Archive for July, 2016

Court Ruling Lets EEOC Inspect Workplaces without Consent, Warrant

Abstract crowd of social media account avatars. Seamless background

A federal court has ruled that the U.S. Equal Employment Opportunity Commission has the right to conduct on-site inspections of businesses without a warrant or consent from the owner.

This new development could put employers in the crosshairs of the EEOC anytime the agency deems a complaint worthy enough to visit a company’s premises over an allegation of discrimination. And legal experts predict that the agency will cite this case whenever an employer tries to refuse an EEOC request for an on-site inspection.

“This decision arms the EEOC with precedent that it may conduct on-site investigations regardless of whether an employer consents, something employers should consider when contemplating whether to deny the EEOC access to its business during an investigation,” the law firm Seyfarth Shaw LLP wrote in a blog.

In the case in question, a man sued Nucor Steel Gallatin Inc. for discrimination, alleging that the company rescinded a job offer after it had learned of his disability history. He later filed a complaint with the EEOC, which subsequently informed the company that it would conduct an on-site visit to interview other personnel who were involved in the hiring process.

Gallatin refused, telling the EEOC “We simply do not feel that coming on-site is necessary or relevant to your investigation.” After that, the commission issued a subpoena to visit the premises and in turn Gallatin said it could not enter the worksite without a court warrant.

At that point, the EEOC asked the U.S. District Court in Frankfort, Kentucky, to intervene in the case. In its decision rendered on April 28, 2016, but published in July, the court ordered Gallatin to let the investigator perform the inspection, but ruled that the investigator limit the inspection to evidence directly related to the Hot Rolling Department Shift Manager position and its associated responsibilities.

It also said that requiring a warrant would essentially duplicate the same procedures for enforcing a subpoena.

The court noted that the EEOC regulations contained comprehensive safeguards for a company that refuses a subpoena. It also stated that the EEOC cannot enforce a subpoena without obtaining approval from a federal district court and that the court will approve the subpoena after determining if the inspection is in the agency’s “authority, procedurally sound, relevant to the specific charges filed, and not unduly burdensome.”

Seyfarth Shaw wrote in its blog that “if the EEOC ever did have any hesitance about conducting an on-site investigation without an employer’s consent, this ruling likely alleviates any such concern.”

The law firm recommends that employers tread carefully if they are considering challenging an EEOC subpoena.

Abstract crowd of social media account avatars. Seamless background

Abstract crowd of social media account avatars. Seamless background

Employment Liability Threat Grows; What to Watch Out for


One of the biggest lawsuit threats U.S. businesses face is from their own employees. Any company with employees – be that one or 500 – can be sued, and even if the case never goes to court, it can create a significant burden for your business.

While most cases are settled out of court, they can drag on for as long as two years. Even if they are dismissed as meritless, the employer is often out thousands of dollars as a result.

To best protect your business from these types of claims and more, you need to learn how to identify potential claims, avoid practices that can expose you to litigation, and create formal polices for your personnel and management.

Currently, the employee-initiated litigation trend includes the following claims:


Discrimination – There are a number of protected classes in the U.S. workforce and, as we march forward, more are being added. The key for employers is to have policies in place that treat everyone equally in the organization, ensure that certain groups of people are not kept from advancing in their jobs, and ensure a harassment-free workplace.


Unequal pay – Most of these actions are filed under the Federal Equal Pay Act or state laws, like the more stringent California Fair Pay Act. And you should now that there are moves afoot to beef up the federal version to the same standards as the California law.


The Golden State’s Fair Pay Act bars employers from paying workers of one gender less than those of another for “substantially similar” work. Violations can result in penalties for the wage differential, plus interest and liquidated damages.

To avoid liability, you should conduct a self-audit that looks at the following:

  • Have you updated job descriptions, including established criteria for assigning values such as skill, education, seniority and responsibility?
  • Are you consistent in your pay for similar jobs performed by individuals with similar skills, education, seniority and responsibility?
  • Are your male and female employees given projects or clients with commission or bonus potential on a consistent basis?


Worker classification – The federal government, individual state governments and the IRS have all been cracking down on employers who misclassify workers as independent contractors.

Besides shortchanging legitimate workers, the practice also cheats tax authorities and workers’ compensation insurers. Worker classification lawsuits continue unabated, with the likes of UPS and Federal Express facing class-action suits from drivers they classified as independent contractors.


What you can do:

  • If you are considering classifying anybody as an independent contractor, you should be sure of their status and check to see if they pass federal and state labor, IRS and workers’ comp tests for classifying workers.
  • Classify workers who perform similar tasks consistently.
  • Conduct classification audits on a regular basis.


Wage theft – These kinds of lawsuits typically involve accusations that the employee was not paid what they were due.

Some of the more common allegations include:

  • Requiring staff to work off the clock
  • Not providing meal and rest breaks as required by law
  • Failure to pay overtime


To avoid being sued, you should write clear and consistent policies and train managers and supervisors on them.


Don’t forget insurance

Employment practices liability insurance should be your final backstop and while you may think you are bulletproof because you treat everyone fairly, remember: experts say that between 30 and 40% of employee-generated lawsuits against their employers are frivolous.

Even if you are the subject of a frivolous lawsuit, you will still spend time and money fighting it.


An EPLI policy will cover you for:

  • Legal costs, including costs of defending a lawsuit in court, whether your company wins or not
  • Judgments and settlements


Bill Would Reverse Ban on Using FSAs, HSAs for Over-the-counter Meds


Legislation in Congress would reverse a controversial portion of the Affordable Care Act that bars employees from tapping their flexible spending accounts, health savings accounts and health reimbursement arrangements to pay for over-the-counter medications.

The ACA barred the practice of spending funds that had been set aside using pre-tax dollars to spend on medications that can be purchased without a prescription.

HR 1270 was introduced last year to remedy what bill sponsor Rep. Lynn Jenkins (R-Kansas) says has resulted in patients having to spend more money than necessary.

That ban is resulting in “families spending more money to see their doctor to get basic over-the-counter medication, and doctors spending valuable time prescribing cold medicine as their more critical patients wait for attention,” Jenkins said at a press briefing on the bill.

HR 1270 was passed out of the House or Representatives on a 243-64 vote and is currently awaiting action in the Senate.

In particular, the measure repeals provisions of the Internal Revenue Code, added by the ACA, that limit payments for medications from health savings accounts, medical savings accounts, and health flexible spending arrangements to only prescription drugs or insulin.

In other words, your employees cannot use the funds in these accounts to pay for over-the-counter medications unless they first obtain a prescription. The only exception is insulin.

If passed, the bill would be retroactive to Jan. 1, 2016 to allow workers who have such medical expense savings accounts to use them for over-the-counter medications like allergy pills and cold treatments.



Measure Aims to Reduce Unnecessary Opioid Prescriptions

Pharmacist in pharmacy (Digital Composite)

Employers and insurers in California are enthusiastic about the prospects of legislation that aims to reduce the chances of injured workers getting hooked on opioids when they are recovering from workplace injuries.

Senate Bill 482, which is sailing the through the Legislature, would require doctors to first check the state’s prescription drug monitoring system before writing a prescription for opioids.

The bill is moving through the state Legislature after a new study found that doctors have been seriously curtailing the amount of opioid prescriptions they write to injured workers. The study found that stronger laws on prescription drug monitoring were likely a main reason for opioid prescriptions having waned during the study period.

SB 482 aims to further tackle the opioid scourge that has hit injured workers hard, leading to addictions that reduce the chances of them returning to their at-injury employer. California has already seen a decrease in the opioid prescriptions for injured workers, but if this legislation passes, it would strengthen safeguards even further.

SB 482, authored by Sen. Ricardo Lara, a Democrat from Bell Gardens, aims to force doctors to use the Controlled Substance and Utilization Review and Evaluation System (CURES) database.

Even though CURES is the oldest such system in the nation, legislators believe that few doctors consult it before writing prescriptions for opioids, which are highly addictive and are often associated with slower recovery periods for injured workers.

Under the measure, doctors authorized to prescribe, order, administer, furnish or dispense a controlled substance, would be required to check CURES no earlier than 24 before writing a prescription for a Schedule II, Schedule III or Schedule IV controlled substance for the first time – and at least annually thereafter.

Doctors who knowingly fail to check the database before writing a prescription would be referred to their licensing board for administrative sanctions.

The measure has already been passed by the State Senate and two committees in the Assembly (in unanimous votes) and looks like it will have a smooth ride on the Assembly floor thanks to amendments that were made in June.

Employers and insurers are encouraging passage of the bill.

The American Insurance Association says that CURES and other prescription drug monitoring programs have been shown to be effective in controlling the practice of “doctor shopping”, whereby patients will visit different doctors to obtain prescriptions for addictive medications. The association also said it will protect patients and improve outcomes.

Additionally, the California Chamber of Commerce says that SB 482 would discourage doctor shopping and identify the handful of physicians who write the majority of inappropriate prescriptions for opioids.


Addictive Medications

Schedule II: Substances that have a high potential for abuse which may lead to severe psychological or physical dependence.

Types: : Methadone, meperidine (brand name Demerol), oxycodone (brand names OxyContin, Percocet), fentanyl, morphine and high-strength codeine.

Schedule III: : Substances with a potential for abuse less than substances in Schedule II, and abuse of which may lead to moderate or low physical dependence or high psychological dependence.

Types: : Hydrocodone (brand name Vicodin), codeine (Tylenol with Codeine).

Schedule IV: Substances in this schedule have a lower potential for abuse than schedule III drugs.

Types: : Brand names Xanax, Soma and Valium.


The study

The study, released in June by the Workers’ Compensation Research Institute, found “significant” decreases in the amount of opioid prescriptions being written for injured workers.

Fourteen of the 25 states examined by the institute recorded decreases in opioid prescriptions of between 11% and 31% in the study period, which measured 24-month periods ending in March 2012 and March 2014.

Michigan saw the biggest drop (31%), followed by Oklahoma (29%) and Massachusetts (24%). Texas saw a drop of 19%; Connecticut, 17%; California, 12%; and Pennsylvania, 4%. Just four states saw increases.

The institute noted that the decreases coincided with various states enacting legislation aimed at reducing the abuse of opioids by improving prescription drug monitoring programs and adopting more stringent treatment guidelines and drug formularies.


Pharmacist in pharmacy (Digital Composite)

Pharmacist in pharmacy (Digital Composite)

Finding Ways to Reduce Human Errors that Cause Workplace Accidents


An Indiana University of Pennsylvania professor is hoping that a study he is embarking on will yield new methods for reducing workplace injuries by identifying tools to motivate and engage workers in the safety process. The study will focus on human error and the role it plays in accidents, and accident prevention.

Safety sciences professor Jan Wachter believes that human error in the workplace, while not completely preventable, can be managed by better tools to motivate and engage workers in the safety process.

If his study yields new ways to manage safety in the workplace successfully, he hopes the results can reduce lost workdays due to accidents by up to 20%. This, of course, would be a boon for employers as one of the costliest results of a workplace injury or illness is the time away from work, requiring other employees to pick up the slack and the loss in productivity, not to mention the personal costs to the person who was injured.

“While human error has been associated with the majority of incidents in the workplace, it can be managed through a variety of mechanisms. But motivation and worker engagement may be the keys to human-error reduction,” he said.

Wachter will test this theory in a research project that recently received $90,000 in funding from the Alcoa Foundation.

The professor says that the key difference in his study, as opposed to other research on safety in the workplace, is that he will investigate how well — or how poorly — workers are engaged, or buying into, a shared accountability for identifying at-risk situations and responding to them.

For example, a worker may forget to wear safety glasses and get glass or metal shards in an eye. Wachter suggests that this type of accident could be prevented through methods of worker engagement. That is, before each work shift, employees may get together and remind each other of the specific personal protective equipment needed for that day’s task. It would be akin to an airline pilot going through the preflight checklist to make sure that all systems in the aircraft are functioning properly before take-off.

The theory of getting employees to buy into a company’s safety policies has shown merit in the past. Safety specialists say that engaged employees demonstrate a greater sense of personal ownership and compliance with safe work methods, adjust more quickly to needed changes in safety practices, and act proactively to ensure that work is being done in the safest way possible.

Studies have already shown that one of the key elements of getting employees to buy into a culture of safety is that the management does so first. But it is rank-and-file employees that really make it happen. Earlier studies have found that employees need the following if they are to truly buy into efforts at keeping the workplace safe:

  • Trust – Workers must believe in management’s emphasis on safety, and that the safety program is primarily for their own good.
  • Knowledge – Employees must be given all appropriate information about the program. Generally, the more they know, the more they will be supportive and involved.
  • Commitment – Like owners and managers, employees must be committed to the concept of safety if they are to practice it.
  • Communication – Lines of communication must be open between workers and workers, and workers and management. Strategies for opening and maintaining lines of communication must be employed.
  • Attitude – Employees themselves may well be the best examples for each other in maintaining standards of a safety program. Attitude is catching, and often the attitude of commitment must be caught from management and ownership.
  • Involvement – The bottom line of a safety program is in practicing the safe behavior that is called for. Sometimes this may mean maintaining what already has been established; sometimes it involves major changes. In any case, the employee must be willing to make the effort to actually “live out” safety practices.
  • Recognition – Not only management, but front-line workers must be involved in recognizing safe behavior. Peer support is crucial for maintaining program enthusiasm and involvement.

It is hoped that the new study will expand on these factors. Once the results are made public, we will publish an update in this newsletter.



Revisit Risk Response Plans in Light of Emerging Threats


There’s a lot going on in the world and the risks are changing and evolving rapidly, making it difficult for many companies to adjust and manage the risks they face effectively.

Some risks that barely registered a decade ago now pose serious challenges to many businesses. There are novel technological risks with new threats constantly arising in the cyber world, economic and market volatility, terrorism, regulatory and legal challenges, supply chain vulnerability and political uncertainty.

These risks can all be real for any business and it’s important that you and your manager sit down and try to identify the potential threats that could affect your operation, assess their likelihood and how your organization can reduce the effects of these events.

By understanding potential risks to your business and finding ways to minimize their impacts, you can ensure that your company recovers quickly after an incident.

Of course, risks vary from business to business and across industries, so there is no one-size-fits-all risk management plan. However, the methods for identifying risks and making a management plan are the same.

This guide outlines the steps involved in preparing a risk management plan and a business impact analysis for your organization.


Identifying risks

The first step in preparing a risk management plan is to identify potential risks to your business. This will help you develop appropriate strategies for dealing with them.

This stage requires thinking outside the box and not looking at the obvious.

  1. Think about your critical business activities, including your key services, resources and staff, and things that could affect them, such as power failures, terrorism, a cyber attack that incapacitates your network, natural disaster and illness.
  2. Brainstorm with staff from various parts of your organization – operations, accounting, legal, logistics and other sections – to identify as many potential risks as possible. Don’t leave anything on the table because it’s too outlandish.
  3. Review your business plan and think about what you couldn’t do without, and what type of incidents could affect these areas.
  4. This includes considering what you would you do if:
  • You lost power supply.
  • You had no access to the Internet.
  • Important documents were destroyed.
  • Your facilities were damaged or you were unable to access them.
  • A key supplier was unable to deliver product to you.
  • The area your business is in was hit by a natural disaster.
  1. Consider the worst-case scenario. This could be the result of several incidents occurring simultaneously or as part of a chain reaction. For example, your cold storage warehouse could lose power, which could cause perishables to spoil, which in turn could lead to your restaurant clients’ customers contacting food poisoning.


Formulating responses

Once you’ve identified risks for your business, you should assess the likelihood that they could occur.

A good strategy is to rank risks based on which ones would cause minor problems, through to major ones that would have to be tackled immediately. You should also try to figure out the likelihood of each of these risks occurring by looking at case studies of your industry.

You should correlate this with the damage each of the risks would do to your business should they occur.

With these factors in mind, you can rank the risks you should address first – and go down the list from there.


Risk management plans

You start by implementing strategies to reduce the chances of your top threats occurring in the first place. You can do this through:

  • Quality control processes
  • Auditing
  • Compliance with legislation
  • Staff training
  • Regular maintenance
  • Changing procedures


Next you should formulate responses that you can implement quickly after an incident, such as:

  • Emergency procedures
  • Off-site data backup and storage
  • Identifying alternate suppliers
  • Risk transfer, like outsourcing
  • Cross-training staff so that more than one person knows how to do a certain task
  • Keeping old equipment after it is replaced so you have backup, and practicing doing things manually in case your computer networks or other equipment can’t be used


Secure proper insurance

If you have concerns about any of the risks you have identified and are unsure whether your current insurance would cover them, you should call us.

Here are a few insurance solutions to common risks:

  • Coverage for the loss of income if customers affected by the crisis stop ordering your product or service
  • Coverage for loss of your customers’ goods or materials
  • Coverage to replace lost income if one of your suppliers is hit by a crisis and can’t deliver product to your firm


Republicans Unveil Two Proposals to Replace/Augment the ACA

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Republicans in June introduced two sweeping proposals for replacing or augmenting the Affordable Care Act, as they seek to blaze a trail they say will be better for both employers and individual Americans.

Rep. Pete Sessions, (R-Texas) and Sen. Bill Cassidy, (R-Louisiana), introduced H.R. 5284, which they call an “alternative” health care bill which will not repeal the ACA, but work alongside it and modify various parts of the system.

The so-called “Health Empowerment Liberty Plan” (HELP) includes conditions for helping Americans purchase health insurance, but also keeps in place ACA provisions that bar health insurers from discriminating against people with pre-existing medical conditions.

And later in June, a Republican task force convened by House Speaker Paul Ryan introduced a proposal that was not in bill form that would completely eliminate the ACA.



Here are the major provisions of the proposed HELP Act:

Individual mandate out – It would eliminate the individual mandate to be covered for insurance either through your job or by purchasing a health plan through a public insurance exchange.

Employer mandate out – It would eliminate the employer mandate, which is the requirement that employers with 50 or more full-time workers purchase affordable coverage for them.

Exchanges still okay – The bill would also allow states to decide if they want to opt in or out of the Affordable Care Act. States that elect to remain part of the ACA would be able to keep their marketplace exchanges and Medicaid expansion programs in place.

For states that decide to opt out, U.S. citizens, including Medicaid beneficiaries, would be eligible for a $2,500 per individual, $1,500 per child tax credit, to be used towards the cost of employer-sponsored health insurance, invested in a Roth Health Savings Account or received as an annual payment.

New tax – The HELP Act would limit the tax exclusion for employer health plans to $2,500 per employee, exposing companies and workers to taxes for insurance benefits above that threshold.

Oddly, Republicans have heavily criticized the ACA’s “Cadillac tax,” which seeks to tax at 40% the portion of any employer-provided health plan that costs more than $10,200 a year.

Small employer purchasing power – The measure would also allow small employers to band together to purchase health insurance. Small employers should be able to “offer health care coverage at lower prices through improved bargaining power at the negotiating table with insurers just as corporations and labor unions do,” according to the proposal.

Minimum essential benefits out – The bill would abolish federal minimum essential benefits – a hallmark of the ACA – though it would allow states to regulate coverage.

People could buy cheaper limited-benefit plans with an annual cap on benefits. Those who buy such plans would receive asset and wage protection if their medical bills exceeded certain thresholds.

Competition and transparency – It would also limit how much insurers could charge for out-of-network services, require providers and plans to disclose prices, and deregulate physician-owned facilities, freestanding surgery centers, and retail clinics.


The task force proposal

The health care reform proposal released by the House Republican task force convened by Speaker Ryan would entail a full repeal of the ACA.

The proposal, which is broad in scope and short on specifics, would include a transition period out of the ACA and into a new plan. It would eliminate the individual and employer mandate and instead encourage people to have insurance coverage with the help of refundable tax credits that would be adjusted for the recipient’s age.

It would encourage small group health plans and provide $25 billion in incentives to states to set up high-risk insurance pools.

In place of the ACA’s individual mandate, the plan would prohibit insurance companies from denying patients coverage or charging them more because of pre-existing conditions – but only if they keep continuous insurance coverage, although they could switch plans or carriers.

It would also allow young adults to stay on their parents’ health plans until age 26, which is one of the most popular pieces of the ACA.

Under the proposal, insurers would be allowed to sell across state lines and medical liability laws would be reformed.


Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Bill Would Nearly Double Permitted HSA Contributions


As employers shift more of the cost burden to employees, legislation in Congress would nearly double the amount workers can put into health savings accounts.

Under H.R. 5445, employees enrolled in high-deductible plans and opting for single coverage could in 2017 contribute up to $6,500 to their HSAs, while those with family coverage could contribute up to $13,100.

Under current law, the 2017 maximum HSA contributions are $3,400 for employees with single coverage and $6,750 for family coverage.

The idea behind the measure is to let employees fund all of their out-of-pocket costs through HSA contributions. Premium costs though would not be funneled through HSAs, but employee premium contributions could also be deducted on a pre-tax basis.

Additionally, H.R. 5445 would increase the amount that employees over 55 years old would be able to contribute to their HSAs.

Under current law, workers who are older than 55 can make an extra $1,000 a year “catch-up” contribution to an HSA, but over-55 spouses cannot. The bill would extend this same right to spouses who are older than 55.

The measure is strong enough that it could receive bipartisan support and it comes at a time when out-of-pocket spending is on the rise. The House Ways and Means Committee approved the measure on a 23-15 vote in the middle of June.

Out-of-pocket spending on inpatient hospitalizations has increased 37% in the years following passage of the health care reform law, according to the “Out-of-Pocket Spending for Hospitalizations among Nonelderly Adults” study, published by JAMA Internal Medicine.

From 2009 to 2013, among those receiving health coverage through the private sector, total out-of-pocket spending – also known as cost sharing – on hospitalizations grew from an average $738 to $1,013, according to the study.

At the same time, individual health plans and consumer-directed health plans (CDHPs) also experienced the slowest growth in cost sharing.


Here’s what the study found:

  • Cost sharing for patients in individual health plans grew 17% from 2009 to $1,875 in 2013.
  • In the group health insurance market, cost sharing for inpatient hospitalizations increased 38% to $997 in 2013.
  • Cost sharing for patients with CDHPs rose 25% to $1,219 in 2013.
  • Cost-sharing for non-CDHPs grew 34% to $957 during the same period.
  • Out-of-pocket costs for hospitalizations among HMO enrollees swelled 34% to $1,075.
  • Coinsurance related to hospitalizations increased from $518 in 2009 to $688 in 2013, and the amount applied to patients’ deductibles rose from $145 in 2009 to $270 during the four-year period.



Tips for a Successful Company Summer Party or Picnic

Smiling friends make barbecue at their back yard on4th July. They having fun at the table

AS A SHOW of appreciation for their staff, many companies hold summer parties or picnics for their employees. They can be both morale boosters and a way for you to say thank you for their hard work and services.

But sometimes the affairs, if not pulled off correctly, can create tension and stress not only for the staff organizing the parties, but also for management and employees that attend.

To have a successful summer party, you may want to consider the following tips:

  • No mandatory fun – Try not to make it seem like another work obligation. Don’t treat plans for the office party as you would in making operational decisions for your company.

What you think the employees would like to see at the affair, may not be what they themselves want. If you don’t know, circulate a quick survey asking what type of party or picnic events they would most like.

  • Get out of the office! – If you are having a party during the summer, have it offsite, preferably outdoors. A local park is always a good option, but you have to plan ahead and reserve a space with your local parks and recreation department.
  • TGIF – Friday afternoon is the ideal time for a summer office party if you can afford to close your office for that period.

Employees are not always thrilled to give up weekend time for work events – and don’t think that just because you are throwing them a party or hosting a picnic, the rank and file won’t still consider it a work event.

  • Active activities – Consider including activities that keep people mixing and moving. If you are inviting families, this is even more important. You can:

Set up a volleyball net or have a water balloon toss, and maybe also consider a scavenger hunt.

Make sure that the employees are doing something they enjoy. Also, don’t push people to participate in events. If somebody just wants to sit and observe the fun with a cold drink in hand, you should let them.

  • Alcohol = liability – Carefully consider the question of whether you should serve alcohol. There are many potential liability issues when you serve alcoholic drinks. If you decide to do so:
  • Monitor consumption and level of sobriety.
  • Do not serve someone who appears drunk.
  • Have plenty of food available.
  • Encourage designated drivers.
  • Have phone numbers available for local taxis