Tag employer risks

No matter what the outcome of the elections in November, change is in the air. Obamacare will change one way or the other. Medical costs are rising. Associated legal costs are also rising. This will affect payroll, payroll taxes, workers’ comp premiums, health premiums, HR issues and no doubt increase employer liability.

We heard this quote in a recent PEO services meeting: “No matter who wins in November, things are going to change. While you can’t plan, you can certainly prepare by choosing a professional HR partner.”

Small businesses will need to be prepared. So while it may be impossible to plan for what may happen, since it is such an unknown, there are still ways to prepare for whatever may come.

At PEO Pros, we have prepared by expanding our HR Outsourcing Brokers division, EmployerNomics. Not only have we added staff at our corporate office, we are now adding regional franchises.

We hope to assist small to medium sized employers with outsourcing these services, now more than ever:

• Payroll and Payroll taxes
• Workers’ Compensation Insurance
• Unemployment Insurance rate management and loss control
• Employment Practices Liability management
• Other employer’s risk management
• Employee Benefits
• Managing risk from employee litigation

We are here if you need us. If you would like to consider joining us, we have several attractive franchise areas still open. But either way, we can’t help you if you don’t call. So call us at 407-490-2468 or use the contact form below.

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Wouldn’t it be great if employers could make all their employee problems go away? Make them “Somebody Else’s Problem”?

We believe that when the Employee Leasing industry chose “PEO” as their new, politically correct moniker, they chose the wrong letters. We think they should call them Employer SEP’s – where the Employee Problems become Somebody Else’s Problems. When an employer and a PEO form a business partnership, defined by the Client Service Agreement (CSA), many of the risks and responsibilities are transferred (in whole or in part) to the PEO and are no longer the employer’s headache.

Will Tenney talks about the choice of the letters “PEO”

Some of the headaches that can be shifted or at least alleviated include:

Payroll Tax Liabilities

Since the employees are now employees of the PEO for tax purposes, and registered on the PEO’s FEIN, IRS payroll tax audits are not as much of a threat anymore. In most cases the client isn’t even involved. The PEO is audited, shows their records and it’s all over. In rare cases, a PEO might have to produce information supplied by the client, but this happens so seldom you might call it a Payroll Unicorn.

Workers’ Comp Claims

The PEO will be the employer of record, so they will be responsible for paying all workers’ comp premiums, and involved in negotiating the claims. In most states, the experience modifier will stay with the PEO, and the client will not be adversely affected in the future by past claims. In addition, the PEO has safety expertise, training and written programs to put in place to reduce the frequency and severity of claims.

Unemployment Claims

Similar to workers’ comp, this becomes the responsibility (and liability) of the PEO, who is the employer of record. The State Unemployment Tax Act rate (SUTA rate) of the PEO is the SUTA rate that gets affected (in most states. There are some exceptions) and the client can maintain a clean record. In addition, the PEOs are much more experienced at handling and negotiating claims and experience has shown they are much more effective at removing false claims.

Employee Lawsuits for Employment Practices

Again, since the PEO is the employer of record, some or all of the liability shifts to the PEO in these cases. This could include:

• Sexual Harassment
• Wrongful Termination
• Discrimination
• Unfair Hiring Practices

… to name but a few.

If you would like to make some of your employer problems become Somebody Else’s Problem, please feel free to use the contact form below, or call us at 407-490-2468

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One of the unforeseen negatives of the Affordable Care Act was increased costs for workers’ compensation insurance, coming both from higher taxes assessed to insurance companies and higher costs of claims. The claims costs are on the rise due to more dependance on workers’ comp vs. traditional health insurance, increased medical costs and the big one, increased legal fees.

As the costs rise, the profit margins diminish. Naturally, the carriers are seeking to reduce their risks to maintain acceptable profit margins. This has led to a “hard market” where risks that were previously accepted are now being cancelled or non-renewed.

Staying “Off the Radar”

It is important to any employer who depends on having reliable workers’ comp insurance to remain off the radar of the carriers and their underwriters. The squeaky wheel get’s the grease, or on this case, the cancellation.

Here are some tips to stay off the radar:

1: Do not shop your workers’ comp policy right now. This will only draw attention to you or your company. Many lesser experienced agents use software that “shotguns” your application to several carriers, and several intermediaries who may duplicate your submission. Nothing sends a red flag to an underwriter more than seeing a submission come in from multiple sources at the same time.

2: Don’t do anything to jeopardize your policy. Don’t hide information, improperly describe working conditions or in any other way try to deceive your agent or your carrier. This is not the time to try to get them to change you to a lower priced code.

3: Do everything you can to minimize claims. Institute a safety program, and if you already have one, make sure everyone is following it.

4: Make sure your website does not advertise you doing “high risk” activities. We’ve seen landscaping company websites showing workers on the roofs of houses, cleaning out gutters. That is NOT in the landscaping comp code description.

5: Pay your premium on time and in full. Slow pay and low pay are great ways to get “on the radar.”

Below is a video of our lead agent John Will Tenney with further discussion:

If you would like more information please use the contact form below.

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What can possibly go wrong with a small business?

Why would a small business need a professional HR partner?

Isn’t that a waste of time and money?

No one wants to fine us do they?

Our lead agent, John Will Tenney, appears below in a candid video discussing this situation:

Business owners, if you’ve ever asked yourselves these or similar questions, consider the recent judgment handed down in Georgia where a business was fined 1.7 million dollars for I-9 violations. That’s right, $1,700,000. If that’s not a significant amount of money to you, there is no reason for you to keep reading.

What is an I-9 Form?

The Employment Eligibility Verification Form I-9 is a U.S. Citizenship and Immigration Services (USCIS) form. It is used by an employer to verify an employee’s identity and to establish that the worker is eligible to accept employment in the United States. (*1)

The form requires documents that establish both identity and employment authorization. The USCIS defines these documents in three “columns” on the form: A, B and C.

Column A are documents that establish both, and if one of these can be documented, there is no need to go to the other two columns. Examples of a column A document are:

• Passport
• Permanent Resident Card
• Alien Registration Receipt Card
• Employment Authorization Card (*2)

Column B are documents that establish identity only and include:

• Driver’s license or identification (ID) card issued by a state or outlying possession of the United States, provided it contains a photograph or information such as name, date of birth, gender, height, eye color and address
• ID card issued by federal, state or local government agencies or entities, provided it contains a photograph or information such as name, date of birth, gender, height, eye color and address
• School ID card with a photograph
• Voter’s registration card
• U.S.military card or draft record
• Military dependent’s ID card
• U.S.Coast Guard Merchant Mariners Document (MMD) Card
• Native American tribal document
• Driver’s license issued by a Canadian government authority

Acceptable Column B Documents for persons under age 18 who are unable to present a document listed above:

• School record or report card
• Clinic, doctor or hospital record
• Day-care or nursery school record (*3)

If a Column B document is presented, a Column C document must also be provided to establish authorization to work in the USA.
Examples of Column C documents are:

• U.S. Social Security account number card that is unrestricted. A card that includes any of the following restrictive wording is not an acceptable List C document:
  NOT VALID FOR EMPLOYMENT
  VALID FOR WORK ONLY WITH INS AUTHORIZATION
  VALID FOR WORK ONLY WITH DHS AUTHORIZATION
• Certification of Birth Abroad issued by the U.S. Department of State (Form FS-545)
• Certification of Report of Birth issued by the U.S. Department of State (Form DS-1350)
• Original or certified copy of a birth certificate issued by a state, county, municipal authority or outlying possession of the United States bearing an official seal
• Native American tribal document
• U.S. Citizen ID Card (Form I-197)
• Identification Card for Use of Resident Citizen in the United States (Form I-179)
• Employment authorization document issued by DHS. Some employment authorization documents issued by DHS include but are not limited to the Form I-94 issued to an asylee or work-authorized nonimmigrant (e.g., H-1B nonimmigrants) because of their immigration status, the unexpired Reentry Permit (Form I-327), the Certificate of U.S. Citizenship (Form N-560 or N-561), or the Certificate of Naturalization (Form N-550 or N-570). A form I-797 issued to a conditional resident may be an acceptable List C(8) document in combination with his or her expired Form I-551 (“green card”). For more information about DHS-issued documents please contact customer support. (*4)

How Can Your Business Avoid I-9 Problems?

Are your I-9s filled out properly? Could you handle a USCIC (formerly the INS) audit today?

If you’ve though about making this “Somebody Else’s Problem” perhaps you should contact us and let us find a Professional HR Partner, a PEO, to take this problem away from you. Please use the form at the bottom of this screen to contact us.

References:
(*1) Wikipedia
(*2) USCIS Website List A Documents
(*3) USCIS Website
(*4) USCIS Website List C Documents

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Can making a mistake in hiring or firing an employee cost you money? Your business? Your personal possessions?

What do you think in this litigious society?

You may be expecting an insurance agency to recommend getting Employment Practices Liability Insurance (EPLI) and it’s not a bad idea, but how about avoiding the need for it as much as possible in the first place?

Is it possible to know the right way to do everything with employees? Possible, but easy? No. It would certainly require staying on top of all the latest laws, practices and codes. Sounds like a lot of research to us.

Wouldn’t it be easier to have it be Somebody Else’s Problem?

Entering in to PEO relationship may be an easier (and safer) solution. After all, it is their job to handle all the employee issues related to employment. In most cases their EPLI policy offers you, the employer, some coverage as well.

Here is a brief story from one of our clients:

“A few years ago we had an employee who was not performing satisfactorily. We didn’t know what to do. She was very well liked and a personal friend of ours. We tried to talk to her but she told us what ‘we wanted to hear’ and still failed to do her job satisfactorily.

We decided to call our PEO. After a very relaxing call we asked ourselves, ‘Why didn’t we do this before?’ After all, they are professionals aren’t they?

They handled it very well. They called our employee and asked if she knew what her job duties were. She listed them fairly accurately. They asked her if she could complete those tasks in the next two weeks. She said yes. They scheduled a phone meeting at the end of the two weeks. They went down the list with her and asked her if she had completed the tasks. Not surprisingly, she hadn’t completed more than a couple. They asked her ‘What should we do?’ She said ‘I guess I shouldn’t be at this job’ and they offered her a chance to resign rather than be terminated for cause. She took it.

When she handed in her resignation to us she told us that the PEO did a great job and she apologized for wasting our time. We took her out for a farewell lunch and she told us she already had a new position lined up. In fact, she entered a new career that suits her better and we are still friends. FOrgive us for stealing someone else’s tag line but:

‘That was easy’

Thanks to PEO Pros for putting us with such a Professional Employer Organization.”

If you want to have less stress and a more comfortable relationship with your employees, consider asking us to match you with the right PEO.

At PEO Pros, we are your professional PEO matchmakers. Use the contact form below for more information.

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Has your workers’ comp coverage been denied or canceled? Not yet? Maybe it isn’t your turn just yet? If renewal time is coming up and you are worried, there are some steps you can take to make it easier.

What is involved in getting workers’ comp coverage? Understand that the insurance company is in the business of managing risks and they are taking a risk every time they add or renew a client. Your goal as a business owner then, along with your agent, is to convince the insurance company, or more specifically the underwriter, that you are a risk worth taking.

Here are the top 10 reasons why company owners either can’t get workers’ comp coverage or have it canceled or denied.

#10: Failure to be specific about what you do.
The ACORD form isn’t always enough. A detailed description of operations goes a long way in to convincing an underwriter that you are worth underwriting. It’s important to use percentages as well. For example, a lawn service company may want to say “80% residential and 20% commercial.” Make sure to list known excessive risk exposures too, such as how often you trim trees, or clean out gutters (involves getting on a roof.) Underwriters do not like surprises!

#9: Failure to maintain a safety program.
This is going to show up in your claims report sooner or later. A safety program not only has to be written, but enforced. Some roofers were seen working on a county school roof recently. They all had harnesses on but they were hooked to nothing. Doesn’t help much. Make sure your employees know the safety program and follow the rules.

#8: Spreading your company too thin.
So many companies try to do more than one thing. A famous person once said “If you try to be everything to everyone, you are going to end up being nothing to nobody.” Find your niche, stick to it, and don’t branch out in to other, riskier areas.

#7: “Shopping” your insurance around on a regular basis.
Sounds like a good business move doesn’t it? It’s not. Underwriters do not want to see your application year after year. Your company will get a reputation as a “policy jumper” and it will become more and more difficult to get a single company to take a chance on you.

#6: Underestimating your payroll to reduce premium.
Admittedly, a lot of times this is the fault of the agent. He or she underestimates your payroll to get you a lower quote. It has a downside, in that it makes you that much less attractive to the carrier. Report your payroll figures as accurately as possible. You plan on growing your company don’t you? It is OK to put that growth in your estimated payroll.

#5: Using too many subcontractors.
Lawyers have learned to “pierce the veil” and “climb the ladder” in subcontractor claims. If more than 20% of your business is handled by subs you are going to have a difficult time getting a traditional workers’ comp policy. Some companies have gone to strategic partner – referral arrangements, rather than subcontracting, because it separates the liability. Granted, you lose control of the cash flow but it is a lot easier to insure.

#4: Using “1099 employees”.
Let’s be clear, there is no such thing as a “1099 employee”. 1099s are reserved for independent contractors. Employees get W-2s. There is no middle ground. If you are paying employees as contractors, and therefore avoiding taxes and premium, sooner or later it will be revealed. The longer it takes to get caught, the more expensive it will be. Be very careful with this. Many states (and the IRS) are cracking down on this.

#3: Owning too many corporations or LLCs.
Workers’ compensation rules are different in different states, but all of them realize the potential cross-company liability of shared ownership companies. So much in fact, that there is a special form (ERM-14) that has a section dedicated to insuring companies with common ownership. While it may seem like a good idea to have multiple companies, most CPAs will tell you that the advantage is minimal compared with the extra paperwork and insurance difficulties. Check with your CPA of course, but it may be to your advantage to have different divisions within one company as opposed to having separate entities.

#2: Putting too much on your website.
Underwriters have the internet on their computers. They know how to use Google. Be assured they will comb every inch of your website to make sure you aren’t doing some high risk activity that you aren’t reporting. This has been the killing blow for several companies trying to get comp coverage. Which leads to the last, and most grievous error companies can commit:

#1: Lying to the insurance company (or agent).
Once you are caught lying on a form, or in an underwriting survey you are pretty much done for. We don’t know exactly how but we know that underwriters communicate with each other. We suspect they have a private Facebook group they tell stories in, and have good laughs about their latest “applicant.”

Never, ever, ever put false information on an insurance form. It’s in writing then and goes on your record. Don’t do it.

Can things go wrong for an employer? Of course. What can an employer do to ease the pain When Things Go Wrong?

Proper preparation can prevent problems. Having a professional partner can help solve problems.

Having a professional employer organization on your side can help prevent problems be the difference between making or breaking during an employee crisis. Things can go wrong. Things can go wrong with employees and administration, too. There are times having an experienced and professional group on the same team as the employer can help clean up the mess.

Some of the problems that can cripple a business that goes solo are:

Payroll/Tax errors.
No business owner is happy to receive letters from the IRS. Wouldn’t it be great if this could become Somebody Else’s Problem? Wouldn’t it be an advantage if all the employees were on someone else’s Federal ID number?

Workplace injuries.
It happens. Employees can get hurt on the job. What are the procedures? How does an employer avoid legal issues? Workers’ Comp Insurance is expensive for a reason. Doctors, Lawyers and Hospitals love comp claims, since there are no co-pays, deductibles or limits. How can employer make this problem “go away”? How does an employer keep the workers’ comp insurance premiums from rising? How do they avoid costly, end of year audits?

Disputes between Employees.
What are employers allowed to do? How do you handle a fight? How do you terminate a bad employee without incurring risk? How do you avoid an unemployment claim? How can you minimize the damage?

Employment Practices.
Is everything being done right? In compliance? Are there any potential lawsuits sitting out there? How can employers protect themselves from employee lawsuits?

Bad Employees
What can employer do to get rid of a bad employee without opening the gates for wrongful termination? What are the documentation procedures? Is there counseling required? Who knows the answers?

These are challenging questions. Is having a PEO an answer for all of them? Maybe. It depends a lot on the employer, the PEO and the relationship defined in the Client-Service agreement. Do you need an expert to help you select a PEO that matches your needs? That’s where PEO Pros comes in.

If any of the problems listed here sound familiar, or keep you up at night, perhaps you should contact us using the form below, or give us a call at 800-788-8343.

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People ask us when they need a PEO, or even why?

Hard question to answer with anything other than “Maybe you don’t!”

Our staff can spend a lot of time telling you why you should have a PEO, and you can probably find some of that on other parts of this site. For fun though, and maybe for educational purposes, we asked them, “When DON’T you need a PEO?” Well they tossed it around the bullpen and surprise surprise, they came up with at least 7 scenarios when a PEO is not called for.

Here’s some situations they gave us when you DON’T need a PEO:

1: You don’t have any employees
2: You have employees but they cause no problems and create no risks
3: You are a government entity who cannot be sued
4: You are a very large company with an internal legal and HR department
5: You are a very large company with annual workers’ comp premiums in excess of $250,000. (In this case you should have your own, custom comp solution, such as a captive or a self funded plan. Ask us about that)
6: You are a short term company, not likely to be around for a while
7: You will never want to sell your company, or facilitate an easy ownership transfer

Can you think of some others? Please let us know!

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If you are shopping for workers’ comp insurance in the medium to large policy market, it’s a sure bet that you have heard the word “captive” at least once or twice.

In this article there are two types of workers’ comp “captives” that will be discussed.

The first is a group captive. There are many varieties of this flavor. This is a situation where a number of companies pool their resources and set up a small insurance company to insure some part of their risk. They can be shared or segregated. There must be some degree of risk sharing to meet legal requirements.

Some of these are often called a “rent-a-captive.” In some cases this captive is used to reduce the costs associated with a high deductible master policy. For example, if your company has a million dollar per claim deductible (a typical high deductible), you could use a “Buy Back Deductible Captive Policy” to assist with reducing the negative effect of high reserves.

For more information on one type of “buy-back-deductible-captive” – please take a look at Kris Delano’s article. Kris works with us on these type of captives.

Another breed is called a segregated portfolio fund. This is usually held “captive” by a carrier and the risk sharing comes between the captive owners and the carrier.

Both captive plans are designed to help entities with large premium recover some of the premium, based on a good loss ratio. They are also designed to recover some of the losses from the insured (in favor of the carrier of course.) In this way they resemble retroactive plans, also known as “retros.”

In all cases, the shared risk encourages both parties to concentrate more on safety and reduced accidents for a single motive: profit.

Both plans offer some tax advantages due to the increase in tax deductible premium paid up front. If there is underwriting profit, there are options as to when to declare the profit that allow the captive owners to be more selective as to how much tax they will have to pay every year.

Also, since the reserves set for claims will be stored in the captive, and NOT in the carrier’s bank account (reserves are not tax deductible), there is another tax advantage here.

If all this is confusing, please consider consulting with a captive expert before proceeding in to one of these agreements. There are many options to consider, and many steps that require negotiation.

At PEO Pros we do not offer “retail captives.” All of our captive arrangements are negotiated individually, tailored to fit the needs of the client. It is very likely that captive clients will save money by having us negotiate the captive agreement for them.

Please use the form below if you would like more information on a captive situation.

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When is a worker an employee and when is a worker an independent contractor?

Employers worry that they may have an independent contractor that is actually an employee. Please remember this important fact: There is no such thing as a 1099 employee.

The worker is either an employee, requiring tax withholding and an issued W-2, or they are an independent contractor.

Things change from state to state. We are asked this question quite often by our payroll consulting clients, not only here in Orlando, but throughout the state of Florida and even nationwide.

Here is a list of questions the state of Florida uses to determine the status of a worker:

A “Yes” answer for the following questions indicates that the worker is an employee:
1. Does the business provide instructions to the worker about when, where and how he or she is to perform the work?
2. Does the business provide training to the worker?
3. Are the services provided by the worker integrated into the business’ operations?
4. Must the services be rendered personally by the worker?
5. Does the business hire, supervise and pay assistants to the worker?
6. Is there a continuing relationship between the business and the worker?
7. Does the business set the work hours and schedule?
8. Does the worker devote substantially full time to the work of the business?
9. Is the work performed on the business’ premises?
10. Is the worker required to perform the services in an order or sequence set by the business?
11. Is the worker required to submit oral or written reports to the business?
12. Is the worker paid by the hour, week or month?
13. Does the business have the right to discharge the worker at will?
14. Can the worker terminate his or her relationship with the business any time he or she wishes without incurring liability to the business?
15. Does the business pay the traveling expenses of the worker?

A “Yes” answer for the following questions indicates that the worker is an Independent Contractor:
16. Does the worker furnish significant tools, materials and equipment?
17. Does the worker have a significant investment in the facilities?
18. Can the worker realize a profit or loss as a result of his or her services?
19. Does the worker provide services for more than one firm at a time?
20. Does the worker make his or her services available to the general public?

Confusing? Yes. Is it risky? Yes it is. The federal government and the IRS are under a directive to reduce the abuse of the 1099 classification. Make sure your contractors are truly independent contractors. If you are unsure, you may want to check with an expert.

If you would like further information from us please call 800.788.8343 or use the form below:

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