safety and jobsite protocols, and therefore more likely to be injured at work. This difference in risk leads to a difference in cost for insurance premiums, with higher paid employees costing their employers comparatively less in premium.

Using the base rate of $31 or more per hour from one carrier, consider the example of a plumber: a plumber earning $30 per hour will cost their employer $9.31 per $100 of payroll, while a plumber earning $31 per hour will cost their employer $4.35 per $100 of payroll. That is roughly a 47% higher cost in premium per $100 for an employee earning 3% less per hour.

Since the last time the WCIRB suggested an increase to the dual wage thresholds in December 2021, inflation and labor shortages have continued to drive up wages in the construction industry. According to the St. Louis Fed, average hourly earnings in construction have increased from $33.60 to $37.53 – more than 11% in that time. While wages are going up, the experience of employees is not keeping pace, leaving insurance carriers exposed. To address this disparity, the proposed threshold increases from the WCIRB range from $1 for plumbing, automatic sprinkler, concrete work, and painting/waterproofing to $4 for sheet metal/HVAC work.

To get ahead of this proposed change, business owners should consider whether it is more beneficial to award employees with raises or to pay more in insurance premiums. With increased overhead costs likely coming either way and quality employees already in short supply, not only could strategic raises offer relative savings, they could strengthen the loyalty from your team.

While this proposed change still needs final approval by the insurance commissioner, it is expected to have a major impact on wages and potentially premiums within the construction industry.

To evaluate the impact of the proposed dual wage threshold increase on your business, contact me at (619) 486-6554 or mgorham@ranchomesa.com.

California Updates Required Employment Pamphlets

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Recently, the State of California has made several important updates to labor pamphlets that must be provided to employees. 

Employers must provide the updated “Time of Hire” pamphlet to new hires. Created by the California Department of Industrial Relations Division of Workers Compensation, the document defines workers’ compensation and explains how employees can file a claim and gain access to medical care.

Additionally, the Employment Development Department (EDD) updated its “For Your Benefit” pamphlet. Employers are required to provide this both at the employee’s time of hire and their dismissal.

The document outlines benefits provided to employees by the state in the event of their termination or when they take certain leaves of absence. It also informs employees on how to obtain unemployment insurance, the tax requirements for unemployment benefits, which employees are not eligible for unemployment benefits, and who is eligible for state disability insurance.

These pamphlet updates accompany the changes made to California Labor Code section 2810.5 in January 2024, which requires that employers provide employees with a written notice about their wages, such as pay rates, overtime rates, and designated paydays. This notice must also be given to employees when they are hired. If there is a change of information in the notice, they must also provide an updated version within seven days of a change or in the employee’s pay stub by the next pay period.   

With these recent changes now effective, its important for employers to evaluate the materials they provide their employees to ensure compliance. For more information about required employment information or other human resources questions, access Rancho Mesa’s RM365 HRAdvantage™ portal.

Getting to Know Our Trade Associations – Meet Andy Berg, Executive Director of NECA San Diego

Author, Anne Wright, Surety Relationship Executive, Rancho Mesa Insurance Services, Inc.

As we have shared with our clients and viewers in the past, Rancho Mesa finds a tremendous amount of value in memberships of various trade associations. Becoming involved in these associations by attending events, and participating in committees, ultimately at board level, has allowed for a deeper understanding of the construction industry that we bond. I have found value in following legislation changes that affects the industry, as well as learning about the issues and processes available for contractors to run safer jobs, be more competitive in the industry, and manage contracts and financial reporting. It has made me better at what I do as a surety agent.

Over the years, I’ve had the pleasure of developing a great relationship with Andy Berg, Executive Director of the National Electrical Contractors Association (NECA) San Diego. This past year, Rancho Mesa was honored to be the recipient of NECA’s Affiliate of the Year Award.

NECA represents the union electrical construction industry, locally and nationally, and is a strong voice for its members on matters on advocacy, education, training, and a vibrant labor force. Andy joined the staff of NECA San Diego in 2002 as the Director of Local Government Relations & Economic Development, and earned his position of Executive Director in 2007.

I had the pleasure of getting to know Andy many years ago when I was involved on the San Diego American Subcontractors Association (ASA) board. NECA was a member of ASA, and Andy joined us on the government relations committee, meeting with local public agency policy makers. I learned most of what I know about communicating with public agencies from Andy, both construction and surety related. He has been a wonderful mentor to me over the years. Collaboration with other groups in the industry is important for the greater whole, and NECA has proven that they are all about advancing their industry, in this regard.

When I speak about the value of association memberships in guiding and forming our careers in the greater construction industry, this relationship with Andy will always be at the top of my list regarding the benefits of forging meaningful connections.

Listen below for the full podcast interview with Andy where he discusses his successful history and issues facing contractors today.

National Ladder Safety Month: Preventing Injury Through Education

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

March is National Ladder Safety Month. Spearheaded by the American Ladder Institute (ALI), this month is dedicated to promoting safe ladder use. 

Tens of thousands of injuries and hundreds of deaths are caused by the improper use of ladders annually. The construction industry is particularly at risk for ladder injuries. Year after year, its one of the top 10 most common OSHA violations in the nation, so this is a good opportunity to evaluate your company’s ladder training and safety protocol. 

Rancho Mesa offers resources in the SafetyOne™ app with online training courses such as general Ladder Safety and Ladder Safety in Construction Environments.

The platform also has the following ladder safety toolbox talks that supervisors can administer to employees:

• Job Built Ladder Safety

• Ladder Types

• Ladder Usage

• Ladder Safety for Landscape Contractors

• Ladder Tips

• Five Ways to Prevent Electrocutions from Portable Ladders

• Ladders and Stairways

Rancho Mesa is also hosting an in-person Ladder Safety workshop on Friday, March 22, which will be recorded and available to view on our website in the coming weeks.

For questions about accessing the online resources in SafetyOne, clients can reach out to their Client Technology Coordinator.

The Critical Importance of Nonprofit Executive Transition Planning

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

In the world of nonprofit management, the departure of an executive director can cause a time of uncertainty. This kind of challenge is why all nonprofits need a well-crafted executive transition plan. This plan is not just a roadmap for navigating the change in leadership but a tool for sustaining and growing the nonprofit's mission. In this article, we will dive into the importance of having an executive transition plan, the key components that make up an effective plan, and the benefits it brings to the nonprofit sector.

Understanding the Role of the Executive Director

The executive director's role is crucial in shaping the nonprofit's direction, culture, and public image. These leaders have many roles from strategic planning and fundraising to staff morale and community engagement. Therefore, the departure of an executive can leave a void that is difficult to fill without a transition plan in place.

A well thought out executive transition plan begins with a deep understanding of the executive director role within their nonprofit. It involves evaluating the organization's current needs, future plans, and the specific qualities in a new leader that will allow them to successfully fulfil the nonprofit’s mission moving forward.

Alignment and Visioning

The next step is to make sure that the organization’s future plans align with the board’s vision. In order for the organization to continue to be successful, everyone needs to be on the same page and have a deep understanding of the organization’s goals.

Developing a transition plan that is prepared for different types of departures like planned, unplanned, or strategic, shows your level of preparedness. Whether the transition is expected or sudden, having a clear plan in place minimizes disruptions and allows the organization to focus on its mission.

Cultivating Internal Leadership

One of the plan's key components is the focus on internal leadership development. By identifying and training potential future executives within the organization, this will create qualified employees ready to step into a leadership role when needed. Also, internal employees bring a deeper understanding of the nonprofit’s culture and operations, making the transition period much smoother than hiring from outside the organization.

The Search for New Leadership

Finding the right executive to guide the nonprofit through its next phase is the most important part of the transition plan. This process involves setting clear criteria for the ideal candidate, conducting a thorough search, and the selection process itself. The plan should outline the steps for advertising the position, screening candidates, and holding interviews, while keeping the organization’s mission on the forefront.

Also, finalizing the transition does not simply involve the selection of a new executive director but also ensures that they are fully integrated into the organization. This would involve a detailed onboarding process where the new leader is introduced to the team and understands the nonprofit's operations.

The importance of having a comprehensive executive transition plan cannot be overstated for nonprofits. By thoroughly understanding the role of the executive director, aligning the transition with the nonprofit's vision, cultivating internal leaders, selecting and integrating a new leader, nonprofit organizations can successfully navigate the executive transition with confidence and ease. This approach not only protects the organization's mission during times of change but also sets it up for future success.

With a strong presence representing the insurance needs of nonprofits throughout California, Rancho Mesa prides itself on understanding both the risk management and operational components within this important space. For questions on this article or to learn more about how Rancho Mesa can help your organization, contact me at jmarrs@ranchomesa.com or (619) 486-6569.

Resources

https://alysterling.com/nonprofit-executive-director-transition/
https://www.philanthropy.com/article/the-great-nonprofit-leadership-turnover
https://boardsource.org/fundamental-topics-of-nonprofit-board-service/executive-transition/
https://buildingmovement.org/reports/the-leadership-in-leaving/

Performance Bonds for Private Equity Contractors

Author, Matt Gaynor, Director of Surety, Rancho Mesa Insurance Services, Inc.

We have entertained several recent submissions from our construction division prospects looking for bonding support of their companies that are majority owned by a private equity firm. The traditional surety market will push back on private equity submissions pointing out the goodwill and large amount of debt listed on the balance sheet. Throw in the limited indemnity package offered in support of the bond program and we have created a perfect storm for the account to be declined without any actual underwriting taking place. But there is hope!

Let’s first take a step back. For our standard construction bond program, we preach the retention of capital and net profit as the best way to increase your bonding facility. The bond company will also look to company and personal indemnity to ensure they are protected in the event of a bond claim. This is in deep contrast to the private equity arena where the payment of monthly interest on debt and write-off of goodwill often translates into a net loss on the income statement translating into reduced net worth. Also, no personal indemnity is afforded to support the bond program. In fact, only limited indemnity from the principal is available.

Fortunately, a number of large commercial surety carriers are willing to look beyond the net worth underwriting roadblocks and concentrate more on cash flow, available bank credit, and other working capital items to consider a bonding program. 

By providing quarterly financial updates, work in progress schedules exhibiting strong gross profit margins, and generating advance discussions of potential acquisitions, the broker and client can get out ahead of potential underwriting distractions.

If you would like more information or want to discuss what is needed in support of a bond program for your private equity owned company, please contact me at (619) 937-0165 or mgaynor@ranchomesa.com.

California Rainy Season Offers Online Training Opportunity for Employees

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Californians have experienced record storms this year along with other parts of the United States. However, with Spring on the horizon, construction companies are preparing for rainier months still ahead. When job sites close due to rain and flooding, it's a good opportunity for employees to use that time to revisit safety and operational skills with online training.

When the weather is hazardous and construction jobs must close, it's common for employers to send workers home. This can cause a financial setback not only for the business, but also for the employees who were depending on working those hours.

“On days where it would be unwise to expect employees to get up on a roof or scale a building wall, offer virtual training sessions so your employees can still earn a living, and you skill up your workforce,” Eric Mochnacz, Director of Operations at Red Clover HR, said in his article.

To prepare for days when the weather restricts jobsite work, employers can compile a list of training that can be assigned to employees, such as operation skills and safety procedures relevant to their work in the field. 

“There’s lots of opportunity and potential in planning for bad weather days by building a strong library of virtual training,” Mochnacz said. “When your ability to meet business goals is directly tied to the weather, having contingency plans is crucial for business continuity.”  

Rancho Mesa offers tools for employee online training via both the SafetyOne™ platform and the RM365 HRAdvantage™ Portal. SafetyOne holds a library of online training on a wide range of topics in construction safety. RM365 HRAdvantage Portal online training topics include professional development and compliance.

For more information on utilizing Rancho Mesa’s resources, contact your Client Technology Coordinator.

How to Strategically Grow Your Construction Company

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

One of the biggest ongoing challenges in the construction industry today is hiring and retaining quality employees that can help build on a company’s foundation. Growing a construction company in a sustainable way through internal promotions while also integrating new hires can separate one company from its competitors.

Employees are a company’s most valuable asset and making sure the right people are in the right positions is vital to profitable growth. There are high performing laborers at every construction firm but just because they are successful in one position does not necessarily mean that they will transition successfully into becoming a great estimator or superintendent. So, it is critical to promote the right people into the right positions for the success of the company.

Promoting from within is typically more cost effective than an outside hire and leads to a boost in company morale. The promoted employee already knows your company culture and safety expectations, and they can pass their knowledge onto new hires. So, finding the right internal people to elevate into leadership positions is the logical path, when available.  

Having assessment tests and specific steps for how to be promoted in your employee handbook is a great way to provide both new and seasoned employees a clear path for career growth.

Identify employees that can handle stressful situations and are poised problem solvers. Do not wait for a need to arise; start including these valued employees in meetings to make sure they are prepared to take on a new role when the company is ready to grow or there is an opening due to an employee retirement. This can alleviate some of a leader’s workload allowing them to deal with big picture issuing facing the firm.

Take advantage of both safety and professional development courses to grow your existing employees. Rancho Mesa’s SafetyOne™ platform provides online safety courses for employees, while the RM365 HRAdvantage™ Portal offers online courses to help employees hone the soft skills they will need to grow their careers.

While this topic remains one of the most challenging aspects of running a construction company, do not let this problem be compounded by being unprepared. Stay diligent in the hiring process and pay attention to the employees you do have with the right traits. This can lead to lower insurance costs as more efficient employees in management positions can directly assist with building a safer culture with more preparedness when claims arise.

If you have any questions pertaining to this article or any other insurance questions, do not hesitate to reach out. You can contact me at ccraig@ranchomesa.com or call at (619) 438-6900.

OSHA Form Submission Time: A Refresh

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

It's that time of the year again, when employers review their work-related injuries and illnesses from the past year and fill out their OSHA 300A Form. Companies in designated industries must electronically submit the 300A Form to OSHA by March 2nd, 2024. As this deadline swiftly approaches, let’s review further details of these requirements.

In addition to the 300A, companies with 100 or more employees in high-hazard industries must also submit information from their form 300-Log of Work-Related Injuries and Illnesses and Form 301-Injury and Illness Incident Report to OSHA annually.

Furthermore, the 300A Form must also be posted in the workplace, visible to employees, from February 1st to April 30th. The Form 300A does not include personal information such as employee names for confidentiality.

Rancho Mesa clients can utilize the RM365 HRAdvantage™ portal to track their incidents and generate their OSHA 300A Summary along with generate a .csv file that can be used to upload their incident information to OSHA’s Injury Tracking Application (ITA).

Employers can electronically submit their injury and illness information via OSHA’s ITA. OSHA changed their login format as of January 2023, so those who have not logged in last year will need to create a new Login.gov account, using their same email address, to access the application.

The forms 300A, 300-Log of Work-Related Injuries and Illnesses and 301-Injury and Illness Incident Report, as well as instructions on how to fill them out can be found in the OSHA Forms for Recording Work-Related Injuries and Illnesses document.

For additional information and detailed instructions on creating a new account, please visit OSHA’s Injury and Reporting webpage.

Navigating the Construction Labor Shortage: Factors and Strategies for Success

Author, Kevin Howard, Partner, Rancho Mesa Insurance Services, Inc.

Construction companies nationwide are grappling with a shared challenge: a labor shortage propelled by various factors. In this article, we will explore these factors and highlight key areas that can contribute to managing bottom lines effectively.

Factors Contributing to the Labor Shortage

Focus on College over Skills Training. Younger people have been opting for academic paths rather than entering the trades. For years, students have been encouraged to attend college in order to have a successful career. Therefore, fewer recent high school graduates have opted to enter trade apprenticeship programs which has significantly reduced the number of people being trained to enter these vital fields.

Retiring Workforce. The imminent retirement of the baby boomer generation (born from 1946-1964) poses a significant challenge. Skilled workers, including superintendents, project managers, and jobsite managers, form a substantial portion of those exiting the workforce. This creates a demand for skilled workers and necessitates a heightened focus on training apprentices.

Inflationary Costs and Higher Wages. Attracting and retaining skilled workers has become a budgetary challenge. Pandemic-induced wage inflation has led to an increase in payroll, resulting in both higher training costs and salaries. Additionally, prevailing wage rates have reached historic highs, contributing to a slower pace in hiring entry-level trade positions for budgetary reasons.

Strategies for Success

As the construction industry struggles with the ongoing labor shortage, business owners must strategize to protect their bottom lines. While challenges persist, focusing on key areas can help mitigate the impact on productivity and costs. Some central aspects that merit attention and investment include:

Safety Training. With an influx of new, unskilled workers, prioritizing comprehensive safety training becomes paramount. This not only helps prevent injuries but also contributes to a safer and more efficient work environment.

Rancho Mesa’s SafetyOne™ mobile app and website provides proactive safety orientation training for new hires plus ongoing safety training for all employees.

Insurance Cost Management. Implementing robust safety measures can positively influence insurance costs. By minimizing workplace accidents and demonstrating a commitment to safety, construction companies can negotiate more favorable insurance premiums.

Using Rancho Mesa’s SafetyOne™ mobile app to monitor safety on the jobsite through risk observations provides the data to show they are committed to safety.

Claim Reviews and XMOD Management. Engaging in claim reviews in regular intervals with your broker to address lingering workers' compensation claims can serve as an effective strategy for minimizing insurance costs, particularly in terms of mitigating XMOD increases and improving overall loss ratios.

Rancho Mesa’s claim advocacy approach remains a critical tool for Rancho Mesa clients.  Jim Malone, the company’s claim advocate, communicates regularly with adjustors and helps advance claims to closure, thus helping insulate XMODS.

Strategic Workforce Planning. Develop long-term workforce plans that account for the aging workforce and the need for skilled labor. This may involve targeted recruitment efforts, partnerships with vocational schools, and apprenticeship programs.

While the construction industry faces substantial challenges due to the labor shortage, proactive measures in safety, insurance management, and strategic workforce planning can help businesses weather the storm and maintain a healthy bottom line.

For more information on these proactive strategies, reach out to me at (619) 438-6874 or  khoward@ranchomesa.com.

2024 Sees COVID-19 Claims Reporting Changes in California

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

As of January 1, 2024, several COVID-19 claims reporting requirements are changing for employers in the State of California.

Beginning this year, employers are no longer required to report COVID-19 cases to their carrier in order to determine workplace outbreaks.

Additionally, COVID-19 is no longer automatically assumed to be a work-related illness. Previously, if a certain number of employees tested positive for COVID-19 within a specific amount of time, those employees’ workers’ compensation claims were presumed work-related, making them eligible for benefits. Now, if an employee claims a COVID-19 injury, it will be treated as a regular claim instead of a presumed work-related illness.

Also, the time frame for deciding liability in COVID-19 injury claims, previously 30 to 45 days, has now returned to the original 90-day timeframe.

Employers are still required to follow Cal/OSHA’s reporting requirements regarding a COVID-19 case, and clients should be aware of their location’s county health department reporting standards. Although most no longer require reporting, health departments such as Los Angeles County still demand companies report employee COVID-19 cases over a certain number.

For questions regarding these changes, visit  www.dir.ca.gov/dosh/coronavirus.

Cracking the Code: Deciphering the Primary Threshold’s Impact

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

Every business owner understands the correlation between their Experience MOD (XMOD) and what they will pay in workers’ compensation premiums.  When the XMOD increases, there is a good chance that the workers’ compensation rates or premiums will rise as well.  This is why it is so crucial to really hone in on company safety procedures to limit work-related injuries as much as possible.  The reality is that even the safest company that does everything the right way is going to run into a workers’ compensation claim from time to time.

So, when the inevitable workers’ compensation claim happens, what are you supposed to do?  What impact will this have on the XMOD?  The first component that business owners need to understand is that there is a cap to how much any single workers’ compensation claim can impact the XMOD.  That cap is called the primary threshold.  The primary threshold varies from company to company and is based off of the company’s payroll.  The more payroll a company has the higher the primary threshold.

For this example, a company has a primary threshold of $15,000 where the maximum number of points that any one claim can impact the XMOD once reaching the threshold is 10 points.  This means that a claim that costs $15,000 and a claim that cost $150,000 will have the same impact (10 points against the XMOD).  However, this does not mean that claims that exceed the primary threshold can be disregarded, because the higher claim cost you have will impact your current and 5-year loss ratio (incurred claim cost/premium paid).  Additionally, if a claim that was reserved higher than the primary threshold and can be closed or decreased lower than the primary threshold, XMOD points can be shaved off of that claim.

Knowing the importance of the primary threshold, we designed our proprietary the KPI dashboard that allows our clients to see their primary threshold number and corresponding maximum impact to the XMOD any one primary threshold claim would have. 

If you have any questions about your XMOD or would like us to create a KPI for your company, please feel free to reach out to me at (619) 438-6905 or ggarcia@ranchomesa.com.

Anne Wright Explores Philadelphia Surety with Mike Hall

Rancho Mesa’s Surety Relationship Executive Anne Wright sat down with Mike Hall, Vice President of Surety for Philadelphia Insurance Company to explore what makes Philadelphia Surety unique and the programs they offer businesses placed with them.

Transcript

Anne Wright: Welcome. This is Anna Wright, Surety Account Executive here with Rancho Mesa Insurance and we’re going to talk a little bit about how we place business with our surety companies. We have a lot of options. Our clients rely on us to obviously be the professionals they expect handling their business, but also making sure we get the right surety relationship that's going to serve them best with all the terms, conditions and long term relationship.

So I have Mike Hall here with me today. Mike, you want to do a quick introduction?

Mike Hall: Sure. Hi, my name is Mike Hall with Philadelphia Insurance, Vice president and I run the Western region, which includes the northwest, Northern California, Southern California and Hawaii. I’ve been doing surety for 29 years, and Anne and I have known each other for, I would say, probably 27 years of that. So we've been doing business a long time and I'm happy to be here.

AW: Well, thank you for being here. We appreciate it. So when we are looking at placing a piece of business with a surety, you know, we're looking at the type of contractor developer, the type of work they do, the job sizes they need, who they do work for, and then the various underwriting information that they have that's available. So again, we have lots of choices in lots of markets, but we found Philadelphia to be a very strong market for some of our best clients, for many years. I think Philly's been around for 11 years.

MH: Philly Surety has been around for just over 12 and a half years. And then Philadelphia Insurance itself has been around for 60 plus years.

AW: Okay. So they brought in some great talent with Mike and some of his peers to run the surety division. It's been very successful. So we found it a very good market for a lot of our accounts. With regard to Philly, what we find sets you apart from some other sureties, again, the relationships. It's very important that we have the personal relationships with the underwriter. So when you say we've been working together and known each other for 27 years, that matters, obviously. What do you think sets Philly apart from some of your competitors?

MH: I would say one thing that sets us apart is we're A++ 15 ranked by AM Best. That's the highest ranking you can get. There are other sureties, but there's only a handful of them that get that ranking. I think we provide good service and a consistent underwriting approach. So the broker in the account knows exactly what to expect as we're going through the underwriting process.

AW: Yeah, it's an excellent point. Something we have to take into consideration with a lot of public agencies and general contractors, the AM Best rating is an important tool that they use to determine what's acceptable as a surety company. So there's a lot of A- surety companies out there right now, which is still an A, and it's still you know, it's not a big negative. But to be able to say you've got that A++ 15 rating is definitely huge for you all.

MH: It definitely comes into play on the commercial side of the house when they're looking at large appeal bonds or bonds of that nature.

AW: Gotcha. Okay. Yeah, well, you know, some of the smaller to midsize accounts, though, you know you write those, too. So I would typically think that the very large general contractors or developers are going to need that A++ 15 rating. But it's nice to know that Philly is available for some of other accounts that we've been able to place with you along the way. So it's not just meant for mega companies.

MH: Exactly.

AW: And you also have a small contract program. You are one of the early entrants, I think, into the, what we call, the Express program.

MH: Yes, we have on the contract side, we have it's called just Contract Express, and it's for programs of job sizes, $500,000 single up to $1,000,000 aggregate programs. We can go a little bit larger in that area, but that's just kind of typically where they, where they operate. And then on the commercial side, we have Commercial Express, which handles those small statutory bonds.

The agent or even the account itself can go online and purchase a bond there, prints it out, prints out the bond form for you and you ready to go.

AW: Very efficient.

MH: Yeah, it's very efficient. And then standard contract, we go up to programs of $300 million. There's other competitors of ours out there that do substantially more than that but-

AW: It fits your needs.

MH: Yep.

AW: So, very good. We look at claims handling as being an important part of the surety relationship as well. We, obviously we all underwrite to avoid claims. We underwrite to a zero loss ratio, but claims happen. So do you have anything you can share about your claims people and how well they work to resolve issues?

MH: Yeah, our claims department is great and in addition to just the normal claims handler, we have one local here in Southern California, but we also have an engineer on staff. So if you had a situation where there's maybe a big bid spread and our account was confident in their number, we could have the engineer talk with the account, go through the project, walk through it, get a better understanding, and then they'll just provide that additional feedback to the underwriting team.

And then we make the final decision on whether we write the final bond or not. We also have accountants on staff, so if the account is in difficult situation, we can send the accountant in and go through the books and records, get a better assessment of kind of what's going on. You know, that makes sense to finance the account through the project, or is it better to take, you know, some other approach to resolving the claims situation.

AW: Sure. So value added services that exactly through the project.

MH: Exactly, and we also offer up early on in the underwriting process, we have the ability to take collateral. We can also use funds control to maybe get over some hurdles in the underwriting process.

AW: All right. So again, all the tools, that's wonderful. Well, I know there was a recent newsletter that came out from Philly and they talked about selecting the right relationship and they mentioned reputation, size and service. And again, that's what our clients look for in us, and that's what we look for in our sureties, and Philly certainly fits the bill when it comes to reputation and size of the company and service to us as the agents and then our clients to get them on their way and grow the relationship and grow their business. And again, the value that you bring has been a great experience in my career with you. So, thank you for that.

MH: Likewise.

AW: So as a broker, we're going to find any way, any reasonable way, to get the bond done. If we can do it with Philly, we're going to do it with Philly. Mike is one of our go-to’s and we appreciate you being here today in StudioOne™.

MH: Thank you for having me.

AW: You're welcome. If anyone has any questions, you can contact me awright@ranchomesa.com.

Thank you.

MH: Thank you.

The Billion-Dollar Cost of Working at Height: The Critical Questions to Ask Before Climbing a Ladder

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

Every year, OSHA publishes a “top 10 most frequently cited standards” list. Without question, ladders and fall protection consistently make the list. A Liberty Mutual 2023 workplace survey found that $6.26 billion was spent on falls as a result of working at height. Working at height is inherently dangerous but becomes more so when the incorrect ladders are used or improper setup for a job. Sending your employees to a jobsite without conducting a proper analysis to guarantee you have the proper equipment is setting yourself up to have preventable claims.

Before choosing a ladder at for a job, ask yourself:

• Will the ladders on site reach your desired height safely?

• Do the pads need to be replaced on the feet of the ladder?

• Do I have a faulty ladder?

• Should I be using fiberglass or metal?

• Is the ground level or should I have a ladder with adjustable outriggers?

• Do I need a guardrail system on my ladder?

• Am I able to get the proper angel needed for an extension ladder?

• Do my employees have the proper footwear?

All potential claims from ladders are theoretically preventable if we take the time to prepare properly. Your employees can be working at height for long periods of time, sometimes on very hot or cold days and need to be alert both while at height and especially when getting down. A vast majority of claims we see from ladder falls come from slipping or missing the last rung on a ladder. Looking further into these accident investigations, we see that many employees are not getting enough breaks so they can stay mentally and physically alert.

Most contractors are equipped with step stools, step ladders and extension ladders but these might not be all that is needed to get the job done properly. Each of these serve a purpose and are the most common on job sites for a reason which is why most work can be completed using just these three types of ladders. However, just because we are able to reach our desired height does not mean that it is the most efficient way to get there. Having more intricate ladders available for certain projects has become increasingly more valuable.

According to the Bureau of Labor Statistics, fatal injuries from movable ladders has decreased by nearly 17% from 2019 to 2020 while non-fatal ladder injuries remained consistent (this is the newest data available published in April of 2022).  Things appear to be trending in the right direction with more information and safer ladders available. That said, ladder safety needs to be at the forefront of your safety program as those contractors working at height are always one slip away from a claim that can drastically change the live of an employee along with your insurance program.

If you have any questions on how to improve your ladder safety program or any other insurance questions, do not hesitate to reach out. You can contact me at ccraig@ranchomesa.com or call at (619) 438-6900.

Developing A Strong Subcontract Agreement with Tree Care Partners

Author, Drew Garcia, Vice President of the Landscape Group, Rancho Mesa Insurance Services, Inc.

Having strong service partners that support your customers outside of your core operations is an important part of business. Many commercial landscape businesses have regional relationships with professional tree care companies to support the needs of their customers.

Here are some of the key components when setting up your overall subcontract program, specific to the tree care industry.

Written Subcontract Agreement

Work with your attorney to draft a master subcontract agreement or project/job specific subcontract agreement since the type of indemnity agreements can change from state to state.

Among other things this agreement should clearly define indemnity and provide insurance requirements.

Insurance Requirements

Limits
Collaborate with your insurance advisor to specify the types of coverages and policy limits you will require in the subcontract agreement. 

Arborist Errors & Omissions Coverage
The tree care company should carry some type of Arborist E&O endorsement or have a separate policy providing coverage for Arborist E&O.

Depending on the scope of work, if the tree care company is providing written arborist reports or providing professional consulting services, require them to carry professional liability coverage.

Additional Insured
Ask the tree care company to name you as an additional insured for both ongoing and completed operations coverage, including primary/non-contributory and waiver of subrogation on their general liability policy in your favor.

Certificates of Insurance
Collect certificates of insurance and automate the process of requesting an updated certificate as the policy period nears expiration.

Transferring risk where possible is critical for landscape contractors. Using these initial steps as you build out a best practice subcontract agreement can insulate your company from the ever growing exposures that exist as you engage with partner trades.

To discuss your company’s management of risk, contact me, Drew Garcia, at (619) 937-0200 or drewgarcia@ranchomesa.com.

WCIRB Proposes 2024 Construction Dual Wage Threshold Increase

The Workers' Compensation Insurance Rating Bureau (WCIRB) has proposed an increase in hourly wage thresholds for all 16 construction dual-wage classifications.

The increases range from $1 to $4 depending on the classification and if approved will go into effect for policyholders renewing September 1, 2024 and thereafter. The chart below outlines the proposed increases for each classification.

Dual Wage Classifications	Existing Threshold	Proposed Increase	Proposed Threshold
5027/5028 Masonry	$32	$3	$35
5190/5140 Electrical Wiring	$34	$2	$36
5183/5187 Plumbing	$31	$1	$32
5185/5186 Automatic Sprinkler	$32	$1	$33
5201/5205 Concrete Work	$32	$1	$33
5403/5432 Carpentry	$39	$2	$41
5446/5447 Wallboard Installation	$38	$3	$41
5467/5470 Glaziers	$36	$3	$39
5474/5482 Painting Waterproofing	$31	$1	$32
5484/5485 Plastering or Stucco	$36	$2	$38
5538/5542 Sheet Metal Work	$29	$4	$33
5552/5553 Roofing	$29	$2	$31
5632/5633 Steel Framing	$39	$2	$41
6218/6220 Grading/Land Leveling	$38	$2	$40
6307/6308 Sewer Construction	$38	$2	$40
6315/6316 Water/Gas Mains	$38	$2	$40

In light of the ongoing labor shortage within the construction industry, employers have been making a concerted effort to retain their workforce. This includes providing more comprehensive benefits packages, including higher wages, and offering merit-based bonuses when appropriate. As a result, these proposed wage classification increases may prompt employers to consider extending further salary increases to their employees, with the aim of reducing workers' compensation premiums.

Rancho Mesa predicts that this information will become a major factor in payroll decisions based on overhead cost management and recommend this as a topic for discussion early, so that our clients and prospects can prepare.

California Expands Regulations for Employee Criminal History

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Recently, California updated regulations regarding how employers can use criminal history to make employment decisions.

The new standards come as an update to the California Fair Employment and Housing Act (FEHA) and apply to businesses with five or more employees.

The updates have expanded the definition of “applicant” to include any employees who pursue or intend to pursue a new position in the company, as well as those being reviewed due to a change in company management or ownership.

Employers are prohibited from stating in job postings that they will not hire applicants with criminal backgrounds.

“Employers are prohibited from including statements in job advertisements, postings, applications, or other materials that no persons with criminal history will be considered for hire, such as ‘No Felons’ or ‘Must Have Clean Record,’” subsection (a)(2) of the law states.

Furthermore, if an applicant shares their criminal history voluntarily, and is otherwise qualified for the job, the employer cannot take their criminal history into consideration until a conditional job offer has been made to the individual.

The update also adds that if a “a licensing, regulatory, or government agency or board” grants the right to perform the job duty, such as in the form of a certification, the employer should not consider their criminal history a disqualifying factor for the prospective job.

The California Civil Rights Department provides sample notices employers can use to communicate how their criminal history will affect the company’s decision making.

Rancho Mesa aims to provide the resources clients need to make informed employment decisions. For any questions regarding these updates, contact your client technology coordinator.

Mitigating Risks in the Solar Industry with Professional Liability Insurance

Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

Since the outset of the 21st century, the solar installation industry has been bustling with the demand to create clean sustainable energy. Based on growing political and ecofriendly needs, the solar industry is ever changing and trying to keep up with constant fluctuations when it comes to energy storage, federal and state regulations, and supply chain demands. Hand in hand with this growth is the risk created for solar installation contractors who are busy creating drawings, proposals and contracts. It is common for a solar contractor to purchase general liability insurance. It is commonly mistaken as the only needed coverage besides workers’ compensation and commercial auto insurance. However, general liability coverage needs to be triggered by either property damage or bodily injury. But, what about all of the potential lawsuits outside of property damage and bodily injury? This is where professional liability becomes an essential element to any solar installation contractor’s insurance program. To dive deeper, I have provided some claim examples that should resonate with any solar contractor performing residential or commercial installation.

Design Errors

Once a rendering is made that calculates the potential savings a solar system can generate, a contract is typically signed with the proposed energy savings. A solar contractor may face a claim if there is a design error. For example, a shaded area may have been missed that does not generate enough energy or the system might have been incorrectly positioned. A professional liability insurance product would be the best risk transfer vehicle for protection against this type of claim.

Failure to Comply with Building Codes

If a customer’s home cannot pass inspection because the work does not meet building codes, there could be a lawsuit and a claim which could trigger a professional liability policy.

Failure to Obtain Permits

If there are any nominal losses created from the lack of permits or timing of permits, a customer could file a lawsuit seeking damages. Since there is no bodily or property damage, a general liability policy would deny this type of claim. A professional liability policy would offer advice through third-party council to help mitigate losses fast in a time sensitive claim scenario.

Battery Storage

The State of California has high hopes to be petroleum free by 2050. This would mean that home battery systems would become essential for energy storage. Now imagine a family is counting on this system to make sure their vehicles are charged. This creates a lot of demand and if this battery was installed incorrectly, there could be claims having to do with losses sustained by that family. The scenarios are endless when you really think about it.

Maintenance Contracts

For some large-scaled solar installations, the energy created can be critical to business or for emergency lighting. If these systems fail to produce the proposed energy, in could cause a domino effect of a loss and/or costly lawsuits. Imagine a manufacturing plant relying on solar panels and battery storage that cannot create their product due to a faulty system. A professional liability policy could help mitigate the loss by adding in defense and counsel.

As the solar industry adapts and grows, the need for appropriate risk protection grows with it. Building an effective insurance program that includes professional liability is critical for all solar contractors considering the exposures referenced in this article. With a strong niche in this space, Rancho Mesa brings expertise and market knowledge that can help solar contractors transfer the appropriate risk, where necessary.

To discuss your risk management, please contact me at khoward@ranchomesa.com or (619) 438-6874.

California Increases Paid Sick Leave for 2024

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

The state of California will officially change the paid sick leave (PSL) law for businesses in 2024. Effective January 1, 2024, the amount of PSL employees can take will increase from 24 hours to 40 hours per year.

The decision to make these increases was approved by Governor Newsom this month and includes two methods of allotting paid sick leave to employees, the accrual method of gaining leave hours over a period of time, and the lump sum method which allots a sum of PSL hours to employees each year.

Employers who provide leave via an accrual system must allow employees to accrue at least 24 hours of PSL by their 120th day of employment, and the entire 40 hours by their 200th day of employment. The accrual method normally follows a rate of 1 hour PSL per every 30 hours worked, however, employers can choose how time is earned as long as it meets the new standards.

If companies provide PSL in a lump sum, they must grant the sum of 24 hours of PSL to employees by no later than their 120th day of employment and they must allot them the rest of the leave (and additional 16 hours) by the 200th day of employment.

If a company breaks up the leave allotment into these 120 and 200-day incriminates, they must allow carryover of any unused leave. Employers can also provide the entire 40 hours at the start of employment, or calendar year, by which they do not need to allow for carryover.

The yearly use cap is now 40 hours or five days instead of 24 hours or three days, and the total accrual cap is now 80 hours, instead of 48 hours.

It is important for employers to evaluate their current PSL policies and make necessary changes to ensure they stay in compliance come January 1st.

The new paid sick leave requirement is one of many employment law changes happening in 2024. Rancho Mesa’s upcoming 2024 Employment Law Update webinar on Wednesday, November 8th will cover these topics in further detail.