R&R Insurance Blog

Saturday is a workday!

WAITING PERIOD TRAP:

The Waiting Period Trap is the black hole called Saturday! The WC Statute includes Saturday as a work day. It doesn’t matter if your business works Saturday or not. It is counted!

What does that mean? Saturday is counted as one of the days in the three day waiting period. If Saturday is the fourth day the employee missed work you then have a lost time claim.

Take Away # 3 discussed the impact that lost time claims have on your premium. These types of claims cost you 3 times as much in premium due to the impact on your experience modification.

Our takeaway #9 referred to the importance of the first conversation. Your first conversation to set the tone for delivering your policy is the only thing that could possibly keep you from experiencing the waiting period trap.

For more information please contact the knowledgebrokers

A legal aspect that your company should be aware of when hiring drivers is negligent entrustment. There is no law that states you have to check the MVR of any applicant. But there might as well be, because there is precedent law on the books that indicates if you don't, then you may be held responsible.

Do you need more proof that a fleet owner must install and maintain an effective program of driver selection and training? That a fleet owner needs a thorough pre-employment investigation of each driver, including a record of accidents and violations? The following is taken from an article prepared by Ben F. Heinz, Director of Safety Engineering Services for Transport Indemnity, and published in a recent issue of Western Trucking Magazine. In the case described, note that the court found the defendant negligent because he employed an incompetent driver.

The threat of increased costs from accidents to employers without workable safety programs is more than a danger warning signal. It is reality. I refer to penalties, imposed on companies by courts or juries where the employer was found guilty of gross negligence. Management, through the growing development of negligent entrustment in court case, can be guilty without doing a thing. Negligent entrustment means to confer a trust upon someone with inherent failure to exercise proper care in this delegation. It opens up new avenues of attack by plaintiff's lawyers. This is particularly true in the motor transportation industry. Here are some examples of how an employer could be penalized in some states by what is known as punitive damages, and in court by higher judgments, if it was found that he failed to select proper personnel, capable for the job to which assigned. This could be a lack of skill in the job. Or it could be a lack of physical, mental, or emotional qualification. The fact that a transportation company did not have an adequate screening procedure or training program for employees could be grounds for finding it guilty of negligence. The lack of an adequate maintenance and equipment servicing program is another vulnerable point of attack for plaintiff's attorney. The failure of a transportation company to comply strictly with state or federal regulatory requirements and directives is another possible indication of negligence.

The truth is, then, punitive damages may be awarded by the courts as the result of the failure of the employer to provide the proper atmosphere or conditions for safety of others. The whole point is to punish the employer for his negligence.

In a recent high court case, (Rone Grain Company vs. McFarland) the suit charged that it was conscious indifference to the right of others for the defendant trucking company to permit a large heavy truck to be entrusted to a man with seven moving violations and 2 accidents in 4 years. This bad driving record was admissible in evidence. Damages were asked -- to punish the defendant against entrusting such vehicles to an incompetent driver and to warn others not to engage in such conduct. The court found the company guilty of gross negligence, but did not assess damages.

However, the judgment was for $24,615 for a whiplash injury on a case where the plaintiff was only 20 and where the medical bill was only $420. Obviously, the jury took this way to punish the trucking company for failure to place good driver personnel on the public roadways.

I am advised from authoritative source that in criminal prosecution the maximum fine is determined by statute. In the civil punishment proceedings there is no ceiling to what the jury may determine is ample punishment in line with the defendant’s net worth. The fact that a corporate defendant's financial position may be introduced in evidence may evoke a large verdict for punitive damages. This could be just because the net worth of the corporate defendant is large. This occurred recently in Los Angeles, where a jury rendered a verdict of $1 compensatory damages against the telephone company and entered a verdict of over $1,000,000 punitive damage. So you see, punitive damages are not allowed because the defendant has suffered any particular monetary loss for which he is entitled to be reimbursed. Rather they may be considered as an expression of a communicative attitude towards one who willfully and wantonly caused hurt to another.

I should think that it would be crystal clear to all of us that employers are facing a real threat to their profits by any apathy or failure to implement and control a program designed for the conservation and protection of their corporate assets.

Note: New Mexico (1994) had a $2,600,000 negligent entrustment settlement in Farmington, NM where the driver for the company did nothing wrong to cause the accident, however had a less than desirable driving record.

R&R Insurance can assist your company in developing consistent methods of screening potential drivers of vehicles on your behalf. Not only does this help safeguard your company from a Negligent Entrustment Lawsuit, but it also helps to make you a better risk to the insurance industry. This can result in better rates that save you money. More about dynamic fleet safety programs.

For more information on fleet safety issues, contact knowledgebroker John Brengosz.

Did you know that on February 1st, companies that employ more than 10 people will be required to post an OSHA 300A form? What is that? Is your company required to do this? How do you do it? What goes on the 300 log? Learn more about the OSHA 300 Log...

Want to know more about the OSHA 300 Log? Join our free webinar - 2 sessions available before the OSHA deadline of February 1st!

OSHA 300 Log - Free Webinar from R&R Insurance:

Both webinars run 10:00am - 11:00am CST

December 14, 2010

January 20, 2011

OSHA is implementing several changes to its administrative penalty calculation system. Many of the agency's current penalty adjustment factors have been in place since the early 1970's, resulting in penalties which are often too low to have an adequate deterrent effect.

Administrative penalty adjustments will therefore be made to several factors which impact the final penalty issued to employers. These factors include:

• History Reduction
• History Increase
• Repeat Violations
• Severe Violator Enforcement Program
• Gravity-Based Penalty
• Size Reduction
• Good Faith
• Minimum Penalties
• Additional dministrative Modifications to the Penalty Calculation Policy

A brief description of each penalty adjustment factor and planned changes are provided below:

History Reduction
The time frame for considering an employer's history of violations will expand from three years to five. An employer who has been inspected by OSHA within the previous five years and has not been issued any serious, willful, repeat, or failure-to-abate citations will receive a 10 percent reduction for history.

History Increase
An employer that has been cited by OSHA for any high gravity serious, willful, repeat, or failure-to-abate violation within the previous five years will receive a 10 percent increase in their penalty, up to the statutory maximum. Employers who have not been inspected and those who have received citations for serious violations that were not high gravity will receive neither a reduction nor an increase for history.

Repeat Violations
The time period for considering the classification of repeated violations will be increased from three to five years.

Severe Violator Enforcement Program
Where circumstances warrant, at the discretion of the Area Director, high gravity serious violations related to standards and hazards identified in the SVEP will not normally be grouped or combined, and may be cited as separate violations, with individual proposed penalties.

Gravity-Based Penalty (GBP)
The gravity of a violation is the primary consideration in calculating penalties and is established by assessing the severity of the injury/illness which could result from a hazard and the probability that an injury or illness could occur. OSHA is adopting a gravity-based penalty structure for serious citations which will range from $3,000 to $7,000.

Size Reduction
OSHA will be amending its penalty reduction structure based on the size of employers, allowing for a penalty reduction between 10 and 40 percent for those with less than 250 employees. No size reduction will be applied for employers with 251 or more employees.

Good Faith
The current good faith procedures in the Field Operations Manual will be retained. A penalty reduction is permitted in recognition of an employer's effort to implement an effective workplace safety and health program. Employers must have a safety and health program in place to get any good faith reduction. Good faith reductions are not allowed in the cases of high gravity serious, willful, repeat, or failure-to-abate violations.

The 15% Quick-Fix reduction, which is currently allowed as an abatement incentive program to encourage employers to immediately abate hazards identified during inspections, remains unchanged. However, the 10% reduction for employers with a strategic partnership agreement will be eliminated.

Minimum Penalties
The minimum proposed penalty for a serious violation will be increased to $500. When the proposed penalty for a serious violation would amount to less than $500, a $500 penalty will be proposed for that violation. The proposed minimum penalty for a posting violation will increase to $250 if the company was previously provided a poster by OSHA.

Additional Administrative Modifications to the Penalty Calculation Policy
Final penalties will be calculated serially, unlike the current practice where all penalty reductions are added and the total percentage of reductions is then multiplied by the gravity-based penalty to arrive at the proposed penalty. All penalty adjustment factors will be applied serially.

These changes will establish general agency policy and do not preclude the agency from assessing a different penalty, where appropriate under the Act, in light of all circumstances in a particular case.

A fleet of any size (simply the use of vehicles in a company or organization), is an exposure which can generate losses for the organization in all four categories: property, human resources, liability and net income. Risk managers recognize the importance of well-designed and properly implemented fleet safety programs. The new twist is that new technology and ever-changing laws require these plans to be reflective of these changes and dynamic for each individual organization.

In 2008, there were 37,261 motor vehicle fatalities and almost 2.5 million injuries in the United States, generating a more than $231 billion dollars in damages. Occupational fatalities associated with highway incidents in 2008 totaled 1,149, or about one in four of all occupational fatalities.

Every organization that uses vehicles in any manner should enforce a fleet safety program that at the minimum contains these components:

• Driver Qualification and Training
• Motor Vehicle Record (MVR) review
• Vehicle Inspection & Maintenance
• Tracking, Monitoring & Documentation

Driver Qualification and Training
Most organizations require basic state licensing and may elect to impose minimum requirements for age and experience of drivers for certain applications such as product load, people transportation etc.

Training drivers in defensive driving techniques and other fleet safety topics can be accomplished through online programming, behind-the-wheel coaching, and classroom instruction.

MVR Review
Regular evaluation of MVRs is a standard component in fleet safety programs. For MVR review to be successful, employers must consider exactly what records will be evaluated, and how they will guide employment and driving assignment decisions.

The MVR monitoring process can be outsourced to companies that provide background screening services for new and existing employees. These services monitor activity associated with fleet drivers and immediately notify fleet managers of any negative activity associated with an employee driver.

Vehicle Inspection and Maintenance
A comprehensive program for regular safety inspections and mandatory maintenance and repairs for fleet vehicles is an extremely important part of a fleet safety program that is often overlooked.

If any claim were to go to litigation, a defense attorney could take full advantage of any evidence indicating a delay in important safety precautions such as tire replacement or brake repair. Therefore, it’s not only important to stay on top of all vehicle maintenance requirements, it’s also essential to keep accurate records of maintenance and repair schedules in case it needs to be proven in court.

Tracking, Monitoring & Documentation
New technologies such as Global Positioning Systems, Ignition Interlock Devices and the onset of extensive mobile device usage has increased the need for close monitoring, highly documented policies and knowledge of the law.

Tracking Location
Global positioning systems (GPS) installed in vehicles can provide fleet owners with many useful tools to not only manage vehicle utilization, but also operational safety. These systems can measure and communicate the exact location and vehicle speed on a real-time basis to a central point. For an organization that must maximize efficiencies to survive, control speeding and other misuse of their vehicles, GPS technology used to monitor the actions of employees behind the wheel can be an important new tool to compliment a fleet safety program.

Ignition Interlock Devices
Another area of technology that is impacting fleet management policies is the use of ignition interlock devices (IIDs) by drivers convicted of DUI. These devices require the driver to blow a sample of their breath through the device before the vehicle’s ignition will start. IIDs can be court ordered for an employee convicted of DUI. The question for business owners and fleet managers is whether to allow IID installation in a company vehicle to accommodate a legal requirement imposed on an employee. It is important for fleet owners to understand the laws, and plan ahead for how they will respond to an IID order for one of their employees.

Mobile Devices
One of the most significant new challenges for fleet safety programs is managing the use of mobile devices on the road. The use of cell phones and other portable devices for talking, texting, email, social networking, and navigation while driving is now commonplace, especially among younger drivers.

The National Highway Transportation Safety Administration (NHTSA) indicates that drivers engaged in texting while driving increase their chance of being in an accident by 23 times. A troublesome reality for fleet owners is how easy it is to prove that a driver was texting at the time of an accident, due to the precise time stamp assigned to every message. These distractions must be considered and addressed in every company’s updated fleet safety policy. Every fleet owner must evaluate the communication needs of their drivers, device policies, and the law to manage that risk appropriately.

Business owners and fleet managers face a intimidating task to develop and implement fleet safety programs that comply with applicable laws and reduce risk to their property, their people and their profitability. A successful fleet safety program for your organization begins with a tailored plan that addresses the specific needs of your organization and then remains flexible enough to respond to changes in technology and the law.

1. Cooperate in setting up the appointment. If the Loss Control Consultant has to make several calls, it sets up a poor first impression.
2. Provide enough time to do the survey. Ask how long the Loss Control Consultant needs to adequately cover all the questions.
3. Provide multiple contacts if necessary.The Loss Control Consultant can get more details from someone more closely related to the issue. Examples: Your Quality Control Director can handle the Products Liability part of the survey; your Maintenance Manager can handle the Property questions/tour; your Traffic Manager can handle the questions on the fleet. Make sure that the additional contacts understand the value of the loss control visit and the importance of the information being relayed. Your additional contacts should beon the same page with you.
4. State all of the positives about your organization, your programs,your efforts. You may want to make some basic notes to make sure you talk about any positive things you are doing.
5. Be open to suggestions made during the visit. If you react negatively to suggestions, the report may label you as “uncooperative”.
6. Have materials ready that you know will be needed such as a property diagram, vehicle list, sprinkler testing info. etc. Showing that you value and respect their time goes a long way.
7. If there are any questions that you can’t answer during the visit, be sure to get the answers and relay them as quickly as possible. An answer of “I don’t know” is seen negatively in their eyes.
8. If there is a weakness that has not been addressed or cannot be explained, it is good to ask for help. Carriers see this as a company who is “cooperative” and they like to partner with these companies.

See Questions you can Expect on a Loss Control Visit.

"Better to be safe than sorry." This is normally a good philosophy to live by. But when it comes to filling out your company OSHA 300 log, this is one time where that rule can cost you.

Unfortunately, many of the people assigned to fill out the OSHA 300 log on behalf of their company haven't been the beneficiaries of any formal training. The OSHA log may have been thrown on their desk and because of that, they operate by the philosophy that if I send it into workers' compensation, then I'm going to also put it on the OSHA 300 log. This can result in over recording and inflated incident and severity rates - which could have serious consequences for your business!

The incident rate and severity rate (or DART rate) are two formulas that OSHA uses to measure workplace safety. Safety professionals will use these numbers as a benchmarking tool to compare accident rates for companies nationwide in the same industry – regardless of company size. These rates are an equalizer of companies of all different sizes because it's based on total hours worked in the company.

Incident rates are determined by taking the number of OSHA recordables (taken from the 300 log at the end of the year) multiplied by 200,000 divided by the total number of hours worked in your company - both by employees and temporary employees.

The DART Rate, which is an acronym for Days Away or Restricted Time, is a measure of accident severity. It counts the number of cases in the calendar year in which a company had an employee away from work due to an injury or who was working under restrictions due to a work injury.

Knowing the above information, let's take a look at a real-world example of a company who was operating with the "better safe than sorry" mentality and how it could have affected their chance to bid on a new piece of business.

CASE STUDY:

We received a phone call from a painting contractor who needed our help because they had to calculate their incident rate in order to bid on a job - it was a requirement of the bid.

In looking at their OSHA 300 log, this painting contractor had 8 incidents recorded in the calendar year. The problem was that they had only worked 90,000 hours that year. Using the formula explained above, we calculated their incident rate at 17.8. This rate was 4 times the national average for painting contractors. For companies or general contractors looking to hire this painter, this is a serious red flag and could likely be a deciding factor in determining if they get the work.

Based on years of experience, our first thought was that they didn't complete the OSHA 300 log properly.

We sat down with this contractor and went through each of the 8 cases on their OSHA log in detail. It turns out that in 3 of those 8 cases, the people never even went to the doctor - which means it shouldn't be on the 300 log. We also noticed a few other inaccuracies. So, when finished, there were only 2 legitimate injuries that should have been entered on the OSHA 300 log. We made the necessary corrections and recalculated their incident rate to be a legitimate 4.44 - which compares very well with the national average of 4.0 for painting contractors.

This new incident rate is something a potential customer or general contractor would feel much more comfortable with, as opposed to the incident rate of 17.8, which would be alarming.

If you're over reporting on your OSHA 300 log, your company can end up with excessively high frequency and severity rates, which can draw the wrong kind of attention. Typically, if OSHA sees a company with a high incident rate, they would be concerned that the company is not controlling the work place. They, along with potential customers, see it as an out-of-control injury situation.

Do you know if your OSHA 300 log is filled out correctly? Are you over recording? What you don't know could be costing you.

Contact us today to set up an appointment and learn how our risk management and loss control experts can help you. If you're interested in learning more about the OSHA 300 log, consider attending one of our OSHA 300 Webinars.

The OSHA 300 log, formally known as the "Log of Work-Related Injuries and Illnesses", is used to classify work-related injuries and illnesses and to note the extent and severity of each case. The log itself is really a listing of employee injuries, and any contract or temporary employee injuries that happened during that calendar year. So, if you have temps working for you and they are injured at your work place, you are required to put that on your OSHA 300 Log.

The OSHA log differs from workers' compensation loss runs in that the OSHA log goes on a calendar year basis. Your work comp policy may go from July 1st to July 1st, but the OSHA log is always on a calendar-year basis.

If everybody has Workers' Compensation Loss Runs why do we have to do OSHA record keeping?

The short answer: Because OSHA says so.

The long answer: OSHA wanted a consistent way to track and measure injury rates throughout the country for various industries - the OSHA log allows them to do that. OSHA wants to capture the injury data from all the different companies in the U.S. They don't simply rely on workers' compensation records because workers' compensation laws vary from state to state and there can be differences in the individual laws - what's considered an injury, how much is paid, etc. But, with OSHA record keeping, it's supposed to be consistent from state to state across America. This is important because it allows OSHA to look at a company in Georgia and very directly compare it to a company in California, as far as injury rates are concerned.

What must be put on the OSHA 300 log?

Cases must be logged on the OSHA 300 Log if:

• There is a death
• Days away from work
• Job transfer or restriction
• Loss of consciousness
• Other recordable case

Most of these are easy to make a determination on. The one that is open for a lot of debate is the "other recordable case." We can tell you from experience, that if a company is skimping or putting too much on their OSHA 300 log, most of the time it's due to the "other recordable case" and how a company decides to interpret some of those standards that OSHA has set for this category.

It's important to know which companies are required to fill out the OSHA 300 log, what you should be putting on your log and why putting too much on your log can really hurt you. We will discuss all of these issues in upcoming blog posts. Be sure to check back frequently, or subscribe to our RSS Feed to automatically be updated on when new articles are published.

OSHA 300 Log Free Webinar:

December 14, 2010
January 20, 2011

Can a sole proprietor be required under a contract to have a workers compensation policy even though he or she is not required to have a policy under the Wisconsin Workers Compensation Act?

Yes, a contract may require a sole proprietor to a have workers compensation insurance policy even though he or she is not required to have a policy under the Act. Contracts often stipulate that a sub-contractor (sole proprietor) have workers compensation insurance and require a Certificate of Insurance as proof that the coverage is in place. The Workers Compensation Division has no jurisdiction over contract stipulations that require worker’s compensation insurance.

What are the options available to a sole proprietor that is offered a contract that requires him or her to have a workers compensation insurance policy? There are three options available to a sole proprietor that is offered a contract that requires him or her to have a workers compensation insurance policy.

1. The sole proprietor may voluntarily purchase a workers compensation insurance policy to cover his or her own work-related injuries and illnesses. It is necessary to have the policy endorsed to name the sole proprietor as a covered employee. All workers compensation policies exclude the sole proprietor unless specifically endorsed to include them. The yearly payroll used to determine premium for a sole proprietor electing to be covered by under a worker’s compensation policy is currently $38,688.
2. The sole proprietor may purchase a "minimum-minimum premium policy". A minimum-minimum premium policy covers any potential exposure (employees) a sole proprietor may have, but it does not cover the sole proprietor. The maximum cost of minimum-minimum premium policy is currently $900 (based on the type of business being insured, the cost may be less). Under the Wisconsin Insurance Basic Manual Rules, if the designated minimum policy premium is greater than 20% of the earned payroll, the minimum premium is 20% of the earned payroll, but not less than the policy expense constant (the expense constant is the cost of producing and servicing the policy.) When a policy is audited, if there has been no earned payroll (no employees) during the policy year (since 20% of $0 is $0), the actual minimum charge for the policy is $220 (the expense constant). The sole proprietor will receive a refund of any premium amount paid in excess of the $220. Example: $900 (initial premium), minus $220 (expense constant) = $680 premium refund.
3. Do not accept the contract.

You may download the entire document pertaining to sole proprietors and workers compensation here:
Sole Proprietors Under the Wisconsin Workers Compensation Act