Archive for July, 2015

Address Risks of Cloud Storage before Making Switch

As cloud data storage becomes more ubiquitous, you may be considering migrating many of your company’s storage functions to a cloud service.

Going with cloud storage can save you money in terms of data storage and hardware, but there are also issues you need to consider, particularly:

  • Accessibility
  • Dealing with data loss and recovery
  • Escrow agreement with provider
  • Continuity after termination
  • Ability to handle advanced workloads


First and foremost, you should not focus exclusively on cost as it is just one parameter you have to consider when initiating a cloud service. One of the most important issues you want to explore and secure is business continuity.



Security of information is the first and foremost concern for most companies that are moving to a cloud solution.

A recent study found that it is the biggest concern for 30% of corporate IT decision makers. You need to ensure the cloud provider has a strong, secure server and that if your provider encrypts your data, then logic dictates that it can also decrypt it.

Some companies are going so far as to demand that people in sensitive positions at the cloud provider have undergone background checks.


Data loss and recovery

You may be considering outsourcing your data management to decrease risks associated with disasters and data loss.

You should identify in the services agreement all of the expectations for data availability in the event of an outage.

It is not enough to identify the service provider as the responsible party when it comes to data. What’s more important is that the contract contains remedies if the provider fails to produce the required backups or data during an outage.


Escrow agreements

What are your options if your cloud service provider goes broke and shutters? You need to have an avenue for continuing your operations in that case.

One way to ensure continued data access is to insist that the necessary source code or other operational data is kept in escrow. The enterprise can then retrieve the source code or the data from the escrow holder in the event that the service provider stops providing services.


Continuity after termination

Many customers are surprised when they terminate a hosted or cloud services agreement and experience difficulty retrieving their data in a usable format without paying substantial fees to the service provider for transitioning the data to a new provider, or back to the customer.

Continued access to data can be a critical requirement for most businesses, so your agreement needs to address this issue.

During your vendor selection process, you need to discuss your expectations for transitioning of critical data and that the issue is included in the agreement. The discussion should include whether the vendor will return all of the data, the format the data will be in when it is returned, and the cost, if any, to return the data.


Advanced workloads

You can move e-commerce applications, content management systems and custom business applications to a cloud vendor to ensure smooth and efficient business management.

So before choosing, you should look at the following before deciding on a cloud vendor:

  • Reliability: Reliability is a major concern when it comes to big data or crucial business information you want.
  • Customer-driven approach: While choosing any cloud service provider, make sure of its customer-driven approach through its 24X7 support system.
  • Easy management: A cloud service provider should have an easy management system for its IT staff to manage and control efficiently.
  • Transparency: Be clear about and ensure transparency in terms of the managed service level agreement, pricing plan, security, data policies and terms and conditions of a cloud service vendor.
  • Integration: You need to find a cloud service vendor that can provide easy integration of existing network resources into the cloud apps server.
  • Network ownership: The cloud vendor you are choosing for cloud transformation of the enterprise business must have a robust and secure network to deliver network connectivity efficiently. Make sure your service provider owns this entire cloud infrastructure.


Because the use of hosted and cloud services is increasing in the marketplace, companies need to evaluate each of the business continuity risks inherent in a hosted or cloud services relationship. The ability to discuss and potentially minimize the risks can increase the likelihood that the relationship will be a successful one for both the customer and the vendor.



For additional peace of mind, contact us about data breach insurance.


Employees Responsible for 85% of Trade Secret Theft

Trade secret theft by employees is a serious and growing problem in the U.S. According to an analysis of federal court cases, 85% of such theft is committed by employees or business partners.

And while that’s disturbing enough, there’s been a significant escalation in the number of trade secret thefts over the years: cases doubled from 1988 to 1995 and again from 1995 to 2004, and they are on track to double yet again in the next few years.

According to a study by PricewaterhouseCoopers, suits brought against former employees over restrictive covenant agreements increased 60% in the 10 years ended 2013.

The law firm of Foley & Lardner LLP, which specializes in employer litigation, recommends the following to protect your company’s secrets from internal misuse:

  • Identify your secrets – In order to protect your trade secrets, you need to know what they are and where you store them. Broadly speaking, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret. Trade secrets encompass manufacturing or industrial secrets and commercial secrets. Legally, you should know that different states define trade secrets differently, so you should familiarize yourself with your state’s definition.
  • Limit access – Restrict trade secret access to those who have a need to know. Have these employees sign a confidentiality agreement in which they:
  • Acknowledge receipt of confidential material
  • Agree to keep the material confidential
  • Agree to return the material when employment ends
  • Agree to advise you of the identity of their new employer and to make the new employer aware of the agreement
  • Agree to allow you to provide a copy of their agreement to a new employer
  • Acknowledge that forensic analysis may be done on their devices, such as computers and phones, when their employment ends
  • Acknowledge that irreparable harm would be done if they violate it


  • Use non-compete agreements – Have employees who have access to your trade secrets and customer information sign non-compete and non-solicitation agreements. You can customize the agreement to ensure it reflects the worker’s role in the company, so you have better chance of enforcing the agreement should it be breached. Do not use a “one-size-fits-all” form and don’t have workers sign such agreements when there is no legitimate business reason.
  • During employee meetings, regularly address the importance of keeping information confidential. This will convey that you are serious about safeguarding your company information, particularly when an employee leaves your company.
  • Conduct exit interviews with employees who had access to trade secrets and:
  • Confirm in writing the obligations the employee has by contract, or otherwise by law, to keep confidential information confidential and, if applicable, not to compete or solicit
  • Confirm that all confidential material has been returned
  • Inquire about the person’s next job


  • Perform forensic analysis on computers and other devices of departed workers who had access to trade secrets to determine whether any thievery of trade secrets or other prohibited conduct occurred.


The takeaway

While the above steps are not foolproof, they can go a long way towards protecting your company’s trade secrets. And if an employee or departing worker makes off with any of this data, you will be in a better position to minimize and mitigate any harm that may come from it.


EEOC Opens up New Discrimination Class: Sexual Orientation

In a step that creates a new protected class, the Equal Employment Opportunity Commission has ruled that discrimination based on sexual orientation is illegal under federal law.

The ruling is significant since it essentially sets the stage for employers being susceptible to a new class of lawsuits, opening up an additional area of liability.

While discrimination based on sexual orientation is not spelled out in Title VII of the Civil Rights Act of 1964, it does bar sexual discrimination and the commission ruled that “an allegation of discrimination on the basis of sexual orientation is necessarily an allegation of sex discrimination.”’

Employers will have to change their policies and handbooks and train supervisors and managers on the ruling.

Federal courts are not bound to the ruling, but that said, courts frequently defer to federal agencies when they interpret laws that come under their jurisdiction.

The ruling applies to a number of employment areas, including hiring, termination and promotion decisions, and employee working conditions, including claims of workplace harassment.

It would apply to both job applicants and employees, who would be able to file a complaint with the EEOC if they feel their rights have been violated in this regard.

The EEOC justified its interpretation of sexual discrimination to include sexual orientation by writing:

“Discrimination on the basis of sexual orientation is premised on sex-based preferences, assumptions, expectations, stereotypes or norms. ‘Sexual orientation’ as a concept cannot be defined or understood without reference to sex.”

Here’s an example of what the EEOC means: When a manager mistreats a gay male employee because he dislikes the fact that his employee dates other men, the manager is taking that worker’s sex into account. Such discrimination is obviously sex-based, and therefore forbidden by Title VII.

The ruling is essentially a roadmap for courts to use when hearing cases of discrimination based on sexual orientation. And the issue is especially salient in light of the recent ruling by the U.S. Supreme Court that laws barring gay and lesbian marriages are illegal.

Twenty-two states currently ban workplace discrimination based on sexual orientation.

And under the new guidelines, all sexual orientation discrimination will be considered illegal, empowering gay private employees to lodge discrimination complaints.

Courts may choose to accept or reject the EEOC’s ruling, but the commission’s rulings are respected by the judiciary, and could tip more courts to rule that sexual orientation discrimination is, indeed, already forbidden in the United States.



Changes to California’s New Paid Sick Leave Law

Less than two weeks after it took effect, California’s paid sick leave law has been changed with important amendments that affect most employers in the state.

The new changes took effect immediately upon Gov. Jerry Brown signing the fixer legislation to last year’s Healthy Families Act of 2014. The new law gives employers some new flexibility in how they accrue paid sick leave.

To make sure that you stay on top of the new law and understand your responsibilities, the following are the main changes:


Employer standard

The old law: Under the original version of the law, if an employee worked in California for 30 or more days within a year from the start of employment they were entitled to paid sick days to be accrued at a rate of one hour for every 30 hours worked.

The new law: Now, an employee who works in California for 30 or more days within a year from the start of employment is entitled to paid sick days so long as the employee works for at least 30 days within the previous 12 months with the same employer.


Sick leave accrual method

The old law had one standard for calculating paid sick leave accrual, but the new law allows for other methods.

Under the amended law, employers may provide for employee sick leave on a basis other than one hour for each 30 hours worked, provided that the accrual is:

(1)   On a regular basis, and

(2)   The employee will have 24 hours of accrued sick leave available by the 120th calendar day of employment.


An employee is allowed to use accrued paid sick days beginning on the 90th day of employment.


Limiting sick day use

The old law: An employer could limit the employee’s use of paid sick days to 24 hours or three days in each year of employment.

The new law: An employer may limit an employee’s use of paid sick days to 24 hours or three days in:

(1)   Each year of employment,

(2)   A calendar year, or
(3) A 12-month period.


Grandfathered status

The new law gives employers more flexibility when accruing paid sick leave.

The law states that an employer may use a different accrual method, other than providing one hour per every 30 hours worked, provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period.

But if employers changed their existing policy, the grandfathering provision does not apply. At that point, an employer has to comply with the accrual method above, or front load three days of paid sick leave at the beginning of each 12-month period.

This section does not prohibit the employer from increasing the accrual amount or rate.


‘Pay’ rates when sick

The new law prescribes options for employers to calculate the “pay” for sick leave under this law:

  • Paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek.
  • Paid sick time for nonexempt employees shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.
  • Paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.


Reinstatement and sick time balances

Under the new law, employers are not required to reinstate accrued paid time off for an employee who is returning after less than a year of leaving their employer if they were paid for their accrued time off upon separation.



The new law also clarifies that the employer does not have to inquire for record-keeping purposes why someone took paid time off. Because of this, the employer is not liable for failing to accurately keep records when, for example, it has a paid-time-off policy and the employee does not announce the purpose of the paid time off.


The takeaway

These changes are important and your human resources manager needs to know about them so that your organization stays compliant, which reduces the chances of being sued by someone.


Independent Contractor Classification Clarified amid Crackdown

On July 15, the U.S. Department of Labor (DOL) issued an administrator’s interpretation regarding the application of the Fair Labor Standards Act with respect to the misclassification of workers as independent contractors.

The new interpretation is required reading for any business that uses independent contractors to any degree – often or seldom. It’s also important as the government continues to crack down on companies that misclassify their employees as independent contractors, most recently evidenced by the decision that Uber drivers are employees, and not independent contractors.

The interpretation came after a ruling by the California Labor Commissioner’s Office that a driver for the ride-hailing service should be classified as an employee, not an independent contractor. The ruling ordered Uber to reimburse a driver $4,152.20 in expenses and other costs for the roughly eight weeks she worked as an Uber driver last year.

Some of the main points in the DOL’s interpretation are:

  • It is the DOL’s unequivocal opinion that “most workers are employees,” under the Fair Labor Standards Act.
  • It fully embraces the “economic realities” test (explained below) as the DOL’s preferred approach to determining whether a worker is an employee or a contractor.
  • It downplays the significance of an employer’s exertion of control over the tasks performed by the worker.
  • It reinforces the DOL’s pattern over the last several years of aggressively examining the classification of workers as contractors.


The “economic realities” test includes the following factors:

  • The extent to which the work performed is an integral part of the employer’s business;
  • The worker’s opportunity for profit or loss depending on his or her managerial skill;
  • The extent of the relative investments of the employer and the worker;
  • Whether the work performed requires special skills and initiative;
  • The permanency of the relationship; and
  • The degree of control exercised or retained by the employer


The changes are not so dramatic, however, and the interpretation should give employers a good roadmap to use when designating employees.

Despite the last item on the list, covering the degree of control the employer exerts over an independent contractor, the DOL actually de-emphasized it repeatedly in the interpretation. Up until this interpretation, degree of control had been a central part of assessing whether a contractor actually is an employee.

That said, because the agency is downplaying this now, it means that employers could be in for a few surprises and time will tell what factors are taking more precedence.

Ultimately, the goal of the economic realities test is to determine whether a worker is economically dependent on the employer (and is therefore an employee), or is really in business for him or herself (and is therefore an independent contractor). This new document should be your guidepost if you currently are using independent contractors or plan to classify someone as an independent contractor in the future.



Same-sex Marriage Ruling and Your Employee Benefits

In June, the Supreme Court ruled that same-sex marriages are valid and should be performed throughout the United States.

While the ruling in the case of Obergefell vs.Hodges  is about personal liberties, it also will have an effect on employers’ employee benefit plans – and you need to know how to respond.

First, in its ruling the court did not touch on sexual orientation discrimination in the workplace. As a result, the decision does not require employers to treat the same-sex spouses of their employees the same as opposite-sex spouses with respect to the provision of health and welfare benefits.

That said, though, despite not addressing those issues, the case will require that employers make changes to their employee benefit plans. There are a number of factors for you to consider if you already offer your employees and their spouses benefits.


Expanding eligibility

If you were not previously offering same-sex spouse coverage, you may wish to offer an off-anniversary open enrollment for any employee with a same-sex spouse to now add various health and other welfare benefit coverage. This is likely to affect a number of your benefits offerings, including health, dental, vision, dependent life or voluntary benefits.

In other words, any benefits normally offered to a spouse, as well as coverage for any children of a spouse, should be extended to same-sex couples. You should review your plan documents and insurance policies to determine if same-sex coverage jibes with their existing verbiage or whether you need to include new wording in order to extend coverage.

Additionally, you may want to revisit your employee handbooks, benefit guides, enrollment forms, and other materials that you typically give to employees or new hires.  Make sure the current wording in those documents properly communicates your benefits options and that they can apply to same-sex spouses if you offer family coverage.

Since the court case was not about benefits, but did in effect allow same-sex couples in all states to marry immediately after the decision, employers rightfully want to know when they should make changes to their benefits plans.

Benefits advisers recommend that if you are already offering family and spouse coverage via your employee benefits plans and you plan to extend the offering to same-sex spouses, you should consider the following:

  • When you want to start the new eligibility for same-sex spouses. You can either start immediately or pick a date in the near future.
  • When can employees begin to enroll? You may need to check with us to see if your current health plan carrier will allow open enrollment for an expanded eligibility of same-sex spouses and their offspring, if any.
  • Do you need to change any of your documentation?


Other considerations

Besides changes to your health plan, you have to consider other changes to your benefits offerings, as well as other administrative issues.


Taxes – As a result of the ruling, states must treat all spouses the same for tax purposes. That may require you to make changes in how you report benefits for same-sex spouse. In essence, the ruling should result in less administration on your part since a same-sex spouse will be treated the same as a spouse of the opposite sex. This is especially important if you have been offering domestic partner benefits.


Not extending coverage  – The Employee Retirement Income Security Act of 1974 gives employers a wide berth in deciding whether to extend benefits to same-sex spouses. But going this route can set you up for headaches in the future, especially if you’ve been offering benefits to opposite-sex spouses up until now. There are legal implications, like being targeted in a lawsuit by employees in same-sex marriages.

Although the Supreme Court has not addressed whether offering health coverage only to opposite-sex spouses constitutes impermissible discrimination, some state laws may prohibit employers from discriminating with respect to the provision of employee benefits.

It’s best not to be the employer whose case sets precedent in this arena.


Domestic partner benefits  – As gay marriage was already the law in a number of states before this decision, many employers have eliminated domestic partner benefits, which they extended to employees who were legally barred from marrying in the past.

But this benefit could still prove useful since there are individuals who are cohabitating with a partner and who don’t want to get married. If you do decide to do away with domestic partner benefits, you should give your employees notice that they will be phased out over a certain period (like between now and the next open enrollment).




Five Ways to Get The Most out of Your Insurance Policy

While you may see that the payment of premiums every year means that your insurance policy is a liability on your book, the reverse is actually true: It’s a valuable asset.

The national law firm of Anderson Kill recommends in a recent blog that companies treat their policies as assets that must actively managed if their full value can be realized when they are needed. It recommends the following steps for maximizing the value of your insurance policy:


1.         Save your policies – Make sure that your insurance policies and accompanying documentation are retained.

If you are going through a housekeeping and are mulling destroying an old policy, make sure first to review your activities and the policy to make sure you may not need it to respond to a loss that occurs in the future or a new claim that dates back to the time the policy was in effect.

New claims that are related to others made during the policy period can also arise, as can claims that arise out of circumstances that were reported during the policy period.

Be smart about how you organize your old policies. If you have multiple lines of coverage, you may want to consider using a spreadsheet to keep them organized.


2.         Review new policies immediately – Once you receive the new policy make sure that it matches the certificate and/or your correspondence with your broker or carrier. If you review the policies upon receipt, you’ll be able to identify any problems.

At this point it is usually not too late to get any problems corrected. Wait too long and that may not be the case.

If you do find any discrepancies, your insurer may be able to issue a revision, endorsement or clarification.

If they don’t, at least you’ll be on record disputing the portion of the policy and you’ll have proof you did not waive anything.


3.         Review coverage after every loss – Whenever you are faced with a potential loss, you should immediately try to assess which of your policies would respond. And if you find that a policy could be tapped for a claim or a loss, you need to file a claim or notify your insurer of a potential claim.

This is important in order to comply with timely notice provisions requiring that you give notice within a certain period of time once you become aware of a potential loss or liability.

Don’t let the matter languish until it becomes a full-fledged claim or wait to see if another party will pursue payment for an alleged liability. And don’t wait just because you are concerned that your carrier will raise your rates next time upon renewal.

This strategy will work in your favor. If you eventually decide to handle it on your own and not file a claim, there has been no harm for you or the insurer. However, if you fail to file the claim in the required period of time, you could well be setting yourself up for forfeiture of the claim.

And if you do wait and the insurer disputes the claim, you could be in for a long and costly legal battle.


4.         Mergers, spin-offs and acquisitions – If you are going through a merger or an acquisition, you need to pay special attention to insurance issues. It may not always be easy to transfer insurance assets that cover both a division that’s being spun off and other parts of the operations.

While it’s desirable that insurance for a covered unit be transferred with the sale, this is not always possible, particularly if the insurance company decides not to approve the transfer. If it refuses, you may have to consider other means of transferring risk.


5.         Additional insured? Ask for policy copy – If your company is named as an additional insured on another company’s policy, you should obtain a copy of the policy and not just a certificate. You should request a copy of the policy, as it will show that you are truly named on the policy and that the policy exists.

Once you obtain the policy, you can then review it to make sure that your company was properly added as insured.

Also if you have a copy of the policy in hand, you’ll be better prepared to handle any issues should a loss or a claim arise. With the policy in hand, you will know where and how to give notice, what coverage is available, what exclusions might apply, what other conditions might apply, and how deductibles, retentions, and limits of insurance are allocated and calculated.

Conversely, if you don’t have a copy of the policy, you have effectively ceded all of the control over the loss and claims-making process to your contractual partner.



Four trends in dental plan design

Subtle yet important trends are reshaping dental benefit plan designs as employers continue to search for ways to keep costs in check while making minimal impact on what they offer to their employees.

While few employers are dropping dental coverage outright (in fact the number of employers offering them has grown), they are instead resorting to some new strategies, including:

  • Higher deductibles,
  • Lower plan coinsurance,
  • Adoption of preferred provider organizations (PPOs), and
  • Switching certain procedures from one category to another.


While new products have emerged in the health insurance arena, there have not been the same developments in dental insurance benefits because cost increases have been minimal.

While medical cost inflation has been high (albeit slower in the past four years than previously), employers have been shifting more costs of medical coverage and health care to employees. But mostly they’ve left their dental plans untouched.


New trends

That said, there are some trends affecting dental benefit plan design:

  • Higher deductibles. While many employers continue to offer dental plans with no deductibles, an increasing number now require a commitment from employees, and the level of that deductible has been slowly but steadily rising.
    In the past five years, the percentage of employers offering plans with a $0-$25 deductible has gone from 63% to 55%. That decline is expected to continue. Generally, however, most plans continue to offer diagnostic and preventive services with no deductible.
  • PPO plan designs.  Some employers have turned to preferred provider organizations to take advantage of the discounts they offer in return for a limited network of doctors. But employees may not like this option because most PPOs are small and their networks may not include the dentists they have been seeing.
  • More self-insured groups.  An increasing number of larger groups, generally those with 100 or more employees, find they can save money by self-insuring their group. But they may need to contract with a third-party administrator to handle the claims.
  • Higher employee contributions.  Many companies are bumping up the share of costs that employees pay for dental premiums. While many employers foot the premium bill 100%, some are starting to have their employees pick up a percentage. And some employers that are first starting to consider dental coverage will start by making it a voluntary plan, in which the employee picks up the premium tab.
  • Many companies that are introducing dental benefits for the first time are opting for “voluntary” plans, in which the employees pay the full cost of the premium.



What can you do?

If you are considering changes to your dental plan, to ensure minimal impact on your employees you may want to consider first (in this order):

  1. Raising the deductible, but not increasing the employee’s contribution.  Remember that dental benefit plan costs are utilization driven, and utilization rates for the most part are user-discretionary. Raising deductibles discourages utilization. Lowering the employer contribution, on the other hand, tends to reduce participation in the plan but increases utilization, ultimately increasing the cost per covered person.
  2. Comparing your plan to others. Talk to some of your peers in the business community, or to us, to find out what other employers are offering in their dental plans. In this case, remember why you are offering dental in the first place: to attract and retain talent. Try to focus on a plan that is similar to what other businesses are offering.
  3. Talking to us. Don’t be shy about asking us for ideas about how you can improve your plan to better achieve your goals. We aren’t going to pitch you on the most expensive product, but rather give you advice on identifying the product arrangement that best suits your company at this time.


Why workers’ comp claims spike in the summer months

Workplace injury rates rise during the summer months. When summer rolls around, companies in many sectors, including agriculture and construction, significantly increase production.

Increased road construction raises risks for workers and drivers. Many of the newly hired workers are young and inexperienced, creating a high potential for workplace injuries.

Toiling in the sun is also a leading cause of weather-related injuries, including heat stroke, heat cramps and heat exhaustion. Heat illnesses occur when the body overheats to the point it cannot cool off, even with profuse sweating.


Young workers

Too often, young workers enter the workforce with little or no on-the-job safety training, heightening safety risks.

Recently, the Washington State Department of Labor & Industries released a report showing that teens are twice as likely to be hurt on the job as adults.

In Washington state, a total of 547 youths aged 17 and under were injured in the workplace in 2014, up nearly 14.7% over the previous year. Of the total, 173 were in the food and hospitality industries. The next largest total, 80, was reported in both the retail trades and agriculture.

Falls to the floor increased 77%, to 55 cases, as the chief cause of injury.

Young workers, aged 14 to 24, have more accidents because they lack the knowledge, training and experience to prevent them. Some common issues employers encounter with young workers are:

  • They do not understand what can go wrong.
  • They do not always follow the rules.
  • They fail to use personal protective equipment (PPE), or use it incorrectly.
  • They horse around on equipment.
  • They do not ask questions.
  • They think they are infallible.


It’s also important for supervisors to recognize the physical, cognitive and emotional developmental differences between young and adult workers. It takes extra effort to train and supervise seasonal employees on working safely.


Here are some training suggestions:

  • Repeatedly demonstrate job procedures and safety precautions. Don’t overlook the basics, such as starting and stopping equipment.
  • The step-by-step instructions for any task must include the task’s hazards and how to avoid them. Take the time to clearly explain the risks of not following the proper steps. Use examples.
  • Explain when and how to use PPE, as well as where to get it, how to inspect it, and how to remove and store it properly.
  • Train one-to-one with young workers and observe them performing tasks.
  • Encourage them to report problems and to ask questions.
  • Assign specific clean-up tasks and emphasize the importance of a clean, clutter-free worksite.
  • Control the hours worked. Many popular summer jobs, such as construction workers, landscapers and jobs in hospitality and food industries, require long hours of work in the heat that can lead to fatigue, inattention and stress, increasing the likelihood of injury.
  • Provide a mentor.
  • Demonstrate that safety is a priority at your facility. Words aren’t enough. New workers also need to see actions that reinforce the message: clean worksite, properly labeled hazardous substances and readily accessible safety data sheets, workers wearing required PPE and who are concerned about workplace safety and show it, and so on.


Heat illness dangers

While there are many excellent resources on dealing with heat, it’s important for employers to recognize that there are individual differences among workers and those who are struggling may be hesitant to complain.

The American Society of Safety Engineers calls heat the “unseen danger” at construction sites because the symptoms of heat illness can be subtle and misinterpreted as mere annoyances rather than signs of a serious health issue.

Workers new to outdoor jobs are particularly vulnerable. Implementing an acclimatization program, providing adequate water and frequent breaks are all critical, but the best way for employers to prevent heat illnesses is to consistently interact with workers to gauge how they’re feeling and provide current information on weather conditions.

Also, using apps, such as OSHA’s Heat Safety Tool, is a good way for workers to monitor their risk levels.  You can find it here.



Drug Inflation May Push Many Plans into Cadillac Tax Territory

As health care inflation starts to climb again, more health plans are likely to breach the Cadillac tax threshold.

A new report by the consulting firm Milliman predicts that a typical family of four covered by an employer-sponsored preferred provider organization (PPO) health plan will incur health care costs in excess of $25,000 by 2016, which is just a few thousand dollars shy of the Cadillac tax threshold of $27,500 for a family of that size.

While 2014 marked one of the lowest rates of health care cost inflation on record at 5.4%, Milliman notes that costs have increased 6.3% this year.

The company calculates these figures according to the Milliman Medical Index (MMI), which is its analysis of the projected total cost of health care for a hypothetical family of four with an employer PPO. It includes all health care benefits in its calculations, including employers’ costs and premiums.


Bumping the Cadillac tax

These rising costs may make it more likely that many family plans will breach the Cadillac tax threshold by 2018. The tax applies to individual health plans worth more than $10,200, and family plans worth more than $27,500.

Milliman predicts that the excise tax threshold is more likely to be reached if a plan is provided by a smaller employer, and if inflation trends exceed recent levels. Employer size affects the portion of premium attributable to loads for administrative expenses and health plan profits, and larger employers tend to command lower expense and profit loads, the consulting firm explains.

And worse, once the threshold is breached, it will be difficult to avoid the tax in subsequent years since health care expense trends will likely exceed the Consumer Price Index, which will be used to adjust the threshold in the years after 2018.


A snapshot

Milliman predicts that most family plans will at some point be taxed. Using its MMI to predict when plans will be large enough to be taxed, when that happens will depend on the rate of health care cost inflation and whether an employee works for a large, mid-sized or small employer.

Higher rates of growth in health care costs will push premium rates over the threshold

more quickly.

Furthermore, the threshold is adjusted to reflect national cost trends, whereas a given employer’s costs may change at a much higher or lower rate due to local conditions or other effects.


Drugs drive inflation

The rise in costs so far is largely due, says Milliman, to increases in prescription drug costs. From 2014 to 2015, pharmaceutical costs spiked, growing by 13.6%, whereas growth over the previous five years averaged only 6.8% – or on par with health care inflation in general.

Milliman attributes the 2014/2015 numbers largely to the following:

  • the introduction of new specialty drugs;
  • price increases in both brand and generic name drugs; and
  • increases in the use of compound medicines.


Prescription drug costs, it says, now comprise 15.9% of total health care spending for the above family of four. Such costs only made up 13.2% of health care spending in 2001.

It is predicting an even steeper rate for next year in light of the fact that the cost of pharmaceuticals continues climbing at unprecedented levels.