Youth Protection Policy - Are You Protected?

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

California Governor, Gavin Newsome, signed a new state law on October 13th, 2019 to better protect California’s survivors of child abuse. In response, youth organizations and insurance companies expect a surge in legal activity in 2020.

This new law will give survivors of childhood sexual abuse until age 40 to file a civil suit against their attackers. This is a 14-year increase from the previous age limit of 26. Adult survivors previously had three years from discovering the abuse to sue, but the new law now provides a five year window. The new law also suspends the statute of limitations to three years beginning January 1, 2020. No age limit will be enforced during the three-year span.

The State of New York passed a similar law on January 25, 2019 named the “Child Victims Act.” Among other changes, the new law allows survivors of any age to come forward beginning August 1, 2019. More than 400 lawsuits were filed the first day the act took effect.

Insurance companies offering abuse liability insurance in California are prepared for a surge in legal activity in 2020. New lawsuits may cause an increase to insurance premiums and negatively impact the carriers’ capacity to offer higher limits of liability.

Youth organizations that normally rely on insurance companies to cover the cost of defense and settlement in these cases, may find themselves in financial jeopardy if insurance limits become exhausted.

It is imperative that school districts and other youth organizations take a critical look at youth protection policies and safeguards moving forward. This may include added training, mandatory background checks, and eliminating one-on-one interactions.

Please contact Rancho Mesa to learn about resources for creating a strong youth protection policy.

Information sourced from The Legal Examiner and ABC News.

Don't Let Your Communications with Employees Hurt as Much as Their Injuries

Author, Jim Malone, Workers’ Compensation Claims Advocate, Rancho Mesa Insurance Services, Inc.

A work-related injury is a traumatic event for your employee and their family. Even though your employees are trained and educated to immediately report work injuries, it is sometimes difficult for them to do so. Employees can be similar to athletes in that they do not want to do anything that might disrupt the team. There are a lot of emotions that can come into play when a work injury occurs. One of the strongest emotions may be guilt or embarrassment after sustaining an injury. There may also be misperceptions of what others are really thinking after an injury occurs. These feelings and misperceptions are usually the main reasons why communication with an injured worker can decline after an injury.

The injured worker may feel as though they have let down their employer after sustaining an injury. They may feel guilty for missing time from work, disrupting the work shifts and schedules of their co-workers, being physically challenged, putting their careers in jeopardy, being able to provide for their families and for causing the company increased premiums associated with a work related injury claim. They realize the cost of these claims are difficult for their company to absorb and may decrease funds for other employee benefits.

It is quite common for injured workers to not want to speak with their employers after an injury. They usually have misconceptions of what their supervisors and co-workers, are thinking about their injury and lost time for medical treatment. Some injured workers feel as though the employer is upset with them for filing a claim. The employer is obviously upset a claim has been reported, but is more concerned with the well-being of the employee and their recovery from the work injury. 

Workers oftentimes assume the employer won’t believe them, even thinking they are exaggerating or faking their injuries. The employee may believe the employer thinks they are trying to get away with something by getting out of work or placed on modified duties, or trying to get medical treatment for injuries or conditions that are not actually related to a work injury.  

All these beliefs, misconceptions and even paranoia usually leads to a breakdown in communication. So, what do you do if this occurs?

Keep reaching out to the employee. Inquire how they’re feeling, how much they like and trust their doctors and therapists, and communications with the claim adjuster. Continue to reinforce your concern for their injury and recovery. Remind them of how important they are to the company and how much you need/want them back. Reinforce you are not “mad at them” for getting injured, filing the workers’ compensation claim or missing work. Let them know you’re more focused on helping them get through a sometimes complicated workers’ compensation injury and understand the claim process. Promise them you will do everything you can to help them with answers to their questions. Help them express their concerns or problems with the claim adjuster and assist in their recovery and progression through the claim process. Be an advocate for your employee. Help them get the very best in medical treatment possible and assist with the claim.

Lack of communication and not addressing these misperceptions with your injured worker is one of the biggest factors leading to legal representation. They often do not know the workers’ compensation system and don’t know the questions to ask. You can maintain a dialogue with them by providing insight on what to expect next with their claim, provide options or even just listen to their concerns and decisions they may have to make during their recovery. 

Lack of communication can result in the injury not being reported timely by the employee, not reported timely to the insurance company or not responding quickly to a request for treatment, which can lead to litigation. A litigated claim increases the cost of the claim by 100, 200 or 300%! Litigation usually increases the life of the claim by several months and even years. It results in further, if not complete breakdown, of communication with the employee. Litigation can oftentimes results in the loss of your employee, possibly increasing the cost of the claim.

Injured workers retain attorneys for a wide variety of reasons. Interruption of communication with the employer is one reason. Another is they have nowhere else to turn. Occasionally, employees may retain an attorney and does not realize they actually hired them. Reassure them you will maintain your communication with them even though they’re being represented. You are still their employer and you still want to help them through the claim and return to work. Oftentimes they realize retaining an attorney was not the best avenue to take. If that is the case, you can reassure them they can terminate their relationship with the attorney with a single sheet of paper. Their representation can be undone as easy, if not easier, than their retaining of counsel. 

Maintain communications with your injured employee. Prevent or break down the barriers that can interrupt your employee’s normal recovery and return to work after an injury.

New Law Changes Which Injuries Must Be Reported

Author, Daniel Frazee, Executive Vice President, Rancho Mesa Insurance Services, Inc.

A new California law, Assembly Bill 1805 (AB 1805), changes when employers are required to report serious workplace injuries to the California Division of Occupational Safety and Health (Cal/OSHA). The law now broadens the scope of what will be classified as a serious illness, injury or exposure. Many believe this change will increase the number of workplace accidents that will have to be reported in 2020.

The definition of “serious injury or illness” has, for many years, been defined as an injury or illness that requires inpatient hospitalization for more than 24 hours of treatment, or if any employee suffers a “loss of member” or serious disfigurement. The definition has excluded hospitalizations for medical observation. Regulations also excluded from reporting requirements any serious injury caused by a criminal assault and battery or a vehicle accident on a public road or highway.

AB 1805 aligns California’s rules more closely with Federal OSHA regulations for reporting. More specifically:

Rules

The following will need to be reported to Cal/OSHA:

• Any inpatient hospitalization (even less than 24 hours),

• An inpatient hospitalization is required for something “other than medical observation or diagnostic testing,”

• Employers must report any “amputation” (even if the tip of a finger is cut off) to Cal/OSHA. This replaces the terminology “loss of member;”

• The loss of an eye,

• Serious injuries or deaths caused by a criminal assault and battery,

• The exclusion for injuries from auto accidents on a public street or highway remains in effect.  However, accidents that occur in a construction zone must now be reported.

Compliance (related directly to serious injuries and illnesses or fatalities)

In order to say in compliance:

• The report must be made within 8 hours of the employer knowing, or with “diligent inquiry” should have known, about the serious injury/illness.

• The report must be made by PHONE to the nearest Cal/OSHA district office.

For more details on how these changes may impact your company’s IIPP, please contact me at (619) 937-0172.

Employers Embrace Benefits of Telemedicine to Treat Work-Place Injuries

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Telemedicine is becoming prevalent in the workplace as a more efficient way to treat non-emergency type injuries. Employers, employees, and insurance companies alike are seeing the benefits of telemedicine from a convenience and efficiency standpoint. 

Telemedicine is defined as the practice of caring for patients remotely when the provider and patient are not physically present with each other. Modern technology has enabled doctors and nurses to consult patients by using HIPAA compliant audio and video conferencing tools.

Benefits of Telemedicine

• Immediate access to medical professionals is provided to injured employees and their supervisors; 24 hours a day, seven days a week. This often eliminates the need for scheduling and attending an in-person appointment and waiting room delays.

• The injured workers and supervisors avoid lost time from work driving to and from appointments.

• Employees who work remotely can quickly gain access to medical assistance.

• Minor injuries such as strains and sprains can respond favorably to appropriate on-site first aid. Often times, these types of injuries are referred to off-site clinics for care that is more expensive and more time consuming, but no more effective.

• Sound clinical decisions can be made about when first aid is appropriate and when referrals are necessary.

• When off-site referrals are necessary, doctors and nurses can direct the injured worker to pre-selected clinics within the insurance companies Medical Provider Network (MPN).

• Many telemedicine providers work directly with the employer’s insurance company to provide the first report of injury and create the claim in their system. This eliminates the need for policyholders to report the claim. This also ensures that claims are reported immediately and without delay.

• Telemedicine calls are typically recorded for future reference. The recordings are a useful tool in documenting the symptoms and injuries that are initially reported. 

How Telemedicine Works

When a workplace injury occurs and the employee requests medical treatment, a call will be placed to the predetermined telemedicine company. The triage nurse that answers will typically speak with the supervisor first, then privately with the injured employee. During the call, the nurse will provide an initial assessment of the injured worker, determine the seriousness, and evaluate the type of medical care that is appropriate. If further medical care is deemed necessary, the nurse will refer the injured employee to a certified occupational physician who can conduct a virtual appointment online via a computer, tablet, or smartphone. If the telemedicine company is not able to conduct a virtual appointment, the injured employee will be directed to a clinic within the MPN.

Once the assessment is complete, the nurse will provide a treatment plan. If the injured employee can safety return to work, the nurse will provide first aid/self-care instructions. Self-care instructions are typically accessed online or faxed. The nurse typically completes the call by speaking once again with the supervisor to ensure they are aware of the treatment plan.

Telemedicine is recognized by many as an efficient way of treating non-emergency injuries in the workplace. In fact, many insurance companies have recently partnered with telemedicine companies to help prevent a minor injury from becoming more complicated, and help the injured employee focus on returning to wellness.

If you would like to have a discussion about telemedicine and how it could be implemented into your workers’ compensation program, please feel free to reach out to me, Jeremy Hoolihan, at (619) 937-0174.

California Non-Profits Brace for Higher Insurance Premiums and Dramatic Changes to Coverage

Author, Chase Hixson, Account Executive, Human Services Group, Rancho Mesa Insurance Services, Inc.

For years, the insurance marketplace for non-profits, specifically general liability, abuse, property and management liability have been somewhat stable (subject to loss history, of course). Unfortunately, that is looking to change as the marketplace braces for significant correction.

The key drivers of change:

• 2018 Wildfire Season
  An estimated $12 Billion in losses has forced carriers to offset those losses with higher premiums, regardless of the amount of property exposure. Reinsurance markets (insurance for insurance companies when a loss becomes catastrophic) suffered significant losses, as well, and have had to increase their rates on the insurance companies they insure.

• Increase in Harassment/Discrimination Claims
  Though the exact reason is unknown, many point to the #MeToo movement as the reason for more than double the harassment and discrimination claims that have occurred the last three years. We have already seen significant increases not only to premiums, but also deductibles.

• Incoming Influx of Abuse Claims
  With changes to California law, insurers expect an uptick in claims beginning January 2020 when the statute of limitations will be lifted for reporting child abuse. We expect to see significant increases in premium as well as coverage being reduced or even eliminated in some scenarios.

What can you do to help your organization? Get out ahead of it early and be prepared to sell your organization to the marketplace. The insurance carriers will need to have a clear picture of what your organization is doing to be different when compared to the organizations that are causing the losses. It may seem like a lot of information to present to a carrier, but failure to do so will lead to increased costs for your organization.

Contact Rancho Mesa Insurance at (619) 937-0164 if you would like to discuss how these changes may affect your organization.

What is an LLC Employee/Worker Bond?

Author, Andy Roberts, Account Executive, Surety Division, Rancho Mesa Insurance Services, Inc.

In California, when a contractor opts to organize their business as a Limited Liability Company (LLC) they are required to maintain an LLC Employee/Worker Bond in the amount of $100,000 in order to obtain their Contractors License, per the California Business and Professions Code, Section 7071.6.5. After our clients receive notice of this requirement, we are often asked why this bond is required and what does it protect against.

LLCs are a very popular type of business structure, as they provide the owners, or members, a high level of protection from a liability standpoint because only the LLC, not the owners personally, will be held liable for the debts and liabilities incurred by the business. While this type of protection is good for the owners, California wants to ensure that the LLC’s employees/workers are protected from certain types of monetary damage they may suffer at the hands of the LLC, and they accomplish this by requiring the LLC to have this bond executed by an admitted surety company. 

By issuing the bond, the surety company is providing the Contractors State License Board (CSLB) a guarantee that the workers employed by the LLC will receive payment of their wages, up to a limit of $100,000. Additionally, the bond covers interest on wages, fringe benefits, welfare fund contributions, and apprentice program contributions. Should an LLC fail to provide any of the guarantees listed above, a claim may be filed against the bond, which the surety company will pay in order to settle the claim. Once the claim has been settled, the surety will look to the LLC to reimburse them for any money paid out.

Please note, due to the high risk associated with these bonds, they aren’t written as easily or freely as the $15,000 Contractors License Bond, which a lot of sureties provide instant quotes on just based on the owners credit score. In order to qualify for an LLC Employee/Worker bond, sureties will require a completed commercial bond application, Indemnity Agreement executed by all owners and their spouses, company financials, and personal financial statements for all owners.

Should you have any questions regarding LLC Employee/Worker bonds or need one quoted or placed for your business, please give me a call at (619) 937-0166.  

Contractors Brace for Impact of 2020 Expected Loss Rates

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

California contractors focused on their experience modification are paying close attention to the soon to be published 2020 Expected Loss Rates (ELRs).

ELRs determine the expected claim cost per $100 in pay roll for each class code during an Experience Modification (Ex-Mod) period. These rates are updated annually. The 2020 rates were recently approved on September 5, 2019. Changes in each specific class code’s ELR can positively or negatively impact a contractor’s Ex-Mod calculation.

In a nutshell, if an expected loss rate drops from one year to another with no material changes to payroll or claims, Ex-Mod’s will increase. Additionally, if an expected loss rate increases, Ex-Mod’s will decrease using the same example.

Below is a breakdown of the 2020 ELRs per class code with notable double digit increases highlighted:

Class Code	2020 ELR	Increase/Decrease %
3724 Solar/ Millwright	1.74	-4%
5187 Plumbing > $28	1.18	-8%
5183 Plumbing < $28	2.6	-5%
5542 Sheet Metal > $27	1.40	-4%
5538 Sheet Metal < $27	2.30	-12%
6258 Foundation Prep	2.65	-3%
0042 Landscape Gardening	2.59	-15%
0106 Tree Pruning	3.91	-21%
5140 Electrical Wiring > $23	.81	-6%
5190 Electrical Wiring < $23	1.89	+2%
5470 Glaziers > $33	1.63	+7%
5467 Glaziers < $33	4.30	-2%
5028 Masonry > $28	2.17	-9%
5027 Masonry < $28	4.73	-18%
5482 Painting/ Waterproofing > $28	1.42	-15%
5474 Painting/ Waterproofing < $28	3.68	-7%
5186 Automatic Sprinkler Install > $29	1.11	+5%
5185 Automatic Sprinkler Install < $29	2.45	-18%
5205 Concrete/Cement work > $28	1.95	-5%
5201 Concrete/Cement work < $28	3.95	-4%
5432 Carpentry > $35	2.01	-7%
5403 Carpentry < $35	5.27	-9%
5447 Wallboard Application > $36	1.34	-12%
5446 Wallboard Application < $36	2.76	-21%
5485 Plastering or Stucco >$32	2.66	-6%
5484 Plastering or Stucco < $32	4.78	-27%
5443 Lathing	2.37	-18%
5553 Roofing > $27	3.90	-14%
5552 Roofing < $27	9.85	-4%
6220 Excavation/Grading > $34	1.24	-24%
6218 Excavation/Grading < $34	2.34	-5%

The data above shows that a majority of class codes will be seeing a decrease in ELRs which will cause higher Ex-Mods in many cases. That reality creates a heightened need for loss control, claim management and post claim strategies. If you are seeking a partner with the tools to address these needs, please reach out to Rancho Mesa Insurance and our team of professionals at (619) 438-6874.

Autonomous Mowing – Are you Covered?

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

Autonomous lawn mowing is becoming more common in commercial and residential landscape management. As the market begins to adapt and utilize this technology it creates a very unfamiliar and unique exposure for you and your general liability carrier.

Commercial General Liability Policies should be written specific to your type of operations, including the coverages needed to protect your landscape company in the event of claim. The insurance marketplace has a general understanding of the common exposures that face a landscape contractor; from installation, to maintenance, and chemical application. Policies are written on the basis of annual sales or field payroll. When automated mowing is offered as a service from the contractor, the insurer would need to charge a premium to pick up the exposure. If the policy is written on a payroll basis then a direct premium will not be charged for the automated mowing operations, as there is no payroll associated with the mowers performance. The policy could also be written on a sales basis with clarification of estimated sales between autonomous mowing vs. the remainder of your operations to the insurance underwriter, so the appropriate rate can be charged. In either case, it is very important that the underwriting carrier has a clear understanding of your operations in order to determine the final pricing.

Whenever you have a change in your operations, such as the use of autonomous mowing, it is critical that you notify your insurer so they can properly assess the exposure and acknowledge that coverage would extend in the event of a claim.

Here are a few questions we use to help negotiate with the insurance marketplace when autonomous mowing is a part of the operations:

• How quickly will the blades disengage if the unit was picked up while moving?

• If the mower was to bump into someone/something will it divert the other way?

• What is the set back of the blades from the perimeter of the mower?

• How does it maintain its boundaries?

• Will it be left on site?

• What time of day will it run?

• How is it powered?

• Who has control of the mower while it is on?

• How can the mower be turned off?

Do not let the carrier find out about your autonomous mowing operations at audit, or worse at the time of a claim.

Finally, consider coverage for the machine itself if it were to be stolen, damaged, or totaled. Adding the mower to your Commercial Inland Marine policy will provide coverage for the equipment. The valuation of this coverage would be detailed in the policy. Be sure to communicate where the mowers will be stored while not in use and the security functions installed on the device to protect against theft.

For more information or questions you might have about this topic or landscape insurance in general please contact the Drew Garcia at (619) 937-0200.

Ensure You’re Not Under Covered and Overpaying for Auto Insurance

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

Auto insurance prices are continuously rising. What is the reason for this and what can be done to cut back on the cost? There are many factors that lead to the carriers needing to increase their rates. We are going to discuss exactly what some of the reasons for the increases are; and more importantly, what business owners can do to offset price increase as much as possible while receiving adequate coverage.

Distracted drivers are causing more claims every year. Repairing a vehicle has become more costly as newer models have technology features such as sensors and back-up cameras. People using their cell phones while driving can cause them to have a diminished reaction time, which is leading to more severe high impact accidents. This is pushing medical costs up at a rapid rate, leading to an increase of claims dollars. Implementing a “No Phones While in a Vehicle” policy could reduce claims drastically and keep your employees safe.

There are many ways that carriers can get out of covering a loss, and employees driving their vehicles to and from job sites can really come back to haunt you if they do not have adequate coverage limits. Make sure that you have Hired and Non-Owned Coverage! Hired and Non-Owned is the coverage needed for the carrier to cover losses on vehicles that are not on the company’s policy, such as rented or employee owned vehicles. Employers need to make sure that employees have adequate personal auto insurance limits. The California minimum coverage limits of $15,000/$30,000/$5,000 can get exhausted very quickly in a serious accident, and lawyers are getting very good at finding grey areas to drag the employer in. You should consider reimbursing your employees to offset the increase in premium for them. Some carriers will apply subjective credits to your company auto premium if they know your employees need to have higher limits to drive for you.

One of the biggest gaps that brokers see when they audit policies for prospects is they are using the wrong symbols, thinking they are covered for a claim, and end up not having correct coverage. Most reputable carriers will offer Symbol 1 for your liability insurance and it is imperative that you use Symbol 1 vs. Symbol 7. Symbol 7 only covers vehicles described in the declaration and leaves limited coverage for vehicles acquired after your policy begins.

Rancho Mesa Insurance Services is a National Best Practices Agency 13 years in a row. We strive to make sure that our clients are without gaps in their coverage. Call (619) 934-0164 to ask about Rancho Mesa’s proprietary programs that help maintain clients’ safety and get them the lowest premiums possible. Register here for the free Fleet Safety webinar to learn how to increase vehicle safety, control vehicle accidents, safeguard long-term profitability, and ensure that your fleet safety & accident prevention programs are up-to-date.

California Wildfires Distress Insurance Market

2018 saw the most destructive wildfire season ever recorded in California. Over 1.8 million acres were burned; 22,751 buildings were destroyed and over 100 lives perished. As a result, insurance claims have exceeded $12 billion and are expected to rise.

Many in the industry expect we are on the verge of a crisis and from what I’ve seen so far, I’d have to agree. The marketplace is in frenzy as carriers aren’t sure what their overall financial hit will be. Furthermore, catastrophic losses like this affect the reinsurance marketplace, which causes pressure downstream to insurers.

Below is a look at what we are seeing in the marketplace.

Non-Renewals

Most carriers are non-renewing their entire books of business who are at risk of wildfires. Even if the client has been with the carrier many years with no losses, they are simply non-renewing properties on accounts in certain areas prone to wildfire. This is essentially leaving the marketplace with very few players.

Significant Premium Increases

Those carriers still willing to write property accounts are hiking up premiums significantly. We’ve heard of increases 5-10 times the previous year’s premiums. We recently spoke to an insured in the Riverside area whose insurance premium went from $85,000 to $500,000 a year. 

Increased Deductibles for Wildfires

On top of the significant premium increases, most carriers are offering increased deductibles for wildfires. It’s not uncommon to now see $150,000, $250,000 and $500,000 deductibles depending on the value of the building(s).

What Can Business Owners Do?

Business owners need to act early and quickly. Speak with a broker to plan ahead because it looks like there will be a significant financial burden and risk (per increased deductible) moving forward. The marketplace is inundated with excessive submissions, so the need to submit as early as possible is imperative. There are alternative insurance programs that can act as a temporary solution while helping alleviate cost burdens. Some declinations can be avoided by proper abatement of brush and trees or installation of fire suppression systems. Regardless of when the insurance policy renews, I suggest getting started on this as soon as possible. The marketplace could take several years to stabilize. 

For help understanding how wildfires can affect your organization’s insurance premium, contact Rancho Mesa Insurance Services at (619) 937-0164.

Maximize Your Bond Line of Credit by Collecting Account Receivables

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

We often hear the term “cash is king” in the construction business. When referring to our contractor clients’ bond line of credit, this term is paramount. The various sources of cash listed on a balance sheet (i.e., cash in the bank, accounts receivable, available bank lines of credit) will largely influence the bond company’s calculation of the bond credit line. Let’s focus on accounts receivable.

When we provide the bond company a financial statement from a client, they will often request we include a Schedule of the Accounts Receivable and Accounts Payable statement. Generally, the schedule breaks out the receivables by 30, 60, and 90 day increments. Regarding the open receivable balances scheduled as “over 90 days past the invoice date,” the bond company will subtract this amount from the equity and working capital analysis because they feel that a greater risk exists in the collection of these receivables.

The over 90-day receivables become very important since the collection of these receivables can mean the difference between a bond company approving or declining a specific bid request (for a project which our contractor may already be heavily invested). The bond underwriter wants to ensure that the contractor has sufficient cash coming in the door to pay the labor, suppliers, and subcontractors on current projects – and may not want to take on additional risk if they are concerned about receivable collections needed to pay for these costs.

Being awarded a contract, whether bid or negotiated, is extremely important to a contractor’s success. But right behind the importance of winning and executing the contract, is the contractor’s ability to collect the money to ensure they are getting paid for the work they do. Make sure you have a good receivables team in place so that paperwork is issued correctly/timely, and consistently follow up on late payments to collect your money.

If you would like a better understanding of how the accounts receivable collection process affects your bond line of credit, feel free to contact me at (619) 937-0165 or mgaynor@ranchomesa.com to discuss ways to ensure your bond program is efficient as possible.

Workers’ Compensation Fraud Is Not a Victimless Crime

Author, Jim Malone, Workers’ Compensation Claims Advocate, Rancho Mesa Insurance Services, Inc.

Fraud can happen in every industry, including workers’ compensation. According to standard definitions, “in law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law, a criminal law, or it may cause no loss of money, property or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements.”

Within workers’ compensation claims, fraud is a term that can be overused by employers who may not agree with a claim, or a condition that has been considered work-related/work-aggravated. Many times, instead of fraud, there is simply a difference of opinion as to whether a specific work incident caused an injury. For these disputes, it usually comes down to a medical opinion addressing whether something is work-related or work-aggravated.   

Examples of Workers’ Compensation Fraud

A claim can become fraudulent when the employee lies about how the injury occurred or about their ability to work. The treating physician may be asked to provide their opinion as to whether the injured worker mislead them about how their injury occurred, and the significance of their complaints or physical capabilities. The doctor is provided records or sub rosa videotape contradicting information previously provided by the injured worker. Fraud can also occur when the injured worker lies under oath during a deposition, thus becoming a felony. 

Workers’ compensation fraud is not limited to employees, but others within the system can also knowingly participate in the fraud. Physicians can be fraudulent in their billing for services not rendered, for accepting kick-backs, or realizing financial benefit for referrals to and from other physicians, vendors or other entities. Employers can commit insurance fraud by understating their number of employees, under-reporting payroll or misclassifying employees into cheaper job/class codes in order to secure cheaper insurance policy rates and premiums. Vendors can commit fraud by billing insurance carriers for products or services never provided. Attorneys can use illegal capping schemes to retain injured workers for clients. 

Combating Workers’ Compensation Fraud

Each insurance company is now required to have a Special Investigative Unit (SIU) that provides ongoing monitoring and investigation of questionable activities related to claims. Fraud continues to cost tax-payers millions of dollars (some estimates are up to $80,000,000) per year. The money and resources the employers and insurance carriers are spending to combat fraud are also increasing each year. 

In the event of a fraud conviction, fines or assessments, prison sentences, or restitution can be ordered. Workers’ compensation fraud is not a victimless crime; from the losses caused by fraudulent activities, to the money used to combat and prosecute fraud. The money lost to workers’ compensation fraud can never be replaced, but we are all responsible to do our part in remaining vigilant and reporting suspected fraud to the appropriate person or agency. 

Senate Bill 778 Extends Employee Anti-Harassment Training Deadline

Author, Alyssa Burley, Media Communications and Client Services Manager, Rancho Mesa Insurance Services, Inc.

Newly passed Senate Bill 778 (SB 778) extends the deadline set in Senate Bill 1343 for California’s mandatory Anti-Harassment Training from January 1, 2020 to January 1, 2021. The bill also addresses concerns about supervisory employees and clarifies when temporary workers must be trained. California Governor Newsom signed the bill into law on August 30, 2019, which included an urgency clause that allows the bill to go into effect immediately.

What SB 778 Means to CA Employers

The changes made by SB 778 not only extends the deadline for non-supervisory employee Anti-Harassment training, but also allows supervisory employees to stay on their existing two-year training schedule. For example, if a supervisory employee completed Anti-Harassment training in 2018, their next training, with the SB 1343 compliant content, will be due in 2020 - two years from their last training date, which is before the new deadline. Likewise, if a supervisory employee was trained in 2019, their next training due date will be in 2021.

Non-supervisory employees will need to complete their initial 1-hour Anti-Harassment training by January 1, 2021. For those who have already taken the training in 2019, we recommend they maintain their two-year schedule, and complete the training again in 2021.

Both supervisory and non-supervisory employees must be trained within six months of hire. However, temporary or seasonal workers who are hired for less than six months must be trained within 30 days of hire.

For questions about this training requirement or to learn how to enroll your supervisors and employees, register for the “How to Enroll Supervisors and Employees in the Online Anti-Harassment Training” webinar or contact Rancho Mesa’s Client Services Department at (619) 438-6869.

California Workers’ Compensation Dual Wage Thresholds Increases Approved for Construction Classes in 2020 – Bottom Line Hit Hard

Originally published May 23, 2019.
Updated September 19, 2019.

Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

In an effort to keep you informed, so you can begin budgeting for 2020, we want to let you know of the approved changes in the dual wage classifications effective January 1, 2020.

The increases range from $1.00 to $3.00 per hour, to keep the thresholds in line with inflation. However these changes will have an immediate effect on your bottom line. 

In the classes of business that are facing a $3 increase, this equates to a low of 9.3% to a high of 10.3%. See the chart below for the actual approved changes. Not only does this have an impact on wages, payroll taxes, and your bottom line, it may also have an impact on your workers compensation premiums. If you find yourself in a situation where the wage increase is not practical, this will push those employees into the under classification which will have a substantially higher workers compensation rate. In either case, proactive planning will be required so you’re not caught unprepared.

Following are the individual classes and approved changes:

Dual Wage Thresholds

Classification	Current Threshold	2020 Threshold	Threshold Difference	Last Changed
5027/5028 Masonry	$27	$28	$1	2013
5190/5140 Electrical	$32	$32	$0	2018
5183/5187 Plumbing/Heating/Refrigeration	$26	$28	$2	2014
5185-5186 Fire Sprinkler	$27	$29	$2	2009
5201-5205 Concrete or Cement Work	$25	$28	$3	2018
5403/5432 Carpentry	$32	$35	$3	2018
5446/5447 Wallboard Application	$34	$36	$2	2018
5467/5470 Glaizers	$32	$33	$1	2019
5474/5482 Painting/Waterproofing	$26	$28	$2	2018
5484/5485 Plastering or Stucco Work	$29	$32	$3	2018
5538/5542 Sheet Metal Work	$27	$27	$0	2014
5552/5553 Roofing	$25	$27	$2	2018
5632/5633 Steel Framing	$32	$35	$3	2018
6218/6220 Excavation/Grading	$31	$34	$3	2018
6307/6308 Sewer Construction	$31	$34	$3	2018
6315/6316 Water/Gas Mains	$31	$34	$3	2018

_{Table Source: WCIRB.com.}

In an effort to help control workers compensation costs, we have developed several proprietary programs including the RM365 Advantage Safety Star Program™ and RM365 StatTrac™ that can help control these increases. Please reach out to me at sclayton@ranchomesa.com to ask any questions about the above or to learn more about our proprietary programs.

3 Benefits to Working with an Insurance Specialist vs. Generalist

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Most insurance agencies welcome any and all types of businesses, paying little attention to the type of business the prospect is running. These accommodating professionals will commit to quote virtually any person or business looking for insurance coverage. With this type of approach, inevitably the buyer will be working with a jack of all trades, but a master of none. Working at Rancho Mesa Insurance for nearly 16 years, I’ve learned the importance of focusing on a niche or vertical market, rather than attempting to write insurance for anything with a pulse. The two vertical markets I focus on are the janitorial and construction industries. Below are three reasons why I believe a business owner should consider working with a specialist rather than a generalist.

Avoid Gaps in Coverage:  

Having a trusted advisor that is a specialist in your industry can truly minimize potential gaps in coverage that otherwise might get overlooked by someone dabbling in your industry. Some examples include:

• Allowing an exclusion of coverage to a policy where the insured has exposure: Unfortunately I see this all too often when I audit a prospects policy. I once reviewed a residential general contractor’s (GC) insurance policy and found a subsidence exclusion. This posed a serious concern because the GC builds foundations. If they were ever served with a claim relating to a foundation sinking or failing, there would likely be no coverage. I’ve also seen residential GC’s who build new homes with a residential exclusion. It’s these types of errors that can put a business in tremendous jeopardy.    

• Missing key coverage’s to plug gaps in coverage: Most contractors are required to carry workers’ compensation and general liability insurances. However there are many exposures that a contractor has in their operations that would be excluded without additional coverage’s in place. One example is pollution liability. If a plumber installs a faucet that leaks over time, undetected, and causes mold or fungus to develop, you will likely run into a pollution liability claim for bodily injury and/or property damage. Most general liability policies have a pollution exclusion. Without the knowledge of placing a separate pollution liability policy in place, the plumbing contractor would be faced with a gap in coverage.

Knowledge of Specialty Coverage’s and Markets:    

Brokers who understand the operations and challenges faced by a particular vertical market have an opportunity to position themselves as risk management and coverage expert in that field. Specialization can also lead to specialty markets seeking brokers out to work with. Specialty markets seek brokers with expertise in their specific niche because they know the marketplace, and proper coverages can provide a steady flow of business. These relationships often lead to a much more comprehensive policy at an aggressive price. In addition, these programs include coverages that you would normally purchase individually that come standard to the program.

In the janitorial industry, one example is 3rd party crime coverage. Many of your standard market package policies will include 1st party crime coverage for employee theft. While this coverage is very important against an employee stealing from an employer, it does not cover theft of a client’s property from an employee. In order to cover this exposure, a policy needs to have 3rd party crime coverage.

Industry Specific Resources:

Partnering with a broker and agency, like Rancho Mesa Insurance, will also provide industry specific resources that generalist agencies will not. Below are a few examples of what you should expect when working with a specialist like Rancho Mesa.

• Industry Specific Workshops – such as OSHA 10 Certification, Mobility & Stretch, Heat Illness Prevention, Fleet Safety, Fighting Fraud in CA Workers’ Compensation, etc.

• Industry Specific Training Materials – extensive training library of over 3,000 titles in both online and in-person formats, available in English and Spanish

• A dedicated Workers’ Compensation Claims Advocate to aggressively work on a client’s existing claims.

• HR Benefits – rely on a team of HR experts who can quickly answer complex human resource and compliance questions over the phone or via email. 

• Comprehensive Living Employee Handbook – create and maintain your customizable employee handbook plus receive suggested updates when laws change.

• Client Services Advocacy – In house dedicated client services coordinator to assist with implementation of risk management services.

Rancho Mesa Insurance is dedicated to becoming a trusted advisor to their clients by providing a 365 day approach to Risk Management. Our laser focus on specific industries has allowed us to build comprehensive programs that our clients are able to benefit from. If anything in this article resonates with you, please feel free to reach out to Rancho Mesa Insurance at (619) 937-0164.

Providing Anti-Harassment Training Is the Employer’s Responsibility

Editor’s Note: This article was originally published on August 22, 2019 and has been updated for accuracy on September 12, 2019.

Author, Alyssa Burely, Media Communications and Client Services Manager, Rancho Mesa Insurance Services, Inc.

Many industries like construction utilize a semi-transient workforce that can shift from company to company as labor needs change throughout the project’s life cycle. Employees may work a few months for one employer, then move on to another employer when the project is completed. This scenario poses a dilemma for California employers looking to comply with Senate Bill 1343 (SB 1343). Providing training to an ever-changing workforce can be a challenge.

“The current employer must provide the Anti-Harassment training to new employees within six months of hire, regardless if the employee was trained and has a certificate of completion provided by a previous employer or labor union.”

SB 1343 requires California employers with five or more employees to provide Anti-Harassment training to all supervisors and employees. The passing of Senate Bill 778, on August 30, 2019, extends the deadline for this training to January 1, 2021. The training must be completed every two years. For example, if an employee was trained in 2019, their next training due date will be in 2021. New employees must be trained within six months of hire. This means the current employer must provide the Anti-Harassment training to new employees within six months of hire, regardless if the employee was trained and has a certificate of completion provided by a previous employer or labor union. Every time a worker begins employment at a new company, they should expect to receive Anti-Harassment training within the first six months. However, temporary or seasonal workers who are hired for less than six months must be trained within 30 days of hire. This requirement ensures the current employer is able to maintain accurate training records.

Recordkeeping for Anti-Harassment training is important when there is an allegation of harassment or if an employee reports the employer for non-compliance. The Department of Fair Employment and Housing (DFEH) “accepts complaints from employees that their employers have not complied with the law…If DFEH finds that the law has been violated, it will work with employers to obtain compliance with the law,” according to the DFEH’s “Sexual Harassment and Abusive Conduct Prevention Training Information for Employers” document.

Rancho Mesa offers free online Anti-Harassment training for supervisors and employees to all of its clients. The training can be accessed from a computer, tablet or smartphone. The online platform provide automated recordkeeping and rescheduling to ensure as soon as an employee completes the training, they are automatically scheduled to complete it in two years. It also allows administrators to archive employee training records when an employee leaves the company and reactivate the records when/if they are rehired. To learn more about the trainings, visit our website or contact the client services department at (619) 438-6869.

SB 1343 requires employers take responsibility for providing Anti-Harassment training to all of their employees and supervisors. Take advantage of Rancho Mesa’s Anti-Harassment training and ensure your company stays compliant.

OSHA Offers Grant Programs to Nonprofits

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Nonprofit leaders who want to make workplace safety training more accessible may be surprised to learn about a unique grant program through the Occupational Safety and Health Administration (OSHA).

Since 1978, OSHA has offered grants to nonprofit organizations for safety training. Specifically, grants are awarded on a competitive basis to provide employees with training on the recognition and prevention of safety/health hazards in the workplace. The intent of the program is to reach audiences who might not otherwise receive safety training. OSHA renamed the program the Susan Harwood Training Grant Program, in 1997.

Grant applications in the past have typically fallen into three categories:

1. Capacity Building: OSHA awards these grants to help an organization grow or build its capacity to provide safety and health training to target audiences; small business employees, hard-to-reach or low-literacy workers, and workers in vulnerable and high-hazard industries.

2. Targeted Topic: These grants focus on occupational safety and health hazards associated with one of the OSHA selected training topics.

3. Training Materials Development: Grantees develop training materials on one of the OSHA selected training topics.

Although state or local government agencies are not eligible to apply, nonprofit organizations, including qualifying community and faith-based organizations, employer associations, and labor unions may submit applications.

The Harwood solicitation for grant applications can be found on the government-wide Grants.gov website.     

Surety Bonds: What Are They, What Do They Do, and Why Am I Required to Get Them?

Author, Andy Roberts, Account Executive, Surety Division, Rancho Mesa Insurance Services, Inc.

When we have clients that are required to bond for the first time, often their first questions are what is a surety bond, how do they work, and why am I being required to provide one.  

In its basic form, a surety bond is a three party agreement between the contractor, called the principal, the project owner, called the obligee, and the surety company. The surety company provides a financial guarantee to the obligee that the principal is both qualified and capable of performing the contracted job.

It is important to note, that while surety is an insurance product, it doesn’t function in the same way that traditional insurance does. Unlike insurance, which protects who obtains it, surety bonds are put in place for the benefit, or protection, of the obligee. As mentioned previously, the bond provides financial assurance to the obligee that the contractor is qualified and capable of completing the job per the terms stipulated in the contract. If the contractor were to default, the surety would be responsible for stepping in and making sure the project gets finished.

When and Why Are Surety Bonds Required?   

Surety bonds are required on most public works projects that are led by federal, state, or local government agencies due to the Miller Act, which was passed in 1935. The Miller Act is designed to protect tax payer dollars, by requiring performance and payment bonds on all federal projects in excess of $150,000 and payment bonds for federal contracts between $35,000 and $150,000. Most states have similar legislation, known as “Little Miller Acts,” although the bond threshold varies from state to state.  In addition to these jobs that require bonding, an increasing number of private owners and construction lenders are requiring surety bonds as well, in order to provide protection on their private jobs.

This article serves as a basic overview of performance and payment bonds, what they do, and why they are required on certain jobs. For additional information about these topics or additional information about the process of getting bonding for a job, please contact us at (619) 937-0166.

Additionally, we will be hosting a webinar, “Surety 101: Bond Basics” on August 27, 2019. I will dive deeper into the different types of contract and commercial bonds that are often required of contractors, and also the process of what is needed in order to get a surety bond program established with a surety. 

Home Care Dishonesty Bonds and Client Property Theft Coverage Are Not Created Equal

A common misconception in the home care industry is assuming a Home Care Dishonesty Bond is the same as having coverage for theft of client property. Many business owners don’t realize that Home Care Dishonesty Bonds, following the payment of a claim, will seek reimbursement from the business owner. That means the business owner is ultimately going to pay the claim if they don’t have an insurance policy to cover this type of act.

A bond is different from traditional insurance in that a bond is in place to protect the consumer (i.e. the client) in the event that a business becomes insolvent or refuses to pay a claim. In the case of home care dishonesty bonds, the bonding company acts as a safeguard for the client. In the event of a proven loss, the bonding company steps in to pay the client, and then seeks reimbursement from the business.

There are insurance companies that provide Theft of Client Property Coverage (sometimes called Third Party Coverage) under the general liability insurance form. This acts on behalf of the business owner.  Should someone accuse their employee of stealing, this insurance would pay the claim and not seek any reimbursement from the business owner.

It is worth looking into your current general liability policy to see whether or not your company is truly covered for theft of client’s property rather than be surprised when you receive an invoice from the bonding company.

If you have any questions about this topic, please contact Rancho Mesa Insurance Services at (619) 937-0164.

CAL/OSHA Emergency Rule Adopted for Wildfire Smoke

Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.
Author, Steve Hamilton, Loss Control Supervisor, Berkshire Hathaway Homestate Companies.

On Thursday, July 17 2019, the California Occupational Safety & Health Standards Board voted to adopt an emergency standard requiring employers to take action when air quality particulate matter measures greater than 150 and when there is reasonable expectation that employees will come in to contact with wildfire smoke. 

While this may seem new to many employers, it is technically an extension of regulations currently in place including the respiratory protection standards for employees and the need to address identified hazards in the workplace. As an employer it is critical that you follow the hierarchy of controls to ensure your employees’ safety in the field. If possible, eliminate the hazard by shutting down the workforce for the day. Employees should remain indoors until particulate levels fall to acceptable. If this is not possible, try to limit the workday by rotating employees who must work outdoors, remaining cognizant of the hazards in the air and allowing employee’s time to recover in appropriate indoor areas. If neither of these options are possible, consider providing N95 respiratory protection masks. 

Please remember that any type of respiratory protection provided to employees must also be accompanied by applicable training, pulmonary exams, communication on proper usage/storage and others. Links to the applicable programs can be found at this address along with sites to help you monitor air quality: https://www.dir.ca.gov/dosh/Worker-Health-and-Safety-in-Wildfire-Regions.html

This site has additional training resources in English and Spanish, handouts on proper usage of N95 masks and the history of the standard as it has been submitted. Cal/OSHA wants you to have the resources you need to effectively address the risk potential.

At this point, the regulation is on its way to the Office of Administrative Law for approval and if deemed compliant, it will go into effect 10 days after it is received. This would mean the regulation could go into effect before August.

An advisory committee will meet August 27, 2019 to begin work on a permanent version of the regulation.

If you have any questions about ways to enhance regulatory compliance, please reach out to your local resources including your insurance agent, workers’ compensation insurance safety professionals, and Cal/OSHA Consultation.