Braden Black CEO
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Monday, November 22, 2010
Multi State Workers Compensation Coverage
One repercussion of the evaporating private construction job markets has been contractors casting increasingly covetous eyes toward regions where projects to exist. Whether these perceived greener pastures are in a neighboring state or across the country, moving into a new geographic market requires planning, analysis, and new bases of knowledge.
Not surprisingly, government requirements will perhaps absorb much of the contractor’s time and effort as she expands into new markets. And perhaps the highest hurdles will be erected by the new state’s division of workers compensation.
Of course, each state has its own unique set of requirements for obtaining and maintaining workers comp insurance. Creating an additional layer of red tape, most states also incorporate special additional rules for construction companies. Florida’s law is typical of the additional measures many states take to ensure everyone working in construction has coverage in the event of an injury. All construction companies, regardless of size, must obtain coverage. Other small (non-construction) companies are exempt if they employ three or fewer workers, not including owners and partners. In addition, general contractors and higher-tier subcontractors who subcontract part of their work must obtain proof of workers' compensation coverage or a Certificate of Election to be Exempt from their subs. If they don’t, “the sub-contractor's employees shall become the employees of the contractor (for insurance purposes). The contractor will be responsible to pay any workers' compensation benefits to the sub-contractor and its employees,” according to the Florida law.
All states require out-of-state companies to secure coverage in state (unless the contractor qualifies for self-insurance) either from a private company or from the state’s own pool.
What’s a risk manager to do?
While individual cases contain special circumstances, there are a few common situations and problems that can be avoided or at least mitigated through proper strategy and understanding of how multi-state workers compensation coverage works.
Most states allow the incoming contractor to purchase workers comp coverage from an insurance carrier. If your carrier is national, it should be able to provide coverage for whichever states you do business, writing a policy that complies with the rules in each jurisdiction, including the particular state’s job classification codes, premium rates, rules, etc.
In 13 states, contractors moving in can buy insurance through the private carriers or through the states’ funds. Only in Ohio, Washington, North Dakota, Wyoming, Puerto Rico and the U.S. Virgin Islands must you go through the government-operated fund. Texas does allow forgoing coverage and taking on all the risk yourself.
In most states and in most circumstances, all employees must be included in the policy. You might find exceptions that allow owners (sole proprietors and partners) to exempt themselves (Florida, and often other states, allows this for companies other than construction firms).
Of special note: if you lease workers through a temporary workforce company, that company’s workers comp coverage extends only to those temporary workers obtained through the agency. Coverage often is determined through examining payroll records. Workers paid through the leasing company are considered leased workers. All other workers would be considered employees, and their workers comp coverage would be the responsibility of the contractor. Anytime a temporary leased worker’s job duties or description changes, the contractor must inform the leasing company immediately to insure the worker maintains proper coverage.
Even if you’ve engaged a national firm to provide insurance in multiple states, it’s up to you to ensure the firm is armed with all the pertinent information to ensure proper coverage. Your agent must understand the scope and scale of your operations in each state in which you operate and that you’re hiring workers who live in those states. This is especially important if the underwriter is unable or unwilling to add an “all states” endorsement to the policy (ask your agent about this endorsement). When changing agents, companies or underwriters, take the time to make sure the new vendor understands your needs. If your previous coverage was sufficient, ensure the new firm is able to match it in terms of coverage. If your situation has changed or you are exploring expansion into another jurisdiction, discuss it with you new carrier – especially the size of your workforce in each location, to which states and U.S. territories your operation extends, and the nature of the work your contracting firm performs in each location – so she’ll know what you require and you’ll know whether she can provide it. If not, you may need to find supplemental coverage.
Not surprisingly, government requirements will perhaps absorb much of the contractor’s time and effort as she expands into new markets. And perhaps the highest hurdles will be erected by the new state’s division of workers compensation.
Of course, each state has its own unique set of requirements for obtaining and maintaining workers comp insurance. Creating an additional layer of red tape, most states also incorporate special additional rules for construction companies. Florida’s law is typical of the additional measures many states take to ensure everyone working in construction has coverage in the event of an injury. All construction companies, regardless of size, must obtain coverage. Other small (non-construction) companies are exempt if they employ three or fewer workers, not including owners and partners. In addition, general contractors and higher-tier subcontractors who subcontract part of their work must obtain proof of workers' compensation coverage or a Certificate of Election to be Exempt from their subs. If they don’t, “the sub-contractor's employees shall become the employees of the contractor (for insurance purposes). The contractor will be responsible to pay any workers' compensation benefits to the sub-contractor and its employees,” according to the Florida law.
All states require out-of-state companies to secure coverage in state (unless the contractor qualifies for self-insurance) either from a private company or from the state’s own pool.
What’s a risk manager to do?
While individual cases contain special circumstances, there are a few common situations and problems that can be avoided or at least mitigated through proper strategy and understanding of how multi-state workers compensation coverage works.
Most states allow the incoming contractor to purchase workers comp coverage from an insurance carrier. If your carrier is national, it should be able to provide coverage for whichever states you do business, writing a policy that complies with the rules in each jurisdiction, including the particular state’s job classification codes, premium rates, rules, etc.
In 13 states, contractors moving in can buy insurance through the private carriers or through the states’ funds. Only in Ohio, Washington, North Dakota, Wyoming, Puerto Rico and the U.S. Virgin Islands must you go through the government-operated fund. Texas does allow forgoing coverage and taking on all the risk yourself.
In most states and in most circumstances, all employees must be included in the policy. You might find exceptions that allow owners (sole proprietors and partners) to exempt themselves (Florida, and often other states, allows this for companies other than construction firms).
Of special note: if you lease workers through a temporary workforce company, that company’s workers comp coverage extends only to those temporary workers obtained through the agency. Coverage often is determined through examining payroll records. Workers paid through the leasing company are considered leased workers. All other workers would be considered employees, and their workers comp coverage would be the responsibility of the contractor. Anytime a temporary leased worker’s job duties or description changes, the contractor must inform the leasing company immediately to insure the worker maintains proper coverage.
Even if you’ve engaged a national firm to provide insurance in multiple states, it’s up to you to ensure the firm is armed with all the pertinent information to ensure proper coverage. Your agent must understand the scope and scale of your operations in each state in which you operate and that you’re hiring workers who live in those states. This is especially important if the underwriter is unable or unwilling to add an “all states” endorsement to the policy (ask your agent about this endorsement). When changing agents, companies or underwriters, take the time to make sure the new vendor understands your needs. If your previous coverage was sufficient, ensure the new firm is able to match it in terms of coverage. If your situation has changed or you are exploring expansion into another jurisdiction, discuss it with you new carrier – especially the size of your workforce in each location, to which states and U.S. territories your operation extends, and the nature of the work your contracting firm performs in each location – so she’ll know what you require and you’ll know whether she can provide it. If not, you may need to find supplemental coverage.
Labels: Commercial, Construction Industry, Industrial
Thursday, November 4, 2010
Jobsite Emergency Action Planning
It’s a contractor’s worst nightmare. Despite your comprehensive training programs, meticulous inspections, and endless discussions about jobsite safety, accidents can and do occur. Some of those accidents will be serious, and perhaps even fatal.
When a worker is killed on the jobsite, it’s understandable that coworkers, supervisors and company management may not think as clearly as they would like or may not act in the most appropriate manner, owing to shock, panic, misinformation, or self-blame. That’s why it is crucial that part of any contractors’ safety plan contain an emergency response section to ensure other workers, the public, and the company itself is as protected as possible following a catastrophic accident. These fatal accidents will require decisive and correct action from several company departments. Obviously, the safety department will take center stage in the aftermath of any accident, but the company’s legal, risk management, marketing, security, business development, and public relations departments also will be called upon to act.
To ensure these functional departments rise to the challenge, executive management must plan, prepare, rehearse, and have at everyone’s fingertips the roles they will play if that terrible day ever arrives.
While it may seem crass to think of the risk to the company’s financial situation at a time when a colleague has died, these considerations are management’s responsibility. “Emergency planning is a compliance requirement often overlooked or inadequately addressed by most contractors,” notes professional safety consultant Mel Hedin, in an article for Erectors.com. “Not surprisingly, it’s also an area that, if insufficient, could result in significant penalty costs for your organization.”
At minimum, your “fatal event” plan must address everything required by your state and the federal Occupational Safety and Health Administration. This includes the development of site-specific emergency action plans – plans that are relevant to the hazards found at the site, as well as anything that could hinder implementation of the action plan, such as limited access to cellular phone service, difficult access for emergency vehicles, etc. Proactive companies will develop a general emergency plan that covers common situations, then adapt, adjust or add to it when special circumstances arrive at particular jobsites.
The plan should instruct workers how to prioritize their duties. Of course, in the event of a critical accident, the first, immediate course of action is to get emergency aid to the victim and to eliminate the risk of a similar fate for other workers. If the injury is the result of noxious fumes, wall collapse, fire or explosion, etc., this may mean moving the victim and evacuating the area. Once the fallen worker is in the hands of trained professional medical personnel, the employees designated by the emergency plan should work to secure the accident area by sealing it off for further inspection, limiting access to the site to only those company officials and medical aid workers with pressing business inside, and locating and isolating witnesses to the accident.
As these tasks are completed, or once they have been executed, workers should implement the action plan’s communication protocol. This will ensure all company departments and leaders will be informed of the situation so they can implement their own portions of the emergency plan. These procedures may include, but are not limited to:
*Sending someone to meet the police, OSHA, ambulance or paramedics to direct them to the scene (security department)
*Determining to which hospital the victim will be transported (public relations)
*Providing additional personnel to limit site access (security)
*Interviewing witnesses and documenting the scene photographically (risk management)
*Shutting down the site (management and security)
*Informing the worker’s next of kin and provide them with childcare, transportation, lodging, and other needs (upper management) If shutdown of the site is necessary, always conduct a personnel debrief prior to people leaving the site
*Establishing a media relations area, and providing updates on the situation (public relations)
Even with the plan in place, it does no good unless it’s handy and your crisis management team understands its provisions. Just like grammar school fire drills, practice and familiarity with procedures will lead to levelheaded decisions in the event of an emergency. All employees will be called upon to fill critical roles in the event of a serious accident or fatality on the jobsite. Make sure they’re ready and able to fulfill their duties.
“I highly recommended that you engage employees in mock emergency evacuation and rescue exercises periodically to evaluate their knowledge and the effectiveness of the plan,” Hedin writes. “Do not attempt to conduct these exercises until completion of policy development and employee training. Because the emergency action plan must be site-specific, you may have to provide additional employee training at each site.”
When a worker is killed on the jobsite, it’s understandable that coworkers, supervisors and company management may not think as clearly as they would like or may not act in the most appropriate manner, owing to shock, panic, misinformation, or self-blame. That’s why it is crucial that part of any contractors’ safety plan contain an emergency response section to ensure other workers, the public, and the company itself is as protected as possible following a catastrophic accident. These fatal accidents will require decisive and correct action from several company departments. Obviously, the safety department will take center stage in the aftermath of any accident, but the company’s legal, risk management, marketing, security, business development, and public relations departments also will be called upon to act.
To ensure these functional departments rise to the challenge, executive management must plan, prepare, rehearse, and have at everyone’s fingertips the roles they will play if that terrible day ever arrives.
While it may seem crass to think of the risk to the company’s financial situation at a time when a colleague has died, these considerations are management’s responsibility. “Emergency planning is a compliance requirement often overlooked or inadequately addressed by most contractors,” notes professional safety consultant Mel Hedin, in an article for Erectors.com. “Not surprisingly, it’s also an area that, if insufficient, could result in significant penalty costs for your organization.”
At minimum, your “fatal event” plan must address everything required by your state and the federal Occupational Safety and Health Administration. This includes the development of site-specific emergency action plans – plans that are relevant to the hazards found at the site, as well as anything that could hinder implementation of the action plan, such as limited access to cellular phone service, difficult access for emergency vehicles, etc. Proactive companies will develop a general emergency plan that covers common situations, then adapt, adjust or add to it when special circumstances arrive at particular jobsites.
The plan should instruct workers how to prioritize their duties. Of course, in the event of a critical accident, the first, immediate course of action is to get emergency aid to the victim and to eliminate the risk of a similar fate for other workers. If the injury is the result of noxious fumes, wall collapse, fire or explosion, etc., this may mean moving the victim and evacuating the area. Once the fallen worker is in the hands of trained professional medical personnel, the employees designated by the emergency plan should work to secure the accident area by sealing it off for further inspection, limiting access to the site to only those company officials and medical aid workers with pressing business inside, and locating and isolating witnesses to the accident.
As these tasks are completed, or once they have been executed, workers should implement the action plan’s communication protocol. This will ensure all company departments and leaders will be informed of the situation so they can implement their own portions of the emergency plan. These procedures may include, but are not limited to:
*Sending someone to meet the police, OSHA, ambulance or paramedics to direct them to the scene (security department)
*Determining to which hospital the victim will be transported (public relations)
*Providing additional personnel to limit site access (security)
*Interviewing witnesses and documenting the scene photographically (risk management)
*Shutting down the site (management and security)
*Informing the worker’s next of kin and provide them with childcare, transportation, lodging, and other needs (upper management) If shutdown of the site is necessary, always conduct a personnel debrief prior to people leaving the site
*Establishing a media relations area, and providing updates on the situation (public relations)
Even with the plan in place, it does no good unless it’s handy and your crisis management team understands its provisions. Just like grammar school fire drills, practice and familiarity with procedures will lead to levelheaded decisions in the event of an emergency. All employees will be called upon to fill critical roles in the event of a serious accident or fatality on the jobsite. Make sure they’re ready and able to fulfill their duties.
“I highly recommended that you engage employees in mock emergency evacuation and rescue exercises periodically to evaluate their knowledge and the effectiveness of the plan,” Hedin writes. “Do not attempt to conduct these exercises until completion of policy development and employee training. Because the emergency action plan must be site-specific, you may have to provide additional employee training at each site.”
Labels: Commercial, Construction Industry, Industrial