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Stay up to date with the latest news and updates regarding insurance law and requirements.

What NOT to Ask Employees or Applicants

written by Rebecca Gomez

The California Fair Employment and Housing Act (FEHA) prohibits employers from untitledmaking non-job related inquiries of employees or job applicants, either verbally or through use of an application form.

Employers are generally prohibited from making the following types inquiries:

  • mental or physical disability or medical condition
  • If the applicant has ever filed a workers’ compensation claim
  • Arrest (s) that didn’t lead to a conviction
  • Criminal conviction history [Unless a conditional offer has been made]
  • Minor marijuana offenses that are more than two years old
  • Salary history [including compensation and benefits]

While conducting background checks or running applicant credit checks is not prohibited, employers should use caution and ensure that they are not being used for discriminatory purposes and that are related to a business requirement.

In order to mitigate employment related claims, discuss hiring practices with your HR administrator and employment attorney. In California, Employment Liability Insurance (EPLI) policies exclude wage and hours claims; however, some carriers do provide a defense sublimit coverage.

Let us know if you have any questions regarding EPLI or would like us to provide a quote. We are here to help.

Do NOT Make This Safety Program Mistake!

training-3185170__340written by Rebecca Gomez

Having an effective safety program is crucial for creating a safe work environment and keeping workers’ compensation premiums low. Some employers have used a reward system (reward employees when there are no work-related accidents) as motivation to create a safe work environment. This can be a costly mistake. A reward system actually does the opposite. The reward system discourages employees from reporting injuries, which exposes your organization to liability and increases the cost and chances of repeated injuries.

There are other simpler and better methods to motivate your employees to create a safe work environment. The most effective way is to keep the topic of safety at the front and center and continually discuss safety to instill this culture in your work environment.

Here are some tips you many use to remind your employees to be mindful of safety:

  • Monthly or quarterly newsletters: Have each newsletter contain an article on a specific safety or wellness topic, and include a reminder of important company safety policies and emergency contacts.
  • Promote Employee’s involvement: It is important to make employees feel comfortable bringing concerns to their managers and it is important for the employees to feel confident that their concern will be addressed and taken seriously. Provide employees with a form on which they can document and report safety concerns.
  • Safety trainings: offer monthly trainings discussing safety or wellness. Be creative and get employees engaged. Promote employee involvement by asking various employees to assist in facilitating the trainings. Attendance to safety trainings should be mandatory

These are just a few ways to create a safe work environment without incentivizing employees to hide their injuries. A safer workplace can be established by continually discussing safety at every step, reviewing safety manual, and promote employee involvement.

Baker Romero provides our clients with free safety videos, articles, and brochures tailored to their industry and loss control/claims review.

Let us know if you have any questions regarding risk management or would like us to provide a quote for workers’ compensation. We are here to help.

Cyber Risk Management: Train your Employees!!

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Studies have shown that most breaches affecting organizations are not committed by nefarious unknown forces, but from their current or former employees. Experts in the cyber intelligence community found that 60 percent of all breaches affecting organizations have been carried out by individuals within their organization, who intentionally or unintentionally, take sensitive information when they depart. From the 60 percent of breaches committed from within the organization, 44.5 percent were done maliciously by employees and 15.5 percent were done inadvertently— accidentally opening malware, sending sensitive information to incorrect e-mail addresses, or losing a company laptop. It is imperative that your organization be proactive to prevent breaches.

Employees have more access to information than in previous decades. The internet has transformed the internet boundaries allowing employees to bring company data outside of the organization. It is important that any one individual employed at your organizations, whether small or large, should not have full-unrestricted access to all sensitive company information.

Breaches can be prevented by creating, implementing, and educating employees on policies and procedures. Most employees may not be aware they are violating company policy if they are downloading information to take home. That is why it is important to train your employees on proper usage and protection of their workplace computer system and digital information. You should also set up procedures that block employees from being able to copy sensitive information.

Being proactive in protecting your organization is key. A cyber policy can further help protect your organization against the costly expenses associated with a data breach. Let us know if you have any questions regarding Cyber risk management or Cyber Liability Insurance. We are here to help.

Risk Management: Non-Owned Auto

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It is common for nonprofit organizations to have their employees or volunteers drive their personal autos for business-related purposes. This however provides the organization with additional liability exposures. In the event your employee or volunteer is in a car accident while using their personal auto on your behalf, your organization can be held liable. Although California law requires employees to carry personal auto insurance, the injured party can pursue a claim against your organization.

Below are some risk management tips if your employees or volunteers use their personal vehicles on your organization’s behalf:

  • Written driver policy signed by the individual driver
  • Obtain a copy of employee’s current driver’s license.
  • Require proof of personal auto coverage and get updated copies at policy renewal.
  • Run annual motor vehicle record check or use the California DMV pull program
  • Purchase a non-owned auto policy for your organization.

If your employees or volunteers drive their personal vehicles on your organization’s behalf, you should consider purchasing a non-owned auto policy. Non-owned auto coverage can be added to your business package policy, business auto policy, or purchased as a standalone policy. Non-owned auto coverage applies when the damages exceeds the limits of the employees’ personal auto insurance or where their personal auto carrier denies the claim. A non-owned auto policy will provide liability coverage for your organization.

Let us know if you have any questions regarding non-owned auto liability or would us to provide a quote. We are here to help.

This is intended for informational purposes only and not to be construed as legal advice.

Be Prepared for the Unexpected!!

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In creating an effective crisis management plan, your organization should explore various potential crises your organization can face, such as fire, weather-related perils, workplace violence, and cyber-attacks. After assessing the risks, create a crisis management plan to address those risks identified. This process should be assessed regularly to strengthen any weaknesses in the current plan or identify new risks.

Crisis Management Plans should include the following:

  • Procedures for the immediate response to a crisis, business operations plan, and a contingency plan for every potential crisis identified.
  • Updated inventory of your organization’s personal property and equipment to ease the insurance claims process
  • Identify Employees’ Roles
  • Identify Individuals who are designated to take charge during an emergency

Your crisis management plan should be able to answer, “What do we do [potential situation]?” Your crisis management plan should be reviewed by your attorney and regularly updated. The most effective strategy is to be prepared.

Many insurance carriers can provide additional information to assist with your crisis management plan. Let us know if you have any questions, we are here to help.

THIS IS INTENDED TO BE USED FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS LEGAL ADVICE

Are You Ready for the New Year?

Be Prepared or it Can Cost You! 

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As the New Year begins, it is important for every organization to review their risk management procedures by addressing any weaknesses to prevent potential accidents that lead to costly claims. One risk management tool to assist in mitigating the costs of claims arising out of your organization’s operations is to have adequate insurance coverage in place. Without proper insurance coverage, one lawsuit or a catastrophic loss can close down your operations.

While there are numerous insurance coverages available in the marketplace, the following are basic coverages that every organization should consider:

  • Commercial Property Insurance covers your building, personal property, and equipment in the event of a fire, theft, storm, and other perils outlined in the policy. Consider adding Business Interruption and Equipment breakdown coverages to the property policy. Make sure that you insure your buildings and personal property/equipment to reflect the replacement cost value [cost to restore or replace damaged property without deduction for depreciation]. The failure of adequately insuring your property (at least 80%) can result in a co- insurance penalty. Co-Insurance penalty reduces the amount of recovery that you may expect to recover if you under report the value of your Consider purchasing flood and earthquake insurance, since most property policies exclude damage or losses resulting from earthquake and flood.
  • General Liability Insurance provides coverage for liability claims from a third party (such as a client, vendor, visitor, etc.) for Bodily Injury and Property damage due to negligence. Most General Liability policies include liability coverage for Products/Completed Operations and Personal Injury (i.e. slander or libel).
  • Volunteer-Accident Insurance covers individuals who donates their work to your organization without pay. Coverage is triggered when those individuals are injured while performing duties related to the conduct of your business.
  • Workers’ Compensation covers the medical treatments, disability, and death benefits of employees who are injured or killed during the course of employment. In California, employers must carry worker’s compensation if they hire employees. It is imperative that every organization ensures their work environment is safe as claims history is one of the factors that determines
    Directors & Officers Liability and Employment Practice Liability Coverage: Coverage for Directors and Officers liability can be stand alone or coupled with other coverages such as Employment Practice Liability. It is important to read the policies terms, conditions, and exclusions of your policy and review the coverage with your attorney. It is also important to check if your policy’s defense limits is inside or outside the liability
    1. Directors & Officers Liability- the Board of Directors is ultimately responsible for the nonprofit organization. It is therefore important that they are informed of their legal liability, risk management program, and the organization’s insurance coverages. Directors and officers liability protects the individuals who serve on an organization’s board of directors against claims brought by employees, vendors, or other parties for alleged “wrongful acts” in the management of the organization. There is no standard coverage policy form. Therefore, it is important to read the terms, conditions, and exclusions of the policy. For example, the definition of “insured” differs among insurance
    2. Employment Practices Liability – Employment Practice Liability protects the organization against claims made by employees alleging discrimination, wrongful termination, harassment, and employment related issues. Most carriers do not insure Wage and Hour claims in California but some may offer a defense sublimit for wage and hour
  • Umbrella policy’s purpose is to protect your organization against a catastrophic liability loss. The Umbrella policy is a form of liability coverage protecting the policyholder for claims in excess of the limits of the primary General Liability, Automobile, or Workers’ Compensation. Umbrella policies may also include a few other liability coverages, such as: Professional Liability, Employee Benefits Liability and Abuse & Molestation.
  • Crime (Fidelity Bond) Insurance provides a source for recovery of funds embezzled by employees or volunteers. If your CPA or Bookkeeper is an independent contractor, make sure they provide you with proof of their insurance (General Liability, Professional Liability, Bond, and Workers compensation policies). If they do not carry their own insurance, discuss this exposure with your attorney, as most crime policies will not insure the acts of independent
  • Professional Liability Insurance coverage that indemnifies the insured for third-party liability claims due to negligence in the performance of professional services. Professionals include Doctors, Lawyers, Therapists, Social Workers, Engineers, etc. The Professional Liability coverage can be purchased as a separate policy or included under a General Liability policy form. However, most standalone professional liability policies are written on a claim made policy form. Therefore, be aware of the retroactive date listed on the policy.
  • Abuse and Molestation Coverage can be critical for social service organizations, especially those who work with children and vulnerable adults. There are no “standard” coverage form and before purchasing coverage make sure to read the terms, conditions, and exclusions carefully. Make sure to screen and supervise prospective employees and volunteers and review with your attorney to make sure your organization carries the adequate limits to protect your
  • Cyber Insurance is a special form of commercial insurance created to protect businesses against cyber (internet) risks, such as hackers and other breaches of computer system security. Also, check other insurance policies (such as General Liability and Directors & Officers) to determine if those policies carry cyber coverage, before purchasing a cyber policy. Claims resulting from cyber losses are on the rise and it is imperative to ensure that your organization has the proper controls in place to protect your data from a Most cyber policies are written on a claims-made basis, it is important to be aware of the retroactive date listed on the policy.
  • Automobile Liability covers organizations who use vehicles as part of their Company vehicles should be insured under a comprehensive commercial liability with limits high enough to protect the organization. If employees use personal vehicles for business, organizations should add hired and non-owned auto liability coverage to protect the business in the event the employee is in an accident.
Start the New Year off right by reviewing your risk management procedures. It is important that you review your current insurance coverages with your broker and attorney. Also, make sure your organization is in compliance by having your broker and attorney review your contracts.

Baker Romero offers an annual review of coverages as well as risk management and loss control services. Let us know if you have any questions regarding any of the coverages listed above or would like us to provide a quote. We are here to help and we wish you a happy and prosperous New Year.

**This article is intended only for informational purposes and not to be construed as legal advice.

Tips to Help Prevent Employee Theft

A recent report shows that the majority of employee thefts occur in small businesses burglar-157142_960_720with less than 150 employees. In most instances, trusted employees perpetuate employee theft.

The following are a few of the more common embezzlement myths, which fool administrators into complacency:

  • “Everyone who works here is a trusted employee.”
  • “Nonprofits rarely have to deal with embezzlement issues.”
  • “We are protected because the Audit will catch any embezzlement problems.”

Below are practical tips to help minimize employee theft within your organization:

  1. Establish best practices in the accounting department that include dual signature requirement or dual review of disbursements. There should be a separation in key business processes. Do not allow one person, including high-level employees, to have control over any function from start to finish.
  2. Provide training sessions for all employees to spot fraudulent activity and illustrate the damaging impact of fraud.
  3. Surprise audits are effective because fraudsters will not have time to destroy or misplace records.
  4. Thoroughly screen prospective employees (and volunteers) with a background check.
  5. If you contract with a bookkeeping service or an independent contractor, they should provide you with proof of their insurance including General Liability and Professional Liability.
  6. If fraud is suspected, immediately retain legal counsel to conduct an internal investigation. You should consider hiring a law firm with an expertise in embezzlement.
  7. Obtain the appropriate Crime Policy to protect your organization, as most liability and property policies will not cover employee theft. Make sure to carry high enough limits to protect your organizations’ crime exposure.

Crime policies (or Fidelity Bonds) can be purchased as a separate policy or included under the commercial business package. Crime policies require that you cooperate with the insurance company in the event of a loss. Proof of a crime usually requires a full investigation. A Crime Policy provides coverage for loss or damage of money, securities, or other property resulting directly from theft by an employee. Most policies exclude electronic data, unless covered by endorsement. Another option to consider is adding the Volunteer Endorsement in the event you hire volunteers to help in your accounting/bookkeeping department of if they handle funds.

According to the 2017 Hiscox Embezzlement Study, bookkeepers are the most common positions who commit theft followed by managers.  The most common embezzlement schemes include:

  1. Funds theft – employee takes cash or bank deposits, or employee transfers money into their own account.
  2. Check Fraud – Employee alters or forges check.
  3. Credit Card Fraud – Employee fraudulently uses employer credit card/
  4. Payroll Fraud – Employee uses payroll system to divert funds to themselves or family members.
  5. Vendor Fraud – Employee creates fictitious invoices.

A few warning signs of embezzlers include:

  1. Disgruntled employee.
  2. Diligent and ambitious employee who appears to be extremely involved in company matters.
  3. Employee with extravagant lifestyle.

Employers should not be complacent about instituting preventive measures. The reality is people steal from their employers work in an organization with an attitude of blind trust. Having strong internal controls and effective hiring practices will go a long way toward mitigating employee theft risks.

Call us if we can be of assistance or if you would like a quote for crime coverage.

**This is intended to be used for informational purposes only and should not be construed as legal advice. Consult with your attorney and CPA for advice on appropriate controls and policies. 

Back to Basics: Workers Compensation Premium Calculation

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Did you ever wonder how workers’ compensation is calculated and why premiums fluctuate even though your payroll is consistent?

Most administrators know that workers’ compensation premium is based primarily on estimated annual payroll.  However, many times, we receive concerns from our clients who were billed an additional premium at audit. Many times this additional premium is due to improper payroll reporting during the workers’ compensation renewal. It is important to be as accurate as possible when submitting your workers’ compensation renewal information or the carrier will bill your organization with an additional premium at audit.

The following is a quick review of payroll calculation. Payroll includes, but is not limited to the following:

  • Hourly and Salaried payroll
  • Bonus
  • Holiday Pay
  • Sick Pay
  • Vacation Pay
  • Commissions
  • Piece Work
  • Market Value of Gifts
  • Profit Sharing
  • Meals and Housing For Employees
  • Allowances for Hand Tools
  • Expense Allowances not based on receipts
  • Deferred Compensation Plans

Not included in the workers compensation payroll:  Tips, Overtime Excess, Severance Pay, Expense Reimbursement based on Receipts and third-party sick pay

Another area that is critical to managing your premium has to do with Independent Contractors. To avoid this premium charge, 1099’s should provide your organization with proof of their workers compensation insurance (at the very minimum). If the 1099 does not carry workers compensation insurance, the insurance carrier may considered them as employees for premium audit purposes and will charge a corresponding premium. Determination is made on a case-by-case basis.

Having accurate payroll information and documentation will go a long way toward streamlining payroll reporting and premium. If you have any questions, call us. We are here to help.

Risk Management Basics: Preventing Slips, Trips, and falls

Written By: Rebecca Gomez

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One of the most common incidents that nonprofits face are slips, trips, and falls. These claims can be costly for many nonprofits and implementing an effective slip and fall incident prevention method will help prevent future claims and keep insurance premiums low. Your organization should establish a risk management policy that focuses on both prevention and procedures in the event an injury occurs. Some good practices include documenting the incident, collecting witness statements and any video surveillance (if possible). These practices can make a huge difference in defending your organization from fraudulent claims as well.

A basic “walk through” of your premises to find potential problems should be implemented daily. Below are a few tips to include in an effective slip, trip, and fall prevention risk management program:

  • Conduct a daily facility safety survey to look for common problems such as wet or greasy floors, loose mats, torn carpeting, bad lighting, clutter, cables or wires and uneven surfaces.
  • Immediately attend to any problems by putting up warning signs and/or closing an area off and taking steps to eliminate the hazard.
  • Maintain all floors and walkways on a consistent basis, using the recommended cleaning products and methods. Fix all uneven surfaces if possible by recoating or leveling the floor. You should mark or illuminate areas that cannot easily be leveled.
  • Train your employees and volunteers in slip and fall safety, and establish guidelines on how they should report problems and respond to customer injuries or hazardous situations
  • Make sure you have secure handrails for all stairs and balconies.
  • Take care of your outdoor areas, including sidewalks and parking lots. Potholes, snow and ice all create potential problems.
  • Additional or dry replacement entrance mats should be available on site during wet weather.
  • Document all of your efforts by keeping records of your daily safety inspections and any maintenance work to improve walking and working surfaces.

Best practice is to have a written policy in place and to train managers, employees, and volunteers on all safety procedures. Safety is everyone’s business!

Your organization should also have a written incident report form to document any such events. It is every employer’s responsibility to provide a safe environment. Be sure you are doing all that you can to recognize and reduce the risk. Slips, trips, and falls have the potential to be a major cause of injury for your employees, volunteers, vendors, and visitors. Be Prepared.

Let us know if you have any questions or would like more information. We are here to help.

Back to Basics: Cyber Risk Management and Your Employees

By Rebecca Gomez

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Addressing cyber security risk management procedures to all staff is critical to every organization. A recent report indicated two-thirds of all cyberattacks against organizations (large and small) result from employee negligence or malicious activities. The same report also indicated that external breaches only caused about 18 percent of cyberattacks. Human error, according to many studies, is the leading cause of cyber-attacks. Therefore, administrators and employees need regular training on how to identify and prevent cyber-attacks.

Minimizing cyber threats requires a cyber security plan that includes effective policies and procedures that account for legal compliance and data protection. These policies should include (not an exhaustive list):

  1. A bring your own device (BYOD) policy: governing whether or not an employee can use their own device to conduct business and the circumstances that deem whether or not personal cell phone use for business is appropriate.
  2. A password policy requiring the use strong and unique passwords that change at least every 6 months.
  3. Personnel policies that enhance security
  4. A network tracking policy requiring regular monitoring of network traffic for evidence of suspicious access.

Organizations should also have an incident response plan in place which outlines how a company will respond to suspected events. Implementing an incident response plan will help your organization to quickly investigate and remediate cyber-attacks. It will also outline the leaders of the response team and their responsibilities implementing the response plan.  The board of directors should be informed of the organizations cyber security program and exposure, as they are ultimately responsible.  Brown & Streza offers a unique proactive approach to a Data Security Breach plan that can help your organization prepare in the event of a breach.

Cyber Risk Insurance should be considered as part of your risk management plan (and not your only plan). A Cyber Risk Insurance policy can offer nonprofit organizations with affordable protection. There is no “standard” cyber policy form and administrators should review their cyber policies to understand what coverage their policy provides. Most standalone Cyber policies offer forensic investigation coverage, system restoration costs, defense and indemnity costs associated with litigation resulting from the loss of personal information, or other sensitive data and defense costs and penalties associated with regulatory investigations. Most General Liability policies now exclude coverage for cyber-related claims.

Please let us know if you have any questions regarding cyber risk management or would like us to provide you with a quote. (see attached application)