The Perils of Using Unlicensed Subcontractors
All employers in the state of California that use employee labor must purchase and maintain Workers’ Compensation insurance. This requirement extends to contracting with and hiring subcontractors.
Here are some steps you can take to better manage your insurance and safety program when it comes to working with subcontractors:
Selecting A Subcontractor
Before a subcontractor begins work, confirm they are licensed and insured. You should only contract with licensed and insured subcontractors. Not having valid Workers Compensation insurance coverage renders a subcontractors license VOID. (Business and Profession Code 7152.2)
- Verify the subcontractors license: Contact the Contractors State License Board (CSLB). Visit http://www.cslb.ca.gov or call (800) 321-CSLB (2752).
- Verify the subcontractor is insured: Request a copy of their Certificate of Insurance that demonstrates Workers’ Compensation (WC) and General Liability (GL) insurance us current and active.
- Read the Certificate of Insurance and confirm the following:
- Named Insured: Verify the certificate shows the subcontractors company as the named insured.
- Types of Insurance Coverage: At a minimum they should have WC and GL coverage with limits of liability that adhere to the state minimum.
- Dates of Coverage: Make sure the policy is active, that the policy has not lapsed, and the dates extend through the end of the project or contract
- Confirm Coverage: Call the subcontractor’s agent or the insurance company to confirm information
- Request Updated Certificates of Insurance: If you work with the same subcontractors from year to year, mark your calendar to request updated certificates annually
- What if a subcontractor is unlicensed and not insured?
- “I’m a sole owner and exempt from insurance.” If this owner is working for you, most of the time they become a statutory employee and they would be covered under your Workers’ Compensation insurance policy
- Also, CA Labor Code 2750.5 presumes that an unlicensed person who performs work requiring a license is an employee and not an independent contractor. Verify licensing and insurance coverage!
What an Uninsured Subcontractor Can Cost You
- Legal Costs: The CSLB may initiate disciplinary action which may require you to hire legal counsel
- Increase in Insurance Premiums: As the uninsured subcontractor may be considered an employee, payments made to the uninsured subcontractor will be identified when your WC policy is audited resulting in additional premium.
- Claims Experience and Increased Costs: Your WC Insurance will be responsible for any injury to the subcontractor and their employees. Any claims paid under your policy will negatively affect your claims experience and all claims paid will apply to your experience modification factor three years, which can increase your insurance costs.
- Increase in Employment Taxes: You may be liable to the Employment Development Department for any unpaid contributions and tax withholding’s for the uninsured subcontractors employees
- Loss of Coverage: Under the California Insurance Code Sections 311 and 359, when an insured has misrepresented or concealed facts that are material to the application for insurance, the underwriter may rescind coverage or cancel the policy. Review your WC policy application, did you say yes or no to the use of subcontractors or sublet of work without certificates of insurance?
If you need loss control information to improve your loss prevention efforts, contact me anytime to discuss.
-JK
3 Key Elements of A Safety Culture
According to OSHA, “Safety cultures consist of shared beliefs, practices, and attitudes that exist at an establishment. Culture is the atmosphere created by those beliefs, attitudes, etc., which shape our behavior.”
Safety culture is the overall organizational attitude, belief, and values associated with safety in the workplace.
See the three key elements of a safety culture from Employers Compensation Insurance Company:
Many small and medium-sized businesses fail to invest in safety, when they’re the ones that can benefit the most from it. They have the most to lose in the face of a costly workplace accident. Creating a climate of safety doesn’t have to break the bank and it doesn’t require a large investment of time or a committed safety officer. Contact me today if you need help for your business.
Research is showing that, for every dollar a business invests in preventative measures, they’re seeing a four dollar return on that investment.
-JK
Los Angeles Has Highest Workers’ Comp Claim Costs in California
File this under the No Surprise folder but a new study by the Workers’ Compensation Insurance Rating Bureau show that Los Angeles has the highest workers’ comp claim costs in California.
Among other key findings, “The Los Angeles/Long Beach Area is the most litigious region in California. Medical legal costs are over 2.8 percent of total incurred costs on indemnity claims in the Los Angeles/Long Beach area compared with 2.0 percent statewide.”
“Indemnity claim frequencies in the Los Angeles/Long Beach area were 24.0 percent higher” than the rest of the state of California.
Read more here from the Insurance Journal:
As frustrating as this is, none of it surprises me. Not a week goes by where I don’t see a workers’ comp claim come across my desk for “cumulative trauma” or “repetitive motion” from an attorney after termination of an employee. And as I always say, nobody hurts more from this than the honest business owner trying to get by everyday running an honest business. They’re the ones paying the costs of these claims.
Here’s a map showing the regional differences of indemnity claims as a share of the total claims counts in California:
-JK
California Insurance Commissioner Awards $34.9M to Fight Workers’ Comp Fraud
Working in the Property & Casualty Insurance industry, I am happy to see the fight against Workers’ Comp Fraud. There are way too many people taking advantage of the Workers Compensation Insurance system in California, particularly Southern California. Honest business owners are stuck paying the high costs which is very much driven by those taking advantage of the system. I see it weekly with the claims coming across my desk. From the individual “claimants” to the attorneys and physicians, I hope you get caught.
-JK
Can I Be Fined for not Carrying Workers Compensation Insurance?
Answer: Yes, you can be fined for not carrying workers’ compensation insurance and more. If the Division of Labor Standards Enforcement (state labor commissioner) determines an employer is operating without workers’ compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, or by a fine of up to $10,000, or both. The Division of Labor Standards Enforcement will also assess a penalty the greater of (1) twice the amount the employer would have paid in workers’ compensation premiums during the period the employer was uninsured, determined according to subdivision (c), or (2) the sum of one thousand five hundred dollars ($1,500) per employee employed during the period the employer was uninsured. [Labor Code section 3722(b)].
Additionally, if an injured worker files a workers’ compensation claim that goes before the Workers’ Compensation Appeals Board and a judge finds the employer had not secured insurance as required by law, when the dispute is resolved the uninsured employer may be assessed a penalty of $10,000 per employee on the payroll at the time of injury if the worker’s case was found to be compensable, or $2,000 per employee on the payroll at the time of injury if the worker’s case was non-compensable, up to a maximum of $100,000. [Labor Code Section 3722(d) and (f).]
Finally, as noted in answer to a previous question, failure to secure workers’ compensation insurance is a misdemeanor punishable by imprisonment in the county jail for up to one year, or by a fine of up to ten thousand dollars ($10,000) or by both that imprisonment and fine. (Labor Code Section 3700.5)
If you need help with quotes for workers’ compensation insurance for your business, contact me today. We can market this with numerous carriers to find the best coverage and price.
-JK
OSHA On-site Consultation Program
The Occupational Safety and Health Administration (OSHA) wants to assist small- and medium-sized businesses with their compliance and safety initiatives through their On-Site Consultation Service. This program offers confidential advice in all states across the country, with priority given to high-hazard work-sites. Consultation services are totally separate from enforcement and do not result in penalties or citations.
Using a free consultation service largely funded by OSHA, employers can find out about potential hazards at their work-sites, improve their occupational safety and health management systems and even qualify for a one-year exemption from routine OSHA inspections. The service is delivered by state governments using well-trained professional staff. Most consultations take place on-site, though limited services away from the work-site are also available. This safety and health consultation program is completely separate from the OSHA inspection effort presently in place. No citations are issued or penalties proposed during the consultation appointment.
Your name, your firm’s name and any information that you provide about your workplace, plus any unsafe or unhealthful working conditions that the consultant uncovers, will not be reported routinely to the OSHA inspection staff. Your only obligation will be to commit the organization to correcting serious job safety and health hazards; a commitment which you are expected to make prior to the actual visit, and carry out in a timely manner.
Getting Started
Since consultation is a voluntary activity, your organization must contact OSHA to request it. The consultant will discuss your specific needs with you and set up a visit date based on the priority assigned to your request, your work schedule and the time needed for the consultant to adequately prepare to serve you. OSHA encourages a complete review of your firm’s safety and health situation; however, you may limit the visit to one or more specific problems.
For more information on the OSHA On-Site Consultation Program, visit HERE
Benefits of On-Site Consultation
Knowledge of your workplace hazards and ways to eliminate them can only improve your own operations and the management of your firm. Your organization will get professional advice and assistance on the correction of workplace hazards and benefit from on-site training and assistance provided by the consultant to you and your employees. The consultant can help you establish or strengthen an employee safety and health program, making safety and health activities routine considerations rather than crisis-oriented responses. This program provides incentives and support to smaller, high-hazard employers to develop, implement and continuously improve effective safety and health programs at their worksite(s). The program recognizes employers who have demonstrated exemplary achievements in workplace safety and health by receiving a comprehensive safety and health consultation visit, correcting all workplace safety and health hazards, adopting and implementing effective safety and health management systems and agreeing to request further consultative visits if major changes in working conditions or processes occur that may introduce new hazards.
-JK
Developing and Injury Illness Prevention Program
California Senate Bill 198 requires all employers to establish, implement and maintain a written effective Injury and Illness Prevention Program. This program must include the following elements:
- Identify a person or persons with authority and responsibility for implementing the program.
- A system for ensuring that employees comply with safe and healthy work practices, including recognition of employees who follow safe and healthful practices, training and retraining, and disciplinary actions for unsafe actions.
- A system for communicating with employees on matters relating to occupational safety and health. It should include provisions for meetings, training programs, posting written communications, anonymous notification about hazards without reprisal, and labor/management safety and health committees.
- Procedures for identifying and evaluating workplace hazards, including scheduled periodic inspections to identify unsafe conditions and work practices and a system to correct them.
- Procedures for conducting accident investigations.
- Maintenance of records of safety inspections and safety and health training for each employee. These records must be kept for a minimum of one year.
An Injury and Illness Prevention Program development guideline is available from Cal OSHA which provides more detailed information on the elements of the IIPP which are required (See Links ):
California Code of Regulations, Title 8, Section 3203. Injury and Illness Prevention Program.
Cal-OSHA Guide to Developing your Injury and Illness Prevention Program
Cal-OSHA Injury and Illness Prevention Program Online eTool
If this feels way too overwhelming for you, let me know. Give me a call or send me an email and I can work with you on developing an Injury and Illness Prevention Program for your business.
-JK
Insurance For Medical Office Towers In Torrance
Just wrapped up the insurance renewals for these two medical office towers in Torrance. 140,000 Square feet
- Property Insurance
- General Liability Insurance
- Umbrella / Excess Liability Insurance
- Earthquake Insurance
- Workers’ Compensation Insurance
-JK
8 Key Components of a Business Safety Program
A safe work environment does not happen by accident. A company’s management team must be fully engaged in creating, planning, implementing, communicating and making sure safety programs work and are designed to fit the business. Most importantly, employees have to understand their role in making their workplace safer.
Your company’s safety program should incorporate the following 8 key components:
- Demonstrate management involvement – Management must lead by example. A visible demonstration that you embrace a safety culture is imperative to its success. Provide the essential time, budget and resources to create and support a safety program.
- Communicate your safety plan clearly – Your safety plan must be published and available to all employees. Reminders and updates should be timely and effective. Allow employees to contribute their suggestions to making the workplace safer.
- Get everyone involved – A safety program is likely to be more effective when employees at all levels are involved. Standardized policies should outline responsibilities and accountability for all employees. Safety goals can become part of job descriptions and employee reviews. Safety committees can help ensure that safety practices are understood and reinforced throughout the company. Positive reinforcement of safe behaviors can be an effective way to help build the desired culture.
- Train your employees to work safely – Safety training should begin from the moment an employee is hired. Ongoing training is also essential to creating a safety culture.
- Review, revise, improve – A safety program should be dynamic, especially since most business environments continue to evolve. An effective safety program should be flexible enough to adjust to changes. Regularly review, evaluate and identify risks that could affect safety, and make the changes necessary to keep your workplace safe.
- Create safety standards – Each department should set safety standards through a Job Safety Analysis (JSA) to make sure every task is done correctly and safely. Recognize good safety performance, and cite and correct unsafe practices.
- Investigate every incident and accident thoroughly – Properly trained staff with experience in investigation, analysis and evidence collection should conduct an accident analysis as soon as possible after an incident. Report the claim within 24 hours to help ensure prompt response and injury management.
- Manage every injury – Even with the best safety program, an employee injury can still occur. Planning helps you to react immediately when an employee is injured on the job. Learn about five strategies that can help you put employees on the road back to productivity.
Initiating a comprehensive program can seem daunting, but I can help businesses like yours take the necessary steps to begin creating a safety culture. Insurance is only one piece of the puzzle. Effective risk management and loss prevention efforts go a long way to keeping insurance premiums down and other costs of doing business.
-JK
Source: Travelers Insurance
Slips, Trips & Falls, By The Numbers
Slips, trips and falls are one of the leading causes of unintentional injuries, according to the National Safety Council. Common areas for falls to occur are in doorways, ramps, cluttered hallways, unstable work surfaces, ladders and stairs. But how does this impact insurance? From National Underwriter P&C’s January issue, take a stats-eye view of these slippery expenditures:
Source: PropertyCasualty360
-JK
About Me
I grew up in Fullerton, CA and graduated from Servite High School in Anaheim. I have my Bachelors degree from Loyola Marymount University in Los Angeles. I currently live in Tustin, CA.
Please contact me if you need help with any of the following lines of insurance for your business:
-Businessowners
-Property
-Commercial General Liability
-Product Liability
-Workers Compensation
-Group Medical
-Commercial Auto
-Umbrella/Excess Liability
-Errors & Omissions/ Professional Liability
-Employment Practices Liability
-Directors & Officers
-Life & Disability Insurance
Jimmy Kinmartin, CPCU 