Archive for December, 2016

Top 10 Laws You Need to Know about For Your Business

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This is the second of two parts on the top 10 laws that will be affecting your business.

  1. First aid rules reporting

New amendments to the California Workers’ Compensation Uniform Statistical Reporting Plan require that even small, medical-only first aid claims be reported.

The Workers’ Compensation Insurance Rating Bureau has always required that these small claims be reported, but the requirement has never been codified.

Effective Jan. 1, 2017, insurance companies are required to report to the Rating Bureau the cost of all claims for which any medical care is provided and medical costs are incurred – including those involving first aid treatment – even if the insurer did not make the payment.

Because the rules require insurers to report these claims, they will likely pass that requirement on to you, the policyholder. That will likely include requiring you to submit all first aid bills to them for payment, rather than paying for treatment yourself.


  1. Marijuana is legal

Many businesses have become concerned about the legalization of marijuana in California, particularly how it affects their rights as employers to conduct pre-employment drug testing and dealing with employees who try to use pot on the job.

Fortunately, Proposition 64 included a number of safeguards for employers, allowing them to have anti-drug workplace rules in place. In fact, these safeguards were built into the initiative to the point that the California Chamber of Commerce took a neutral stance on the measure.

And despite California’s medical marijuana laws, courts have said that employers are not required to allow patients to imbibe prior to or while on the job. Also, because it is still illegal under federal law, you can also bar employees from keeping marijuana, transporting it or selling it at work.

Just as you have rules against working while intoxicated from alcohol, you should have similar rules for pot.


  1. New cellphone law

California already bars texting or talking on the phone without a hands-free device while driving, and now there’s a new law that takes into account the many new uses of smartphones.

If you have any employees that drive on the job, you need to update your employee manual to reflect Assembly Bill 1785, which prohibits motorists from driving “while holding and operating” a hand-held wireless telephone or a wireless electronic communication device.

Because people use their phones now for more than just texting and talking – think interacting with apps, using Facebook or surfing the Net – the law needed updating.

But it authorizes a driver to operate a smartphone mounted on a vehicle’s windshield like a GPS or on the dashboard or center console “in a manner that does not hinder the driver’s view of the road,” and if the driver can activate or deactivate a feature or function “with the motion of a single swipe or tap of the finger.”


  1. ACA document deadline change

The IRS extended the deadline for distributing Affordable Care Act health insurance reporting forms to their employees to March 2 from Jan. 31, to give employers more time to get their accounting systems in order.

This law only applies to applicable large employers as defined by the ACA (those with 50 or more full-time or full-time equivalent workers). The law requires those employers to distribute forms 1095-C (Employer-provided Health Insurance Offer and Coverage) and 1095-B (Health Coverage) to employees.

The deadlines for filing other ACA-related forms with the IRS have not changed.


  1. Smoking in the workplace

There has been a loophole in the California law that prohibits smoking of tobacco products inside an enclosed place of employment, unless the only employee is the owner and operator of the business.

The new law expands the prohibition on smoking in all enclosed places of employment to all establsihments of any size, including a place of employment where the owner-operator is the only employee.

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Be on Your Toes for Host of New Laws Affecting Businesses in 2017

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Every New Year there’s a swarm of new legislation and regulations affecting businesses and it’s difficult to stay on top of it all.

In this blog and the next, we cover the top 10 laws, regulations and developments that you are likely to contend with in 2017.


  1. Owners/officers exemption changes

A new law has changed who in an organization can be excluded from workers’ comp coverage.

Going forward, only owners and officers who own at least 15% of a company can claim an exemption from workers’ compensation coverage in California.

Any company that claims this exemption was required to submit waivers to their insurer by Dec. 31, 2016 for each officer/owner who is exempt.


  1. New overtime laws or not?

Department of Labor regulations that were set to hike the white-collar overtime exemption salary threshold to $47,476 starting Dec. 1, 2016 were put on ice by a federal judge in Texas in late November.


Many employers had already taken action like giving out raises to executive, administrative and professional workers, in order to keep the exemption from having to pay overtime when they work more than eight hours a day or 40 hours a week.

The judge ordered a temporary halt to implementation while he reviewed the case, so for now, the current $23,660 annual salary threshold will remain – but that could change with short notice.

The big wildcard is what President-elect Donald Trump will do, as many pundits expect he will scrap the regulations.


  1. New X-Mod regimen

California has new rules for calculating employers’ experience modifier – or X-Mod.

The Workers’ Compensation Insurance Rating Bureau has replaced its static “split-point” experience rating system, in which an employer’s actual workers’ comp losses are divided into actual primary losses and actual excess losses below and above a $7,000 threshold.

Under the new system, the Rating Bureau will use a variable split-point system that gives more weight to claims frequency than claims cost. This change is expected to limit the impact of one large claim on an employer’s (particularly a small business’s) X-Mod.

At the same time, an employer’s X-Mod would be more affected by the frequency of claims.


  1. ACA questions

With the election of Donald Trump for president and his and the Republican-led Congress’s promises to repeal the Affordable Care Act, all the rules that have been created for the landmark health insurance reform law are now thrown into doubt.

While Republican leaders in both the House and Senate have promised to repeal the ACA as well, it’s not clear how far they will go and what they would replace it with. They have to tread carefully now that nearly 20 million people buy their coverage from exchanges, and eliminating the law overnight would send shockwaves through the country.

The likely scenario will be a delayed repeal that will take years to be finalized.

Trump has said he wants to eliminate public insurance exchanges and the individual mandate, but he has not touched on the employer mandate.

For now, continue following the law and wait for further news as Congress and the next president act.


  1. Minimum wage climbs

Effective Jan. 1, 2017, the California minimum wage for businesses with more than 25 employees is $10.50 per hour, against $10 previously. This is another step toward a $15 per hour minimum wage on Jan. 1, 2022.

To be continued in our next blog….

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Happy Holidays!

All of us here at Wright & Kimbrough Insurance want to wish you and yours a happy holiday! Be safe and take care of your loved ones.

Small Employers Can Reimburse for Health Insurance under New Law


Congress and the Obama Administration have acted to allow employers with fewer than 50 full-time employees to reimburse their workers for individual health plans that they purchase on their own.

The law, which takes effect Jan. 1, reverses an onerous IRS provision that imposes a maximum $36,500 fine on small employers that are found to have reimbursed an employee for health coverage that they purchased on the open market or a government-run health insurance exchange.

The fine still stands for applicable large employers, as defined by the Affordable Care Act, and only applies to small employers who are not required to purchase coverage for their employees under the law.

The provisions are part of the 21st Century Cures Act, a sweeping law that covers the Food and Drug Administration approval process and a number of health initiatives. The legislation was signed into law by President Obama in December.

In the process, the new law creates something known as a qualified small employer health reimbursement arrangement – or QSEHRA – the vehicle through which employers would funnel the reimbursements.


Why is this important?

The IRS in late 2013 issued guidance that prohibited most employers from reimbursing employees who purchased individual coverage on the open market or on an exchange. The IRS reasoned that these types of arrangements violated a number of ACA provisions.

The penalty for violating this guidance is a maximum $36,500 per employee per year, payable in the form of an excise tax.

Obviously, the new law is good news for smaller employers that do not want to pay out for coverage, but still want to offer some assistance to employees.

The new law has a number of provisions:

  • Only small employers that are not considered applicable large employers under Code 4980H(c)(2) are permitted to offer a QSEHRA.
  • The employer cannot offer a group health plan to any employee.
  • Reimbursements are limited to $4,950 for individuals and $10,000 for families. The amounts are indexed to inflation and will increase over time.
  • The QSEHRA must be offered on the same terms to all employees, although offers may vary depending on age and the number of eligible family members.
  • The employee must purchase minimum essential coverage, as defined by the ACA, and provide proof to the employer.
  • The reimbursement will not be subject to income taxes.
  • Employers will have to report the reimbursements on W-2 forms.


Employers that want to go this route will need to make some accounting and reporting adjustments to ensure they are in compliance with the new law.

You can talk to us about how such an arrangement could be structured.


The big caveats

Employees that receive reimbursements from their employers would be required to report any such reimbursement to the insurance exchange. And receiving a reimbursement could make them ineligible for government subsidies to help pay for coverage on an exchange.

Even if the employee remains eligible for a subsidy, the amount of the subsidy will be reduced by the amount of funds available under the QSEHRA. This likely limits the attractiveness of a QSEHRA for many employers who might otherwise consider it.

Also, as a result of Donald Trump’s election and Republican control of both houses of Congress, anything concerning the ACA could be subject to change quickly.


New Law Will Create Indoor Heat Illness Prevention Standard

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Legislation signed into law by Gov. Jerry Brown will expand Cal/OSHA’s heat illness prevention standard to indoor workers.

SB 1167 requires the state workplace safety agency to devise new regulations that will apply to indoor workers starting Jan. 1, 2019. Cal/OSHA’s rulemaking body will therefore have the next two years to draft and finalize those regulations.

SB 1167 does not specify to which types of workplace the eventual regulations would apply. But a broad reading of the law means it could apply to all indoor workplaces, including air-conditioned offices.

The new law also does not specify the provisions of the eventual rules, other than that they minimize the risk of heat-related illness and injury among workers working in indoor places of employment.

The law requires that the indoor heat illness standard be based on environmental temperatures, work activity levels, and other factors.

The Department of Industrial Relations created a booklet on indoor heat illness prevention in 2012 that outlines best practices and engineering controls employers can use to minimize the risk of indoor heat illness.

According to the booklet, workers who are at greatest risk are those who:

  • Wear personal protective equipment.
  • Have had a heat-related illness in the past.
  • Have not had sufficient time to get used to the hot working conditions (like new workers).
  • Have pre-existing medical conditions.
  • Take over-the-counter or prescribed medications (like medication for high blood pressure, antidepressants, diuretics or water pills).
  • Are overweight.
  • Use drugs and/or alcohol.


Cal/OSHA recommends using an indoor heat illness checklist during workplace inspections to look for anything that may cause heat illnesses in indoor work environments.

This includes problems with the facility, equipment and processes; jobs that require significant exertion or use of personal protective equipment; and how effective the employer’s heat illness prevention policies and procedures are.

Once heat hazards are identified, all sources of heat should be addressed. There are various methods or controls that can be used to provide effective protection.

Here are some best practices that Cal/OSHA recommends for reducing the risk of indoor heat illness:

  • Rotate workers in hot, strenuous jobs.
  • Slow down the pace when hot.
  • Change schedules during hot weather.
  • Allow workers to acclimate to working in the heat.
  • Allow for breaks in areas with good ventilation so that workers can seek relief from the heat.
  • Encourage workers to participate in heat stress prevention activities, such as drinking water, watching out for each other, monitoring heat, conducting inspections, and taking rest breaks.
  • Ensure there are no restrictions or obstacles to workers drinking water.
  • Encourage workers to drink water often when working in hot conditions.
  • Provide drinking cups or drinking fountains nearby the workspace.
  • Train supervisors in how to respond if someone gets ill from heat.
  • In hot work areas, install equipment to monitor air temperature and humidity. It should be visible to anyone working in the area.
  • Train workers in:
  • How to recognize heat illness symptoms and how to respond to emergencies.
  • The importance of immediately reporting to their supervisor symptoms or signs of heat illness in themselves or in co-workers.
  • Your procedures for responding to symptoms of possible heat illness.
  • Understanding that personal factors increase the risk of heat-related illnesses (clothing, hydration, and physical fitness, use of some medications, drugs and alcohol)


Engineering controls

Engineering controls are changes to equipment, machinery, materials or to the work processes that eliminate, reduce or isolate hazards.

They are the most effective because they do not depend on people to provide protection against hazards.

Engineering controls include:

  • Installing and maintaining ventilation systems.
  • Providing equipment to do a strenuous job more easily (i.e., a pallet jack or conveyor belt).
  • Enclosing hot machinery and pipes.
  • Installing local exhaust systems to remove heat.
  • Installing local ventilation to provide cool air.
  • Fixing steam leaks and repairing other broken equipment generating heat.


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New Rules on First Aid Claims Reporting Take Effect Jan. 1

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New amendments to the California Workers’ Compensation Uniform Statistical Reporting Plan require that even small, medical-only first aid claims be reported.

The Workers’ Compensation Insurance Rating Bureau has always required that these small claims be reported, but the requirement has never been codified.

Effective Jan. 1, 2017, insurance companies will be required to report to the Rating Bureau the cost of all claims for which any medical care is provided and medical costs are incurred – including those involving first aid treatment – even if the insurer did not make the payment.

Because the rules require insurers to report these claims, they will likely pass that requirement on to you, the policyholder. That will likely include requiring you to submit all first aid bills to them for payment, rather than paying for treatment yourself.

First aid is defined in California Labor Code as “any one-time treatment, and any follow-up visit for the purpose of observation of minor scratches, cuts, burns, splinters, or other minor industrial injury, which do not ordinarily require medical care.”

For workers’ comp purposes, that also means that the injured worker did not miss work because of the injury.

Besides these rules, there is a very good reason for reporting these claims because what starts as a first aid claim can develop into a larger claim over time. At that point, if you never reported the claim in the first place, coverage issues may arise.


Examples of first aid claims

  • Abrasions and cuts that require cleaning, flushing or soaking.
  • Using hot or cold therapy for a muscle injury.
  • Drilling a fingernail to relieve pressure, or draining fluid from a blister.
  • Removing foreign bodies from the eye using only irrigation or a cotton swab.
  • Removing splinters or foreign material from areas other than the eye by irrigation, tweezers, cotton swabs or other simple means.


While State Fund has already had a policy in place for the last three years which enforces that all claims must be reported, many other insurance carriers have historically allowed first aid claims to be pulled out of the formula and paid for by the employer.



OSHA Issues New Anti-retaliation Rules for ACA


Fed-OSHA has issued final regulations on whistleblowing and employer retaliation under the Affordable Care Act.

The new rules set forth procedures and time frames for reporting and processing whistleblower complaints by employees against their employers and expand the instances in which an employee can sue their employer for retaliation under the ACA.

The new rules are of utmost importance for employers, considering OSHA’s low bar for what it considers retaliation in the new regs.

They’re also important in that more employees may be compelled to lodge complaints if they feel slighted after their employers change their health plans or greatly increase the cost-sharing burden on them.

It will be critical to train your human resources staff and managers, as well as decision makers, in the new rules.


The new rules

The ACA whistleblower regulations prohibit employers from retaliating against employees for, among other things:

  • Receiving a subsidy for a marketplace plan;
  • Raising concerns regarding employer practices that the employee believes violate the ACA;
  • Reporting ACA violations;
  • Cooperating with a federal investigation;
  • Participating and/or cooperating in a proceeding associated with an alleged or actual violation;
  • Refusing to participate in a policy or practice that would violate the ACA; and
  • Receiving a premium tax credit or a cost-sharing reduction for enrolling in a qualified health plan.


An employee who believes that he or she has been retaliated against in violation of Title I of the ACA has 180 days after the alleged retaliation to file a complaint with OSHA.


What constitutes retaliation?

Retaliation can include several types of action, such as:

  • Firing or laying off
  • Reducing pay or hours
  • Blacklisting
  • Demoting
  • Denying overtime or promotion
  • Disciplining
  • Denying benefits
  • Failing to hire or rehire
  • Intimidating
  • Making threats
  • Job reassignment that affects prospects for promotion


OSHA has published the “Filing Whistleblower Complaints under the Affordable Care Act” factsheet on the complaint process. As an employer you should read it to understand the rules. You can find them here:


Employer best practices

Make sure that managers and HR personnel ensure strict confidentiality for employees’ ACA-related information and do not share it with other managers and supervisors.

Cover the new regulations in your training and meetings for HR personnel, who in turn should train managers to ensure they understand the consequences of taking actions that may be construed as retaliatory.

Train managers on how to respond if an employee complains about their health insurance in light of the ACA. In such cases, the manager should refer the complaint to the HR or benefits personnel responsible for the company’s health insurance plan.


Retaliation scenario

Your HR department is notified by the Department of Health and Human Services that an employee has purchased coverage on a public insurance exchange and received tax subsidies to help pay for it.

An HR manager goes to the employee’s manager to complain, saying that it could cost the company a $2,000 penalty. The manager finds an excuse to reduce the employee’s hours and reassign him to a lesser position.



Identify, Eliminate Slip, Trip and Fall Hazards


While big-ticket and dramatic workers’ comp claims make headlines, the reality is that the more run-of-the-mill injuries are the ones that end up costing employers the most.

That is especially true for slips, trips and falls and related injuries, which can often turn out to be the most expensive workers’ compensation claim an employer experiences. Slip, trip and fall claims account for nearly one quarter of all workers’ comp claims and some 300,000 workplace injuries every year, according to the National Council on Compensation Insurance. Slips, trips and falls also account for nearly 1,000 workplace deaths annually.

While the average cost of a slip, trip and fall claim is $22,800, according to the National Safety Council, there are a number of hidden costs to employers as well. These include lost productivity, the cost of additional overtime for workers that cover for their injured colleague, and hiring and training a replacement for when the worker is mending.

Additionally, the cost of one claim can send your company’s X-Mod higher. With these grim statistics in mind, it should be a priority for your company to do all it can to minimize these expensive and easily avoidable claims.


High-risk areas for slips, trips and falls include:

  • Where floors can become wet or oily;
  • Where external grounds are slippery or uneven;
  • Sloping surfaces;
  • Work areas where lifting and carrying tasks (and some other manual handling tasks, such as pushing and pulling) are performed;
  • Any area where the pace of work causes people to walk quickly or run;
  • High pedestrian traffic areas;
  • Where there are constant changes to workplace conditions, such as building sites;
  • Unfamiliar locations, such as client workplaces;
  • Accident locations that have not been secured and cleaned up.




Tips for reducing slips, trips and falls

  • Immediately identify and clean up any water or grease – the leading causes of slips – on floors.
  • Install and maintain slip-resistant flooring (with a .50 or greater coefficient of friction) with deep profiles for draining wet areas. Floor surfaces in high traffic areas such as building entrances should have a coefficient of friction of 0.60 or greater.
  • Require staff to wear slip-resistant shoes in areas where conditions increase the slipperiness of floors, such as kitchens.
  • Make sure that you keep floors clean and uncluttered of items that people can trip over.
  • Fix damaged or uneven floors and steps.
  • Conduct regular checks of any step stools and ladders, and replace if broken or if they show signs of stress cracks that could cause them to break when someone steps on them.
  • Pay attention to your cords, leads and cables and make sure they are not in any area where someone would walk. One solution is to provide power, telephone, computer and other equipment services from ducts in the floor or from the ceiling into individual workstations. Fit out workplaces to provide flexibility without requiring cords on the floor.
  • Ensure that there is adequate lighting in work areas, stairs and passageways, as well as in sidewalk and parking areas.
  • Prepare for adverse weather conditions such as ice, snow and rain by using walk-off mats at all entrances and a good supply of walkway cleaning supplies.
  • Properly install and maintain stair handrails and guardrails.

Deadline for Distributing Employee ACA Forms Extended


In a bit of good news for employers, the IRS has extended the deadline for the Affordable Care Act’s 2016 information-reporting requirements, giving businesses an additional 30 days to deliver these forms to employees.

The IRS, in a notification posted on its website, said it wanted to give employers more time to distribute the forms due to the “lengthy administrative process” involved.

That’s because the Treasury Department and the IRS determined that a substantial number of employers and insurance providers needed more time to gather and analyze the information they need to prepare the 2016 Forms 1095-C (Employer-provided Health Insurance Offer and Coverage) and 1095-B (Health Coverage).

The IRS notice has the following effects:

  • The deadline for distributing Form 1095-B and Form 1095-C is deferred to March 2, 2017 from Jan. 31.
  • Because the IRS granted an across-the-board extension to all employers, it will ignore any requests for extension that employers have filed.
  • This extension applies for tax year 2016 only, and does not require the submission of any request or other documentation to the IRS.



PLEASE NOTE: The deadlines for filing Forms 1094 and 1095 were not changed. These are forms that employers are required to submit to the IRS.

This means there is likely to be no automatic extension to file the 2016 Form 1094-B (Transmittal of Health Coverage Information Returns) – which must be submitted with copies of Form 1095-B – Form 1094-C (Transmittal of Employer-provided Health Insurance Offer and Coverage Information Returns) and copies of Form 1095-C.

Therefore, this notice does not extend the due date for filing with the IRS the 2016 Forms 1094-B, 1095-B, 1094-C or 1095-C, which remains Feb. 28, 2017, if not filing electronically, or March 31, 2017, if filing electronically (as those submitting 250 or more forms are required to do).

Forms 1095-B and 1095-C must be postmarked to employees/responsible individuals by March 2, 2017 – for tax year 2016.

While the date for filing with the IRS was not extended, employers can obtain a 30-day extension by submitting Form 8809 (Application for Extension of Time to File Information Returns) by the due date for the ACA information returns.