Are your independent contractors classified correctly?

CA Supreme Court Adopts a New Tougher Standard

written by Rebecca gomezdownload

For the past several decades, California courts utilized the multi-factor test to determine whether or not a worker is classified as an employee or independent contractor. The multi-factor test focused on the level of control the employer retained over the worker and other factors, such as the right of employer to discharge individual, how the individual is paid, length of services, and the parties’ intent.

Last month, the California Supreme Court abandoned the multi-factor test and adopted the “ABC Test.” The “ABC Test” imposes a tougher legal standard to determine whether or not an individual is truly an independent contractor. The legal effect for this ruling places the burden on the employer to establish that a worker is not an employee by proving that the worker performs work that is “outside the usual course” of the employer’s business.

Under the “ABC Test,” an employee, generally, would be viewed by others as working in the hiring entity’s business and not for the worker’s own independent purposes. The Court explained, the term “employee” for the purpose of wage orders does NOT include workers who provide only occasional services unrelated to an organization’s primary line of business and who have their own independent business.

The “ABC Test”

Under the “ABC Test” a worker is presumed to be an employee, unless:

A. The individual is free from control and direction of the hiring entity (both by contract and in fact)

  • The individual must be free from control. If an employer dictates how or where the work gets done, or who does the work–the individual is an employee.
  • Although an employer may put a “when” on work by establishing a deadline, they should not dictate work be done on certain days or certain hours.

B. The individual performs work that is outside the usual course of the hiring entity’s business;

  • The work individual performs must not be essential to the offerings of the business.
    • Cooks and servers for restaurants perform work that are essential to the business and therefore are employees, not independent contractors.
    • Someone who is hired to design a new menu or reupholster their booths do not perform work essential to the restaurant business, therefore can be classified as independent contractors.

C. Individual engages in an independently established trade, occupation, or business.

  • Is the worker in business for themselves doing the kind of work that the organization has hired them?
  • The focus of this element is whether the individual made money from other sources, besides the employer, doing the same kind of work they offered to the employer.
    • The more evidence indicating the individual has an established business, the stronger the argument for an independent contractor

All three parts must be satisfied in order to properly classify an individual as an independent contractor. If the employer cannot establish any one factor, the individual is an employee for wage purposes.

Below are some examples of True Independent Contractors:

  • Independent Plumbers
  • Independent Electricians
  • Independent Accountants
  • Sole Practitioner Attorneys

What should your organization do?

Since the new standard is case law, coming from the court not legislature, the standard takes effect immediately. Your organizations should mitigate your liability, with assistance from your attorney, by analyzing the individuals currently classified as independent contractors and apply the ABC Test. If the individual fails one or more of the factors, reclassify them as an employee. Work with your attorney to assist with implementing the classification transition and help minimize potential legal exposure.

Insurance Policies generally do not cover independent contractors. It is best practice to request your independent contractors to provide you with a certificate of insurance and adding your organization as an additional insured. To help mitigate gaps in insurance coverage, your attorney should review your insurance policies.

Let us know if you have any questions or would like us to provide you with an insurance quote. We are here to help.

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!!

Picture1written by Rebecca Gomez

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.

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

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)

Cyber Risk Management and Cyber Liability Insurance

By: Rebecca Gomez

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Last weekend, a ransomware virus known as “WannaCry,” affected 150 countries and more than 300,000 people. Ransomware is a cyber attack where hackers encrypt files from their victim’s server and holds them for ransom. In the case of “WannaCry,” the hackers demanded $300 to restore their data.

An important lesson to take from this incident is that no one is 100% safe from cyber crime. If the appropriate measures to protect your data are not diligently taken, your organization is vulnerable and recovering from a cyber attack can be costly. The Hiscox Cyber Readiness report stated that last year alone, cyber crime has cost the global economy $450 billion.

Below are some risk management tips your organization may want to consider regarding cyber risk:

  • Conduct regular back ups of systems
  •  Have strong passwords that are unique which provide a barrier against intrusions
  • When using unfamiliar websites, make sure the URL begins with https. The “s” indicates that the site is secure.
  • Continually install the updates your browser and operating system (including anti-virus and anti-spyware) requires.
  • Be aware of the e-mail you receive: if the deal sounds too good to be true, be very skeptical. If you receive a message from your co-worker, employer, or someone you know and it sounds out of character, or includes nothing but a link in the body of the email, it may be suspicious. Check with the sender and make sure it is legitimate. This could be a phishing fraud.
  • Do not use an unprotected Wi-Fi network for your business, always require a password and do not conduct business where there is public Wi-Fi.
  • Password Protect smart phones and computers
  • Train employees on cyber risk management

The “WannaCry” ransomware incident serves as a good reminder to keep current with system updates and to contact your IT person to check your organization’s software for vulnerabilities. Good data security is key to protecting your organization.

Cyber Liability insurance should be part of your organization’s risk management program.  If you have a Cyber Liability policy, be sure to review it and understand the terms and conditions. Many cyber policies offer effective loss control services to help protect your organization. Let us know if you have any questions regarding Cyber Liability or would like us to provide you with a quote. We are here to help.

Back to Basics: The Importance of the IIPP

by: Rebecca Gomez

 

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In California, organizations with at least one employee are required to have a written Injury and Illness Prevention Program (IIPP) that is easily accessible for employees to read. An IIPP is a safety program that requires employers to develop and implement an effective program that improves safety in the workplace. In order for the IIPP to be effective, all employees, supervisors, and management need to be actively involved.  Cal/OSHA requires eight elements to be written in the IIPP and implemented in the workplace (with a few exceptions).

  1. Responsibility (The position/person who is in charge of implementing the IIPP)
  2. Compliance
  3. Communication
  4. Hazard Assessment
  5. Accident/Exposure Investigation
  6. Hazard Correction
  7. Training and Instruction
  8. Recordkeeping

Above are the minimum components required for an IIPP to be acceptable to Cal/OSHA standards. Everything in the IIPP must be implemented and documented to avoid a fine from the Cal/OSHA inspector. If your organization adds additional safety procedures to the IIPP, make sure those procedures are properly implemented with proper documentation.

There are a few exceptions to the IIPP requirements. One exception is as follows:

If your organization has 20 employees or less in a calendar year, whose industry is not on a high hazard list, and has an experience modification rating of 1.1% or less, your organization qualifies for the limited requirements of the IIPP:

  1. Identity of those whose authority and responsibility to implement the IIPP
  2. The schedule of periodic inspections to identify unsafe conditions and work practices
  3. Training provided to employees.

Cal/OSHA provides a sample IIPP program (see attached). Anything that is written in the IIPP must be implemented and have supporting documentation. Administrators need to make sure that employees know who the IIPP administrator (the authority) and who has the responsibility for implementing the procedures in the IIPP (This is usually one of the first questions a Cal/Osha inspector will ask an employee during an inspection). If your organization identifies a specific individual’s name, instead of a position title, make sure to update the IIPP if another individual replaces that position.  It is important to update your IIPP at least once a year.

The IIPP, while statutory, can support an organization’s safety culture. The IIPP enforces the importance of safety in the workplace. A safe work environment can help prevent workplace injury claims and lower your organization’s workers’ compensation premium. Please let us know if you have any questions or concerns regarding workers’ compensation or the IIPP. We are here to help.

Developing a Safety Culture

by Rebecca Gomez

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At Baker Romero, we encourage our clients to focus on the importance of developing a safety culture in the work environment. Administrators should find ways to motivate employees to practice safe work practices. An effective safety culture can help lower the amount of claims and minimize the cost of a claim as both affect the x-mod and the workers’ compensation premium.

This past year, the Occupational Safety and Health Administration (OSHA) enacted a new regulation that prohibits employers from implementing injury based incentive programs. OSHA considers this type of incentive program as retaliatory, which can discourage employees from reporting injuries.  Having rewards based on injury free days is an example of the prohibited safety incentive program. When employees refrain from reporting a claim after an injury, another issue to consider is the adverse impact it can have on a claims report. The cost of the claim significantly increase when employees do not report injuries.

However, OSHA did not prohibit the use of incentive programs altogether. Employers should develop a safety program that encourages safe work habits and implement an effective return to work process.  Recognizing employees for safe work habits such as completing training and using safe work procedures can create a proactive safety culture. Also, consider incorporating safety measures into performance appraisals. The performance appraisal demonstrates the importance of a company’s commitment to safety.

In the final analysis, developing a strong safety culture by encouraging safe work habits can be more effective. Administrators should create innovative ways to encourage and recognize safe work habits that encourage employees to be safe on a daily basis.

As a service to our clients, our agency provides safety videos tailored to their organization to help them promote safe work habits.  Please contact us for information regarding the safety videos or if you would a quote for workers’ compensation coverage. We are here to help