RiskReport - 2014 Q4

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October 2014

INSURANCE SERVICES

Delivering essential employee benefit and commercial insurance information to customers and our members EMPLOYMENT PR ACTICES LIABILITY INSUR ANCE

The Answer to Costly Employee Lawsuits If you have employees, your firm is at risk of complaints about your actions towards them.

The costs of defending against an employee complaint or an Equal Employment Opportunity Commission charge can be enough to bury some firms. That’s why you need employment practices liability insurance.

EPLI is written to: • Protect a company against damages for events relating to its workforce, including but not limited to: wrongful terminations, harassment, discrimination, defamation and unfair hiring/firing practices; and • Provide defense costs associated with responding to employment-related lawsuits.

Some examples of actions that could lead to EPL claims including the following real-life cases: RETALIATION The plaintiff alleges that she had her employment terminated because she testified on behalf of another worker, who had brought a separate action against the company. She alleges that this is a violation of her employment contract, which provides that she can only be terminated for good cause. The plaintiff accused the employer of breach of contract, wrongful termination and retaliation.

Total defense and settlement costs:

Exceeding $120,000

WRONGFUL TERMINATION An executive of a manufacturing company files suit against the company for wrongful termination and intentional infliction of emotional distress.

The plaintiff, a former chief operating officer, makes statements that the company improperly failed to pay an employee overtime and terminated the employee for filing a complaint.

The plaintiff alleges that although the company advised him that his termination was due to performance problems, he was actually terminated in retaliation for his honest statements he made in connection with a fellow employee’s termination.

Five reasons your Business Needs EPLI Coverage 1. EPLI covers actual as well as alleged acts of discrimination, harassment, retaliation, wrongful termination and more.

2. 60% of firms are sued by ex-employees.

3. Some 40% of EPL claims are against firms with fewer than 100 employees.

4. The risk of not having EPLI can be crippling. The median cost of an EEOC lawsuit in 2013 exceeded $250,000.

5. There is no EPL coverage under other insurance policies.

Total defense and settlement costs:

Exceeding $750,000

DISABILITY DISCRIMINATION A worker was terminated while out on medical leave due to an injury that occurred at work.

He asserts that he was the victim of numerous discriminatory and harassing actions and remarks regarding his disability. The plaintiff alleges he was advised that if he filed a workers’ compensation claim, he would be terminated.

He was in fact terminated without disability benefits after he filed a workers’ comp claim.

Total defense and settlement costs:

Exceeding $75,000

CLIENT TESTIMONIAL

Call us today about an EPLI policy at 800-659-3363.

C O N TAC T U S

The VMA Insurance Team helped me sort out some workers comp issues saving me a significant amount of time and expense.

— PIERRE MARTICHOUX | President, Chameleon Like

David Katz CA License #0712961 800-659-3363 david@vma.bz

AFFORDABLE CARE ACT

Health Reform Definitions All Employers Should Know

T

HE AFFORDABLE Care Act has completely altered the health insurance landscape in America, and with it a whole new lexicon of terms has arrived.

Shared responsibility taxes The taxes you will likely incur if you: 1. Do not offer minimum essential coverage (explained later) to at least 95% of all full-time employees. The penalty for not offering coverage is $2,000 times for each full-time employee, minus the first 30, if at least one of those employees receives a subsidy at an exchange.

While the ACA places the onus of providing health coverage on the shoulders of employers with 50 or more full-time workers, the law’s new catchphrases has lefty many confused. To help you cut through the ACA fog, we offer you the: ACA DICTIONARY

Full-time employee Employees that work 30 hours or more hours a week are considered full time under the ACA. You have up to 90 days to offer coverage to a new employee.

Affordable plan The ACA defines affordability as an employer plan that requires an employee to pay 9.5% or less of their W2 wages for single coverage.

Full-time equivalent employee Employees that work 30 or less are aggregated into full-time equivalents (FTEs) to determine large employer status. So if you have an employee that works just 15 hours a week, he or she is counted as a 0.5 FTE (and two 15-hour-a-week workers is one FTE).

Scan the QR code to view the PDF online

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INSURANCE SERVICES

Essential health benefits Most small group and individual policies will have to cover the following:

2. Do not offer a plan that provides minimum value (also explained later) and that is affordable to each full-time employee. The penalty for failing to do so is $3,000 times the number of employees for which the employer fails to offer minimum value and affordable coverage, and if those employees receive a subsidy to purchase on a state-run exchange.

Pay or play Your decision to either pay employer shared responsibility taxes or offer affordable coverage to your employees.

Visual Media Alliance

Minimum value Any plan that does not cover at least 60% of medical costs does not provide minimum value and may result in shared responsibility penalties to the employer.

An affordable plan must be offered to all employees to avoid the possibility of shared responsibility taxes.

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Ambulatory patient services

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Emergency services

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Hospitalization

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Maternity and newborn care

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Mental health and substance use disorder services, including behavioral health treatment

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Prescription drugs

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Rehabilitative and habilitative services and devices

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Laboratory services

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Preventive and wellness services and chronic disease management

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Pediatric services, including oral and vision care

Get a Quote and Get your Questions Answered

| insurance.vma.bz | 800-659-3363

INSURE YOUR BUSINESS

INSURE YOUR STAFF

WHY VMA INSURANCE

Coverage for liability, auto, property, management, workers’ compensation and more

Medical, dental, vision, life, disability, executive reimbursement and more

VMA Insurance Services offer preferential group rates and other cost-saving benefits.

WORKERS’ COMP

The Audit Survival Guide

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O BUSINESS ever wants to be audited, but in the world of workers’ compensation insurance it’s a regular occurrence that does not need to be a stressful event.

A workers’ comp audit by your insurer is common for most mid-sized or larger employers, and the audit threshold in California is about to be raised to include employers with $16,000 or more in annual premium.

While many employers are used to audits and have their procedures and policies in place to ensure a smooth experience, some of you may be growing concerns that now are large enough to be subject to audits.

The key to a workers’ comp audit is preparation and having your paperwork (and electronic files) in order, so you can produce the required documents swiftly. We’ve prepared the following seven ways to prepare for an audit, and if you follow this advice it can save you stress and perhaps money.

1. Understand why you are being audited. Workers’ comp carriers base your premiums on your number and cost of any previous claims, your industry and your payroll.

At the end of the policy, the insurer needs to audit your payroll to make sure that the payroll and class codes that you reported at the inception of the policy were correct and if they’ve changed during the last year.

Remember that an audit can go both ways.

The insurer’s auditor will be looking to see if you either owe or are owed money. You may have underestimated your payroll or incorrectly classified employees, or you may have overpaid due to similar classification errors.

2. Gather records. Collect all paperwork requested by the auditor, and ensure that your documentation is in order. You’ll most likely be asked for the following: •

Employee records

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Payroll records

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Cash disbursements

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Certificates of insurance

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A detailed description of your business operations

3. Review prior audits. When you are preparing for an audit, go back further than your current policy year’s documents.

Categorizing your employees correctly is what’s most important to ensure a smooth audit and not be hit by surprises. Knowing how your employees have been categorized in the past can help you make sure they’re categorized correctly in future audits.

4. Double-check subs. Many small businesses have been overcharged by thousands of dollars in a single year because of an error. If your subcontractors carry their own workers’ compensation insurance, you aren’t responsible for paying premiums for them. If they don’t, you could be responsible for the exposure under your policy.

5. Track overtime. Don’t forget to keep track of overtime for your employees. Your workers’ compensation premiums aren’t calculated at a full overtime pay rate. Typically, the auditor will break out overtime pay and discount it to straight time. If your records aren’t accurate this can cost you.

6. Be prudent. Don’t volunteer more information than the auditor asks for.

New Audit Threshold Starting Jan. 1, 2015, all policies with more than $13,000 in annual premium will be subject to yearly payroll audits.

The current threshold is $10,000.

This will help keep the audit focused, and avoid adding questions that aren’t relevant.

7. Request the documents. Ask the auditor for the worksheet after the audit, and then have us review it for accuracy.

If you suspect mistakes in the worksheet, it’s your right to ask for a corrected audit.

Spending some time preparing for your next workers’ compensation audit is a worthwhile investment. With workers’ comp being one of your biggest expenses, you should not be paying any more than you need too, especially due to a small mistake.

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Save the Date!

Discover your group health care options for 2015 at the PIBT Health Benefits Fair on Oct. 7, 2014.

Visit vma.bz for details.

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ABOUT US The Risk Report is provided to members of Visual Media Alliance and clients of Visual Media Alliance Insurance Services, its wholly owned subsidiary. VMA Insurance Services provides a full suite of insurance programs including property and liability, commercial auto, management liability, professional liability (errors & omissions), and group health programs to over 750 firms.

VICE PRESIDENT David Katz COMMERCIAL INSURANCE CUSTOMER SERVICE REPS Crystal Carlson, Renee Prescott HEALTH INSURANCE CUSTOMER SERVICE REPS Lena Nelson, Sue Benevente INSURANCE.VMA.BZ 800-659-3363

October 2014

INSURANCE SERVICES

Health Benefits Fair 2014 Find Out Your Health Plan Options for 2015 Private Insurance Benefit Trust offers the best possible cost-containment programs plus personalized customer service to benefit employers as well as employees.

Date:

Tuesday, October 7

Time:

8:15 a.m. Continental Breakfast 9:00-noon Benefits Introduction

Where:

Crowne Plaza Hotel 1221 Chess Drive, Foster City, CA 94044 650-570-5700

You will be able to speak with the carriers and meet VMA and PIBT staff if you have questions.

You can also interact with your fellow business owners or HRMs and share ideas.

PRIVATE INSURANCE BENEFIT TRUST For more information contact: Lena Nelson at Visual Media Alliance 415-489-7618 or 800-659-3363 E-mail: Lena@VMA.bz

This newsletter is not intended to provide legal advice, but rather perspective on recent regulatory issues, trends and standards affecting insurance, workplace safety, risk management and employee benefits. Please consult your broker or legal counsel for further information on the topics covered herein. Produced by Risk Media Solutions on behalf of Visual Media Alliance. All rights reserved.