Tag Archive | California

Workers’ Compensation Fraud Billboard in San Diego

During a quick day trip down to San Diego last weekend, I caught this billboard from the San Diego County District Attorney which kind of took me by surprise. Picturing a handcuffed jail inmate it reads “Commit Workers’ Comp Fraud, Get A New Outfit.” In addition, “don’t do it, don’t tolerate it, report it” with a phone number to call right there. As a commercial insurance professional who sees’s businesses affected by this often, it was kind of refreshing to see actually. Here’s the sign:

Work Comp Fraud

Taken straight from the California Department of Insurance:

In California, workers’ compensation insurance is a no-fault system. Injured employees need not prove an injury was someone else’s fault in order to receive workers’ compensation benefits for an on-the-job injury. In addition to medical expenses being covered for injured employees, some injured workers are entitled to recover a portion of lost wages resulting from an injury. Fraudulent workers’ compensation claims can be an enticing target for criminals.

Workers’ compensation insurance fraud occurs in simple and complex schemes that often require difficult and lengthy investigations. Employees may exaggerate or even fabricate injuries. At the other end of the spectrum, white-collar criminals, including doctors and lawyers, entice, pay, and conspire with others to defraud the system by creating false or exaggerated claims, overtreating, and over prescribing harmful and addictive drugs. Insurance companies “pick up the tab,” passing the cost onto policyholders, taxpayers, and the general public.

The Workers’ Compensation Fraud Program was established in 1991. The legislature made workers’ compensation fraud a felony, required insurers to report suspected fraud, and established a mechanism for funding enforcement and prosecution activities. The legislation established the Fraud Assessment Commission to determine the level of assessments to fund investigation and prosecution of workers’ compensation insurance fraud.

Funding for the program comes from California employers who are legally required to be insured or self-insured. The total aggregate assessment for the fiscal year 2015-16 was $58,862,000.

During the fiscal year 2015-16, the Fraud Division identified and reported 5,380 suspected fraud cases; (SFCs) assigned 502 new cases, made 249 arrests and referred 167 cases to prosecuting authorities. Potential loss amounted to $193,354,616.

Workers’ Compensation Fraud Convictions

-JK

California has become the latest state to outlaw the ‘previous salary’ question.

California joins Delaware, Massachusetts, Oregon, and several cities (including San Francisco) in passing laws preventing employers from asking prospective workers for their salary history. If asked, companies must also provide a pay range for the job in question. The new law, which comes into effect January 1, aims to curb the gender pay gap by keeping low salaries from following women through their careers.

-JK

California Commercial Auto Insurance – Losses & Costs Rising

Right now there are industry-wide challenges with increasing loss costs in commercial and personal auto insurance, particularly in California. If you have a commercial auto insurance policy for your business, you’re probably seeing your premiums increase. If not, you can expect to. I’ve been seeing it with pretty much all major insurance carriers on the market. We’ve been having to shop coverage for clients like crazy due to the steep premium increases.

Commercial Auto Insurance.gif

California Commercial Auto – What’s Driving Losses?

More trafficTotal miles driven increased 50 percent faster in California than in the rest of the country since the start of 2015. More vehicles = higher frequency of accidents.

Distracted driversOne-quarter of crashes involve drivers talking on phones or texting.

Escalating medical costsMedical care costs are climbing more than 1.5 times faster than other costs.

More fatalities and other severe accidentsAccident rates per person and per mile
of driving are rising in California.

Inexperienced or undesirable driversA shortage of skilled commercial drivers with good driving records = greater odds for accidents.

Rising auto repair costsRecord U.S. auto sales mean garages are often servicing newer cars with more expensive parts. Even minor repairs can cost big bucks.

What you can do to help ease your commercial auto insurance loss costs?

  • Implement a fleet safety program and follow proper fleet maintenance procedures.
  • Enforce company policy for use of company vehicles (e.g., limitation on personal use, who can use company vehicles, hours of operation, etc.).
  • Regularly check employees’ driving records and take appropriate action driving records are not acceptable.
  • Use telematic devices to monitor employee driving habits and usage of company vehicles.
  • Be aware of the risks involved with employees using their personal vehicles on the job.
  • Provide Driver Safety Training for their employees. Important topics include, but are not limited to: Distracted Driving; Speeding; DUI; Need for Rest; What to do if your vehicle breaks down, etc.

Need help with these things? Contact me today. Buying a commercial auto policy is one thing, but implementing these risk management procedures along with the policy can help your business tremendously with costs.

-JK

10 EEOC Tips for Small Businesses

I will preface this by saying that I am not a Human Resources professional nor an attorney. Don’t take this as the end all/ be all when it comes to your employee relations. Although I am not and attorney or certified HR professional, I do help businesses with their risk management and insurance needs and Employment Practices Liability Insurance is one of those areas. Here in Southern California, Employment Practices Liability insurance claims happen a LOT more than general liability, professional liability (E&O) or any other areas of liability for that matter. I don’t have the statistical data, but working day-in and day-out with clients, I do see Employment Practices Liability claims a whole hell of a lot more than most other lines of insurance. And remember, Employment Practices Liability claims are NOT covered by a General Liability insurance policy or Workers’ Compensation.

With that being said, here are 10 EEOC (Equal Employment Opportunity Commission) Tips for Small Businesses taken directly from the EEOC. The Equal Employment Opportunity Commission is an independent federal agency created by Congress in 1964 to eradicate discrimination in employment. The Commission enforces various statutes that prohibit employment discrimination on the basis of race, color, sex, national origin, religion, retaliation, age, and disability or protected veteran status.

The EEOC has the authority to investigate charges of discrimination filed against employers who have a statutory minimum number of employees. HR can help avoid costly penalties by following the tips published by the EEOC.

  1. Look at the facts, not the faces. Race, color, religion, sex (including pregnancy, sexual orientation or gender identity), national origin, disability, age (40 or older) or genetic information (including family medical history) should not be a factor when you hire, fire, promote, pay, train, discipline or make other work-related decisions.
  2. Provide reasonable accommodations to applicants or employees who need them for medical or religious reasons, if required by law*.
  3. Develop a strong anti-discrimination policy before discrimination becomes a problem.
  4. Ensure that employees understand their rights and responsibilities at work.
  5. Be alert to potential harassment or discrimination. Stop, address and prevent harassment and discrimination.
  6. Ensure that employees are not punished for reporting discrimination, participating in a discrimination investigation or lawsuit, or opposing discrimination.
  7. Post an EEO poster at your business.
  8. Keep employment records as required by law.
  9. File an EEO-1 Report if you have 100 or more employees. Some federal contractors with at least 50 employees must also file this report.
  10. Contact the EEOC to request assistance, information or training.
* Federal, state and local laws may prohibit additional types of discrimination and/or require you to provide reasonable accommodations for other reasons. Federal, state and local government websites may have additional information about these laws.

-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:

wcirb-claims-map

-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)].

frustrated

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

Workers Compensation – Employee or an Independent Contractor?

One of the biggest dilemma’s concerning workers compensation insurance coverage is whether a given individual is an employee or an independent contractor. It applies to pretty much any industry. Recently, I had a discussion with a janitorial services business which uses a specialist to do floor waxing when needed. The owner told me this individual is an independent contractor. I explained to the owner that individual might be considered an employee in the eyes of an insurance carrier.

The reality is there is no definitive test to determine Employee or an Independent Contractor! It’s not a black and white issue. In many cases, it is the court of law who decides.  California Workers Compensation laws are construed liberally; in other words, in favor of the claimant. There is a presumption of employment unless the employer can prove otherwise.

There are certain basic questions which might help determine the status, however. The following circumstances can help determine the relationship between and employee versus an independent contractor:

Employee Independent Contractor
Has the right to control the manner and means of accomplishing the result desired Responsible only for the result of the work performed
Has a specific title and/or position Engaged in a distinct occupation or business
Works under the direction of a boss Is a specialist, does actual work without supervision
Uses company tools and/or equipment Supplies their own
Working hours are set by the company Has no set hours, may come and go at will
Is paid salary or by the hour Paid on a per-job basis
The person assumes they are an employee The person believes they are an independent contractor and usually has a certificate of insurance

These are just a handful of circumstances. If you have additional insight to share, please comment below!

-JK

What If I Have Employees and No Workers Compensation Insurance?

So you’re an employer looking for ways to save money and trim your business expenses. There are plenty of areas you can probably pinch and save but let me tell you, workers compensation insurance shouldn’t be one of them and let me explain why.

The very core of workers compensation insurance is that it provides medical care for employees who are injured in the course of employment. Beyond medical care,  Workers Comp insurance provides temporary and/or permanent disability benefits, supplemental job displacement benefits or vocational rehabilitation and death benefits. Workers Comp is a trade-off between employers and employees. Employees receive prompt effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries.

[Did I bore you yet?]

Putting the definition of workers compensation insurance aside, one might ask:

“Does an employer have to purchase workers’ compensation insurance?”

Yes. California law requires all employers to have coverage for their California employees, even if they have only one employee. (This applies in all states, not just CA. I am using CA as an example since I reside here).

What happens if an employer is unlawfully uninsured and an employee is injured?

According to the WCIRB, it is a criminal offense for an employer to be unlawfully uninsured regardless of whether or not an employee is injured. California Labor Code specifies that it is a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year, or both. In addition, the state issues penalties of up to $100,000 against illegally uninsured employers. If an employee is injured, an employer also opens himself/herself up to liability lawsuits from injured employees.

Would you be willing to take that gamble? The way I look at it, an annual insurance premium is nothing in comparison to the possible fines and penalties one might face should they decide to take that gamble. Please, find other ways to save on your business expenses, workers compensation insurance isn’t the place to do it.

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