Archives for January 2020

NCCI 2020 Data Reporting Conference – Nuggets of Excellent Information

January 31, 2020 By JL Risk Management Consultants

NCCI 2020 Data Reporting Conference West Palm Beach Worth The Time and Travel Spent

The NCCI 2020 Data Reporting Conference ran from January 28th through today, January 31st at the Palm Beach Convention Center, West Palm Beach, Florida.

west palm beach skyline ncci 2020 data reporting conference

Wikimedia Commons – AndyCox

The weather was superb. The only bad weather was late at night when it rained buckets. I used to live in Boynton Beach, FL, located just south of West Palm Beach.

Last year, I did not attend this NCCI Conference. I decided the information does not change much from year to year.

The NCCI 2020 Data Reporting Conference contained a few important updates for me. The conference is a massive gathering of data reporting personnel that work with NCCI during the year.

The most important aspect was the new Indemnity Financial Call. The data reporters said this caused the last week of March to become even more of a hell week with both the Indemnity and Medical Calls due on the same day.

I was at the conference to analyze the state rules that change the national NCCI rules and the anomalies the state changes caused to specifically the Unistat Reports. The Unistat Report for each employer turns into their E-Mods (in a way).

Some of the instructors from two years ago were teaching the same courses. Some new NCCI instructors were on hand teaching other subjects.

The states with the most deviations to the overall NCCI national rules were:

Missouri
Texas – NCCI brought Texas on board two years ago, so many of the rules were in transition to the NCCI rules.
Oregon
Florida – kind of ironic as NCCI’s HQ state.
Georgia – seemed to have the most state deviations from the National Rules.

The next link contains the full schedule from the NCCI schedule to show what they offered over the last few days. I arrived one day into the conference and left one day early.

Each session repeated at least once to allow everyone the opportunity to attend the sessions of their choice.

The sessions from the NCCI schedule can be found here. You may want to review them to see if the conference would benefit you or your organization.

I attended a mix of the sessions. Even though I had to set through 2.5 hours of a class to cover 30 minutes of my interests, the sessions were well worth the time.

Slideshow of NCCI 2020 Data Reporting Conference Powerpoint

Wikimedia Commons – Gareth Saunders

NCCI is going to put all their Powerpoint slides online in the coming weeks. It may well be worth your time to review most, if not all of them.

I will post a notice when they publish all of the sessions to their website. One of the advantages of being at the conference was receiving the answers to the review questions for each session. The NCCI does not provide the answers to all of the questions in their slides.

I had previously written articles on the NCCI Data Reporting Conference over the past few years. If you are interested, past articles can be found here.

The NCCI 2020 Data Reporting Conference was well worth attending. As I have said in the past years, if you have the time and you have anything to do with data reporting to NCCI, the conference is well worth the time and travel. NCCI does a nice job.

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WCIRB Conference Oakland CA HQ Last Week Lasted 90 Minutes

January 30, 2020 By JL Risk Management Consultants

WCIRB Conference Oakland CA – My Mistake Turned Out OK

From The WCIRB Conference Oakland CA – my mistake on thinking it was a full-day conference. The WCIRB used to host one day conferences. Their conference booklets from 2002 – 2010 still sit in my bookshelf.

WCIRB Conference Oakland CA redistricting map

If you search this blog, you will find a few articles that consist of my attendance at those conferences. The WCIRB’s presenters were always top-notch and very informal, which made the day-long conferences almost a roundtable of sorts.

Yes, I traveled to WCIRB’s (Workers’ Compensation Insurance Rating Bureau) HQ without reading the conference press release more closely. I did have two clients in the area to visit, so my trip was not a washout.

The WCIRB’s personnel have been very helpful with generally a great attitude when I contacted them over the years. No manuals were provided except for an advertisement for their new designation – WorkComp Essentials.

Californians are great networkers. I talked to quite a few agents and premium auditors. The number of premium auditors at the meeting was surprising. The subject of the meeting consisted of the 2019 and 2020 changes to the Classification Codes.

If I remembered the total correctly, the WCIRB changed over 200 CLass Codes. Two agents that I met were not happy as their insured clients were a tad upset with the changes.

The WCIRB is going to cover AB 5 and its implications. I posed the question – There are now two or more Assembly bills introduced that may change AB 5. Should the WCIRB wait until to see the ramifications of those bills to see what effect they will have on the process? I saw other attendees shaking their heads in agreement. The WCIRB presenter said their lawyers are following those Assembly Bills closely.

The WCIRB said they were going to post the video of the meeting online sometime soon on their website. That video would be one to watch.

I am now attending the NCCI 2020 Data Conference – West Palm Beach, FL. I will write a report on that one tonight. Thanks to the WCIRB for hosting the WCIRB Conference Oakland CA. I just wish it had been longer.

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Bulk Workers’ Comp Claim Settlements Are Nothing New

January 23, 2020 By JL Risk Management Consultants

How To Set Up Your Own Bulk Workers’ Comp Claim Settlements

One of the major retailers published a news release concerning bulk Workers’ Comp claim settlements.

bulk workers' comp claim settlements groceries aisle pic

Public Domain – Daniel Case

The company had found out that many settlements had one or two sticking points that could easily settle by settling some of the “small things” involved with settlements. The self-insured retailer called the method bulk Workers’ Comp claim settlements,

Bulk Workers’ Comp settlements started for me in the mid-1980s. My supervisor was out for the day when I was a claims trainee. I did not necessarily get along with my claims manager.

My bi-weekly claims review was due with my supervisor. My claims manager decided to do the claims review with me (gulp!).

At the time, I was an all lines outside adjuster with a heavy claims load for a trainee. My claims manager decided to cover only Workers’ Comp Claims as I had so many in my claims load. (Double gulp!!)

One attorney’s name kept popping up in a certain region of my territory in Oklahoma. Let us call him Attorney Tony.

My claims manager was surprised that the claims supervisor did not share a claims settlement technique that he and my absent supervisor had used very successfully.

My claims manager told me to print every summary sheet with Attorney Tony. Call him up and go to the city where he practices with all of my claims summary sheets as long as the injured worker were not still drawing benefits.

In the 1980s in Oklahoma, Workers’ Comp settlements with represented clients were settled by Joint Petition. If the injured workers’ attorney agreed to the settlement, the Oklahoma Workers’ Comp Commission Courts would approve it.

My claims manager also informed me not to buy the claimaint attorney’s lunch and do not let him buy mine – separate checks to avoid any appearance of a conflict of interest.

Attorney Tony was bilingual and had a large number of Spanish- speaking clients in this particular mid-sized Oklahoma town. I pulled 18 files where his client was finished drawing weekly (Temporary Total or Temporary Partial) disability benefits.

I circled back to my claims manager that day and said – wait, I do not have Independent Medical Exams (IME”s) for ratings for all the 18 injured workers. My claims manager said to go to the meetings, raised my settlement authority, and I was to call him, not my supervisor, if I went over my new temporary authority amount. (Triple Gulp!!!)

Steak Frites bulk workers' comp claim settlements restaurant

Wikimedia Commons – LWY

I called Attorney Tony, and he agreed to meet me at a restaurant with large tables. I think it was a steak restaurant.

We met in person the next week with my 18 claims summaries. I thought – how will I settle these without IME’s. My bulk workers’ comp settlements had begun in earnest.

Attorney Tony came with no notes. He knew all of the files by heart – impressive. He shook my hand and said – “Look, we can spend months with me sending my clients to his usual IME physicians and I could do the same, or we can settle all 18 files today. – What?

Oklahoma allowed PPD Rating stipulations at that time. I liked the security of an IME to back me up, so I was very hesitant.

We went through the files one by one. Attorney Tony said Ok, so for Mrs. Jones, I can get an IME of 15% to the body (45 weeks of benefits), and you can probably get a )0% (no weeks of benefit)s. Quite a few of these were non-surgical so Attorney Tony said he would stipulate that I had 0% ratings on all of them and then we discussed what rating that I would stipulate to settle and close the file by averaging the ratings.

We covered 14 files in this manner. That left four files with posts-surgical PPD considerations. The four had ratings from the treating Doctor.

I had to stipulate to higher ratings, and he stipulated to the treating physician ratings or something along those lines. We hashed those out over the rest of the two-hour lunch.

Wow, 18 files settled by using a bulk workers’ comp settlement technique first given to me by my claims manager.

Still yet today, I think that my claims manager had given Attorney a heads-up call that a claims trainee had a stack of files to settle and not to take advantage of my newness.

Eighteen files covered almost 15% of my Workers’ Comp claim file load.

When I returned to the office the next day, my claims manager called me into his office and asked me how it went with Attorney Tony. I informed him all 18 files settled with only four having to be hashed out more heavily.

My claims manager said that we save three to four months and 36 IMEs on those 18 files.

Petition of bulk workers' comp claim settlements right

Wikimedia Commons – Parliament of England

I could not even remember what I had for lunch; I was so nervous. My claims assistant had to type up 18 Joint Petitions. They were not happy as they did take some time to produce for the Court. The carrier had to type them up, not the claimant attorney.

After that interesting lunch, Attorney Tony and I would settle files over the phone using the same workers’ comp claims bulk settlement technique.

My Quick Guide on Bulk Claim Settlements

Follow the rules of your state -you may not be in a state that allows bulk settlements or stipulations.
Find the claimant attorney with the most files in your claims load
Make some appointment with the attorney, even go to their office or meet for lunch at least for the first time
Make sure your usual defense counsel has no reservations about settling the files using this method. They should not if it is legal and proper.
Know your claims cold that you wish to discuss. if you are hesitant, you lose
Very important — make sure you have the authority to settle. Make sure your claims department is OK with settling claims this way.
Do not debate with the attorney
If you want to bring along an attorney, that would be OK, but that could change the dynamics.
Bulk settlements may not work with certain claimant attorneys. Do not even try it.
Buy your own lunch or coffee. Make sure the place has room for any documents you may wish to spread out on the table. A corner booth works well.
If you feel like you are in over your head, call it a lunch or meeting and go back to your office. Do not be intimidated.
After meeting in person, you will be surprised at how many files settle quickly over the phone.

I wish you good luck with your workers’ comp bulk claim settlements. Now go settle some claims.

©J&L Risk Management Inc Copyright Notice

California Assembly Bills Try To Right The Wrongs of AB 5

January 22, 2020 By JL Risk Management Consultants

Possible Corrections To AB 5 Introduced With Two New California Assembly Bills

Two California Assembly Bills were introduced very quickly after the rumble caused by California AB 5 since the Bill became law on January 1, 2020. California Assembly Bill 5 ratified the famous 2018 Dynamex court decision.

Picture of California Assembly Bills in Session

Public Domain whitehouse.gov

Many people in California do not think that AB 5 needs any correction.

An article from WorkCompCentral.com pointed out the two new bills’ introductions (behind a paywall). I will not load in both of the complete new bills. California always has a great useful Legislative Counsel’s digest at the top of most bills.

AB 1925 appears first. The Bill attempts to exempt small businesses (less than 100 people) from AB 5.
AB 1928 appears second. This Bill reverses the AB 5 Bill and Dynamex court decision and reverts to the S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) court case used to determine who is an independent contractor. Follow the link to the Bill to see the most redlines I have seen in a Bill in a long time.
A comment that I found in a blog on these two Bills. The comment reeks of the confusion now in California.

Massachusetts California Assembly Bills Statehouse

Wikimedia Commons – Hsin Ju HSU

Articles on the California Assembly Bills and other changes may be coming to your states if your company has no workers’ comp interests in CA. Some of AB 5 came from Massachusetts. Independent contractor determination Bills have been heavily produced across the nation over the last five years. (coming to a state near you).

These two Bills were introduced within one day of each other. The speed speaks volumes.

Introduced by Assembly Member Obernolte January 14, 2020

An act to amend Section 2750.3 of the Labor Code, relating to employment.

LEGISLATIVE COUNSEL’S DIGEST

AB 1925, as introduced, Obernolte.

Worker status: independent contractors: small businesses.

Existing law, as established in the case of Dynamex Operations W. Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission.

Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of specified wage orders.

Hiring entity California Assembly Bills Job interview

Wikimedia Commons – Alan Cleaver

Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business.

This test is commonly known as the “ABC” test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.

Existing law exempts specified occupations and business relationships from the application of Dynamex and these provisions. Existing law instead provides that these exempt relationships are governed by the test adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

This bill would expand the above-described exemptions to also include small businesses, as defined.

An act to amend Section 2750.5 of, to add Section 2750.7 to, and to repeal Section 2750.3 of, the Labor Code, relating to employment, and declaring the urgency thereof, to take effect immediately.

Introduced by Assembly Members Kiley and Melendez
(Coauthors: Assembly Members Fong and Gallagher)
(Coauthors: Senators Jones and Moorlach)

January 15, 2020

LEGISLATIVE COUNSEL’S DIGEST

AB 1928, as introduced, Kiley. Employment standards: independent contractors and employees.

Ceremonial Mallet California Assembly Bills used by legislatures and courts of law

Wikimedia Commons – howtostartablogonline.net

Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of specified wage orders.

This test is commonly known as the “ABC” test. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.

This bill would repeal those existing provisions and instead require a determination of whether a person is an employee or an independent contractor to be based on the specific multifactor test set forth in Borello, including whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired, and other identified factors. The bill would make related, conforming changes.

This bill would declare that it is to take effect immediately as an urgency statute.

Blog Comment Covers The Situation Well

This whole thing just seems awkward.
1. Dynamex for all Labor issues, but Borello for WC.
2. Dynamex for all Labor issues, and Dynamex for WC if there are more than 100 Employees, but Borello for Employers with under 100.
3. Dynamex for Labor and WC if there are more than 100 Employees, but Borello for both if there are less than 100.

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California Assembly BIll 5 Article Response Gig Employers Very Concerned

January 9, 2020 By JL Risk Management Consultants

California Assembly Bill 5 Cranks Up the Questions – Email and Phone Calls

The California Assembly Bill 5 (also known as AB 5) article published by me this week generated the most phone calls and emails on an article in months.

Map of California Assembly Bill 5 Interstate

Public Domain License – User:NE2

J&L heard in the last 48 hours from a:

Dog walking company
Stonecutter
Trucking line
Attorney
Associated consultant
Insurance agency
Temporary employer
Reporter
Researcher
Medical clinic
Other employers

Some of the forward-thinking employers and entrepreneurs were not directly affected by California Assembly Bill 5. Their companies were located in other states. Their concern originated with my statement 10 years ago that I included in the recent article. <<<Check out that article here.

The statement – what happens in California may be coming to a state near you – raised many questions within the general employer community on who was an independent contractor and who is an employee.

The IRS website names even more categories of employees or contractors. I use the website as my go-to starting point for employers. Check out the IRS determinations here. Yes, I know that many states have exceptions. I use the website as a rule-of-thumb only.

The IRS categorizes workers as:

An independent contractor
An employee (common-law employee)
A statutory employee
A statutory nonemployee
A government worker

If you had thought only two employee categories of workers exist, you might want to check out the definitions of each type. I will be updating my IRS subcontractor page analysis next week with a new article. The IRS always provides a plethora of information on taxes on their website.

Certificates of Insurance become very valuable at the time of the premium audit. Make sure that the premium auditor sees any certificates of insurance. More proof of the type of relationship exists, but if you have the certificates, attach them to your organized spreadsheets to lower your workers’ comp audit stress level.

Wait, do you organize your employees and contractors on a spreadsheet for the premium audit? If not, an employer should immediately start that project when the notice of premium audit letter arrives with a proposed date of audit.

Organization and neatness count tremendously during any audit (premium, tax, unemployment, etc.). Excel(r) can be your best friend.

Dynamex Decision

Work at California Assembly Bill 5 over the phone

Wikimedia Commons – Daviesmo

The California Assembly Bill 5 was a codification of the Dynamex court decision that added in one major concern that had previously not been considered:

Is the worker an integral part of your business? Google defines the word integral as:

necessary to make a whole complete; essential or fundamental.

You may want to refer to the actual decision using this Dynamex court decision link. This court decision became the basis for California Assembly Bill 5.

The chain of events was:

Dynamex decision
AB 5 produced
AB 5 passed
Governor signed into law
Law became effective January 1, 2020
Gig-based companies are ignoring the law
Trucking companies filed for an injunction against AB 5
Large gig-based companies pledging $100 million to repeal the law

Please remember we/I are not attorneys or agents, so you may wish to consult with your agent and attorney on your compliance with California Assembly Bill 5.

California AB 5 Causes Workers Comp Conundrum For Gig Workers

January 7, 2020 By JL Risk Management Consultants

New California AB 5 Legislation Causes Confusion for Gig Workers And Comp Carriers

The New California AB 5 (Assembly Bill 5) has the gig worker economy up in arms. Let us start with the Bill itself. The Bill can be found here. Reading it over may be a good idea.

Public Domain License

The Bill was introduced by Lorena Gonzalez and supported by Governor Gavin Newsom.

Why is this bill so important? Because it codifies The Dynamex Decision. What is the Dynamex decision? Check here for that court ruling. I had written on the subject a few times. My newsletter has the article on Dynamex in the viral archive section. The article became viral after I first posted it in 2018.

Many phone calls and emails have come into J&L’s offices from employers concerning workers’ comp premium auditors addressing their audits with the main question from the Dynamex decision. Take the time to read the archived article. Understanding the decision is well worth your time.

California AB 5 initiated a firestorm on if gig workers become employees or stay as independent contractors. The Law of Unintended Consequences kicked in as truckers came under the jurisdiction of the AB 5.

Uber, Lyft, and Postmates have all refused to follow the new law that became effective January 1, 2020. To date, the companies did not reclassify their workers are employees. Many parties filed temporary injunctions against the new rules. The companies have pledged $90 million in California to have AB 5 reversed.

The misclassification of employees as independent contractors remains a hot button for people on both sides of the issue. Freelance writers and photographers fall under this law. Many have experienced having their contracts terminated. Some gig workers have supported California AB 5 as a way to have fair living wages.

The IRS publishes a rather involved website on how to determine if a worker is a subcontractor or employee. The guide does not fit every jurisdiction. Think of it as a rule of thumb.

Workers’ Comp Carrier Premium Audits

Wikimedia Commons – KG Shreyas Thimmaiah

The premium auditors have their work cut out for them. If an employer objects to having a worker or workers reclassified as an employee, what does the auditor do about an unsettled issue? OK, so say a premium auditor audits an employer where gig economy individuals write articles as a side job. The auditor reclassifies them as employees. The premium auditor may be wrong. Why?

The new law does provide a specific carveout for freelancers: They can contribute up to 35 submissions per year to a single outlet and still be considered contractors. Wow – my head hurts.

And this is one example of making a premium auditor’s job more difficult and possibly having the employer paying excess premiums. There are more exceptions, such as:

Several businesses were granted exemptions because they were able to demonstrate the following:

Whether or not their independent contractors had the wherewithal to set or negotiate their own prices – this is left to much interpretation – define negotiate
Whether they had access to direct communication with customers – once again – an interpretation – define direct communication
Whether they earned at least twice the minimum wage – An Uber driver can write off their mileage on their taxes, does that count as income?

One could go on and on debating the fine points of the three above bullet points for hours on end.

Ouch – this whole situation is getting very complicated for workers’ comp insurance carriers, their insured clients, agents, underwriters, and premium auditors.

Why Is This CA Law So Important

Supreme Court of California AB 5 State building

Wikimedia Commons – Tobias Kleinlercher

The California Courts patterned their decision off a Massachusetts rule. In other words, this law is not isolated to California AB 5. It is coming to a state near you. I have always advised readers and clients that their state or states of operation may adopt something similar to California AB 5 very soon. Be prepared.