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Monthly Archives

May 2017

A Primer On Contractor Bonds

By Construction Insurance Bulletin

Installing ducts and showers in homes around the area, building additions to people’s homes, putting new toilets in, you’re probably not going to need a contractor’s bond. But, when you get those big-time jobs, the ones that make or break the business this year, when you start taking on new hires because you don’t have the manpower, when you’re doing swimming pools and whole new buildings, you’re gonna have to get bonded.

The Miller Act dictates that on any job budgeted at over $100,000, you’re going to have to supply a contractor’s bond. Now, this might not be your responsibility. If you’re sub-contracting for somebody else, you can let the head honcho who brought you onto the job worry about it. Otherwise, you need to get bonding in order to ensure that the job can be completed in a professional manner.

All of this being said, many clients may require bonded contractors on the job as a matter of preference. Getting bonded can make it easier to attain work for your firm even if you tend to focus on smaller and medium sized projects rather than six-figure constructions and installation.

Contract bonds are bonds that allow you to work on a particular job. Contract license bonds allow you to work in a certain area. You’ll need to check your local regulations to determine what you need in order to take a contract in addition to a contract bond. A bond differs from an insurance policy in that the firm signing the bond over to you is not covering the losses, damages or legal fees, rather, they are lending you the money to do so should something go wrong. You are expected to pay the surety back for any costs. It’s a line of credit rather than a form of insurance. Your insurance may wind up helping you to cover those costs, but any claims you make on your bond will eventually come out of your own pocket.

So what’s it going to cost you to get bonded? It’s really hard to guess. There are quite a few factors that weigh into the quote you’re going to get from a licensed surety bond provider. The good news is that the cost of getting bonded tends to correlate with the cost of the job. Making sure that your budget covers your own costs as well as the cost of getting bonded can help to ensure that you’re not scraping together your pennies to cover your end.

EPLI: Does it Cover Third Parties?

By Business Protection Bulletin

The purpose of third-party coverage in an Employment Practices Liability (EPLI) policy is to protect an organization and its employees from accusations of wrongful acts committed against customers, clients, vendors, and suppliers. Some EPLI policies also cover wrongful acts committed by third parties against the insured’s employees.

Harassment and all forms of discrimination are covered under wrongful acts. Discrimination claims include discriminatory practices against a person based on their race, religion, age, sex, national origin, disability, pregnancy or sexual orientation. Harassment involves unwanted sexual advances or requests for sexual favors. Both verbal and physical conduct, as well as other forms of harassment that create a hostile or offensive work environment, are covered. Some policies also cover accusations of mental anguish, emotional distress, humiliation and assault.

If your organization has a lot of interaction with the public, it is especially vulnerable to third-party claims like those described above. In some cases, EPLI carriers might not provide third-party coverage to firms with a high potential for claims. What they might offer instead is limited coverage, such as covering accusations of discrimination, but not harassment claims.

To protect your organization from third-party claims, you need to go beyond just purchasing coverage. You must implement policies and procedures that address discrimination and harassment issues, both from the standpoint of an employee’s actions and the actions of third parties. EPLI insurers are increasingly requiring employers to implement these practices before they will issue a policy.

Having policies in place will offer little help to stop third-party claims if employees aren’t adequately trained. New employee orientation programs should include a presentation outlining the organization’s harassment/discrimination policies. The training must also include how to report and handle a third-party claim. However, hearing the information once is not enough to insure compliance. Employees must be retrained periodically through departmental meetings. To maintain the effectiveness of departmental training sessions, be sure that supervisors are provided with copies of all policy updates and procedural changes.

One important caveat to keep in mind is that most EPLI policies don’t provide third-party coverage for accusations involving the violation of the Americans with Disabilities Act (ADA). Nevertheless, you should review your EPLI policy’s definition of a claim to determine the policy’s interpretation. Many policies define a claim as a “demand for monetary damages.” This definition can present a problem in an ADA claim, because many of these claims are asking for reasonable accommodations, not monetary awards.

That’s why it is important to ensure that your policy’s definition of a claim includes claims for non-monetary damages. A policy with this expanded definition will cover defense costs and indemnity connected with an ADA claim, but will not provide the funds to bring your organization into compliance with the provisions of the law.

Professional Liability Insurance: Protecting Your Name

By Business Protection Bulletin

Professional liability insurance is essentially there to protect your reputation as a professional.

Things happen. There are unforeseeable circumstances that can botch even the easiest job in the most capable hands. When that happens, most contractors, consultants, professionals and business owners are more than happy to help cover the cost to the client, to injured parties and so on. That’s why the insurance policy is there.

Professional liability is there to protect specifically against claims of negligence by covering the court costs. These are the cases that we fight not because we don’t want to foot the bill, but because a reputation is on the line, and at the end of the day, all any professional really has to lean on is a trusted name. That is the foundation of success in any field. You can lose your office space, you can lose your clients, you can lose some of your best employees, and you can always rebuild from there. Once your name has been stripped of value, however, there’s not much left to do. Top talent will avoid the association with a negligent employer and clients and customers will jump ship.

These are the cases that you want to fight even at a financial loss. Even if you know that you’re not at fault for a visitor who suffered an injury on your property, it may make more sense to take responsibility than to fight it in court and spend more money in front of the judge than you would have on the doctor bill. The more comprehensive your professional liability policy, the less likely you are to have to do this when your reputation is on the line.

Of course, you can’t always have the case dismissed, so professional liability will cover the costs awarded to the plaintiff in a civil suit should you lose the case, meaning that you will be covered even where general liability coverage does not kick in. However, the real value in the policy is in allowing you to defend yourself against that civil suit in the first place, and, wherever possible, protecting your reputation within your industry.

Medical professionals rely on malpractice insurance for the same reasons, while insurers and lawyers will rely on errors and omissions, or E&O insurance. In any field where a professional mistake can prove incredibly costly or harmful, you will find some form of professional liability insurance being sold.

Your Executives Can be the Biggest Risks.

By Business Protection Bulletin

Having the wrong executive in the wrong spot might create a legal problem, as well as a business headache. In the California appellate case Align Technology v. Bao Tran, Align sued a former employee, attorney Bao Tran, for stealing their patents and starting a competing law firm. The suit alleged that Tran used confidential information to assist a startup competitor and fund an unauthorized law practice on the side.

According to the allegations, Tran used company funds to apply for patents in his own name and for his clients, ran his side business using the company’s phones and computer systems, and misappropriated company property by applying for patents in his own name.

Align allegedly learned of Tran’s side business as the result of at least 13 phone calls from his clients, including one call in June 2005 from an individual who indicated that Tran had been his company’s intellectual and patent attorney for three years. Tran denied these allegations and accused Align of defaming him and attempting to undermine his new business.

Bottom line: Don’t assume that your executives aren’t a problem. Many companies focus on rank-and-file employees, even though executives can cause 10 times the damage.

To read the case, click here.

How Big Is Your Printing Business?

By Business Protection Bulletin

Success comes with a price. The more business you’re doing, the more it’s going to cost to do business. Maybe that’s why so many small business owners aren’t interested in growing beyond a few employees in a small shop, maybe that’s why there are software developers making enough money to buy some office space, but prefer to run the business out of their garage. Ambition, empire building, it comes with its share of headaches.

Insurance is one of those areas where the law is going to put a completely different set of rules on you depending on how much business you’re doing, and commercial printers insurance is no exception. If you’re a small business owner looking to expand, something you may want to consider is your BOP.

BOP’s are for small businesses only. A BOP or Business Operator’s Policy is basically a simple, all-in-one general liability and property insurance policy. It simplifies the process for business owners who would rather let the insurance run on autopilot. It is available to businesses with fewer than 100 employees, running their business out of a smaller workspace, and who don’t need to buy more than a year of coverage at a time.

When you expand your business, you expand your risk. More employees means more people who could become injured, and people who are, let’s face it, more likely to sue if they feel that your worker’s compensation policy is not adequate. You’re not likely to face civil charges when you’re only employing your immediate family and a couple of friends, but the risks are compounded when you’re staffing a full company. The laws regarding insurance take that into account.

If your business is growing, then you may need to look into expanding your policies regarding slander and libel, as well. As you start taking on larger projects, you’re taking on greater risk of upsetting the wrong people with what you print. First amendment laws can protect printers to an extent, and your clients are most likely to take the brunt of the heat should charges be filed. However, an important rule of thumb in all litigious matters is that they’re going to target whoever has the most money and resources with which to pay out. That’s not a major concern if it’s you and a small staff running your press out of a studio, but it can be when you start leasing an old warehouse and hiring enough people to fill it.

If you want to establish yourself as a major brand in printing,

Electrical Safety Tips

By Workplace Safety

A preventable electrical injury occurs in the workplace every 23 minutes.

Jim White, training director for Shermco Industries, Inc., a Dallas-based electrical power systems test and maintenance company, has developed this list of 10 tips for keeping workers safe from shocks, burns, and electrocution on the job:

Develop a zero-tolerance policy toward energized work. Get serious about “no hot work.” This includes conducting an electrical hazard analysis for energized work. Fine and discipline violators.

Get out in the field or plant and see what your workers are doing. (aka “management by walking around”).

Develop checklists or other ways to track who is qualified to perform which tasks. Some businesses use job-task analyses to provide a blueprint of employees’ activities.

Train your employees. To be qualified to perform any task, workers must know the construction, operation, and hazards associated with the equipment they’re using. Make supervisors responsible for knowing what employees can – and can’t – do safely.

Develop safe work practices and procedures. Practices such as energized electrical work permits, clearance procedures, and switching orders can help prevent accidents and can help document that the right steps were taken. These precautions become especially important in case of an accident.

Perform periodic safety audits. When workers know that they’ll be subject to random audits, they’ll try to maintain safe work procedures and practices. Remember: what gets measured, gets done.

Conduct job briefings any time the scope of the work changes significantly and when new or different hazards are present.

Be cautious about implementing safety awards programs, especially if they might discourage accident reporting.

Become familiar with industry standards. Examples include with NFPA 70E and the IEEE (Institute of Electrical and Electronics Engineers) Guide for Performing Arc Flash Hazard Calculations.

Document everything. If you don’t have it in writing, you never did it. Show a good-faith effort; OSHA will notice – and compliance could save you big dollars and legal penalties.

Safety Tips for Offshore Liabilities

By Workplace Safety

No matter what your workers’ compensation policy is, the best way to operate your business is to avoid having to use the policy altogether. Unfortunately, safety can be difficult to enforce in your own facilities, let alone offshore. Employees often have very different motivations than middle management and even upper management which can make them more prone to risky maneuvers. Here’s how to ensure quality control and safety even when you’re miles away.

Never Assume

This is the most important piece of advice you can get. Accidents are rarely ever predictable to company owners, which is a major red flag that someone has been assuming rather than verifying protocol is being followed. It doesn’t mean you have to start breathing down management’s necks, but it may mean doing more follow up on where the gaps are when it comes to safety measures. Every company can improve in these matters, it’s just a question of which areas to focus on.

Inspect Machines 

Your machinery is likely one of the biggest hazards, and it may be time to increase your maintenance on the equipment — especially if it’s several years old. It can be helpful to list out the common and uncommon hazards alongside potential mistakes that could lead to injuries before contacting the inspectors to review the current schedule and major priorities. Tweaking it can increase the safety (and financial stability) of everyone in the company.

Refreshers

Employees who concentrate on certain projects may forget their safety training for everything except what they work on. Everyone should know about how the different parts of the machines work together, whether they use them everyday or once a month. Safety gear cannot be optional on an offshore site, no matter what the rules of the country are. Mats, boots, helmets, masks: they’re all important. There should be full body harnesses for those working at dangerous heights. Even ergonomic chairs and stretching exercises can be implemented for people who are in a more office-type setting.

Emergency Training

Debris, oil, water cannot be on the floor or in people’s ways for very long. Employees are typically using their own wits to keep themselves from injury, and a rough patch or unexpected object blocking their path can easily make for a bad fall. Offshore facilities often have much more lax procedures when it comes to toxic materials, or even basic clean-up procedures. Taking shortcuts may not technically be illegal, but it can open you up to liabilities that are much more expensive than taking the time to clean. In addition to safety training around machines, employees should know basic emergency safety (e.g., fire, earthquake, etc.) and first aid for the unexpected.

Required OSHA Training

By Workplace Safety

This real-life case reinforces the need for every business to provide OSHA-required training.

A West Virginia company assigned a new employee – call him Jim – to drive a forklift, even though he had no experience or training in forklift operation “There’s nothing to it,” his supervisor told Jim. “It’s just like driving a car.” However, his first few weeks on the job turned out to be bumpy. Several times on each shift, while driving the forklift, he would knock things over. Although the supervisor warned Jim to be more careful, he continued to bump his way through the workday, leaving a trail of destruction wherever he went.

About three weeks after being hired, Jim’s supervisor instructed him to drive down a narrow aisle between two rows of stacked, loaded pallets. After objecting, Jim reluctantly proceeded down the aisle. His left foot, which was dangling outside the forklift where it shouldn’t have been, became pinned between the forklift and the wall of pallets. Jim suffered multiple fractures of the foot, together with a badly twisted knee; both injuries required surgery. Instead of going back to work, Jim went to court, filing suit against his employer and his supervisor for negligence.

His argument was clear: The company and his supervisor failed to provide safety training that could have prevented the accident. Jim’s attorney told the court that, although OSHA regulations mandated specific training, testing, and certification for forklift operators, the company had not trained, tested, or certified him. This meant that Jim should not have been operating a forklift – and if he hadn’t been doing so, the accident would not have taken place.

The Supreme Court of Appeals of West Virginia agreed, ruling there was sufficient evidence to prove that both the employer and the supervisor were negligent. When they hired the employee; they knew that federal law required proper training or certification of forklift operators. Allowing Jim to drive a forklift without proper training was an act of negligence.

The message: Failure to provide OSHA-required training is a huge mistake. Whenever you hire new employees or assign workers to new jobs with new hazards, make sure that they receive proper training from the get-go. Never allow an employee to operate dangerous equipment or perform any other hazardous job until they have completed the required training and demonstrated competence, as well as understanding the hazards and necessary precautions.

Workers’ Compensation for Ranches

By Workplace Safety

All states have their own rules when it comes to workers’ compensation, but those rules rarely stay the same. New Mexico for example recently ruled that ranch employees are required to have workers’ compensation offered to them, whereas before those workers were part of an exempt group under the law. Ranches and farms require a good deal of manual labor, and where there’s manual labor, there’s injury. Find out more about what you should know about workers’ compensation for ranches and farms.

Agriculture Yesterday and Today 

As evidenced by New Mexico’s example, farms and ranches have long been left out of many legal restrictions for businesses. After all, an industrial factory with 1,000 workers couldn’t be held to the same standards as a family farm with 4 people tending to the livestock. However, policies are shifting toward offering more coverage for employees who need that protection. Even if your particular ranch does not need insurance due to the laws in your state, it may still be a good idea to get it.

Exemption for Agricultural Activities

Small farms across the nation typically weren’t expected to keep up to the commercialization culture simply because of the size and production scale of the business. The exemptions vary from state to state, with some basing the exemption on total payroll numbers, or the type of labor on the ranch (e.g, seasonal, family business, etc.) The extra rules were made to protect the farm from exorbitant fees, but also to protect Americans from having to shoulder the raised costs of production. However, this has led to workers being hurt who otherwise would have been covered under normal workers’ compensation laws.

Employees may not only be affected by their exact title (e.g., farmer vs. feed mill salesperson), but by the exact activity that they’re doing at the time of injury. One worker who was injured after handling a steer was told by the employer that they were engaged in an agricultural activity, which would have been exempt in that state. However, after challenging this in court, he was granted compensation because it was determined he was conducting commercial business rather than agricultural at the time. This type of distinction illustrates just how complicated these affairs can be.

The Future Is Covered 

If you remember anything about workers’ compensation in this sector of the economy, the clear takeaway is that there is more pressure for employers to give more consideration to their employees. Constitutional activists are clear that they find these exemptions exploit the workers who put their bodies at risk everyday. While state law may take more time to catch up, it’s likely worth looking into having some type of coverage for ranches regardless.

Avoiding FLSA Violations

By Risk Management Bulletin

Have you audited your practices for these common wage and hour exposures?

Exempt vs. non-exempt. Have you classified your exempt employees properly or are you risking an overtime exposure?

Rest and meal period violations. Is the employee truly relieved from work and are your time-keeping clocks tracking meals accurately?

Travel time. Many workers who start from their home and then go to multiple locations fall under “portal-to-portal laws.”

1099 misclassification. This is a significant exposure. The IRS and state agencies are looking to find as many people as they can who are classified as employees.

Failure to pay prevailing wage. If you’re working a government or quasi-government project, make sure you’re complying with all wage requirements.