Tag Archive for: workers’ compensation

insurance for e-bikes

e-bikes: responsibility and danger

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As e-bikes become more popular, the danger to both the rider and those around them also increases. While these bikes can be a great way to get around town, it is important that riders take responsibility for their actions and are aware of the dangers they present.

In this blog post, we will discuss some of the dangers associated with e-bikes and what riders can do to stay safe while enjoying this new form of transportation!

what is an e-bike?

An e-bike, or electric bike, is a bicycle equipped with battery power motors to aid with pedaling (either partially or completely depending on the bike).

In the state of California, electric bicycles can be classified according to their top speeds and type of assistance they provide. 

  • Class 1 e-bikes are powered solely through pedal-assistance, with no throttle option and a maximum speed of 20 mph.
  • Class 2 electric bikes feature both pedal-assistance and a throttle, also reaching a top speed of 20 mph.
  • Class 3 e-bikes offer pedal-assistance only, no throttle, but can reach a maximum speed of 28 mph.

e-bike dangers

E-bikes provide an exciting new way to get around town, but they also come with certain increased risks of injury that include: 

Speed 

E-bikes often have powerful electric motors that can propel them at higher speeds, making it easy to lose control if the rider is not careful. Because e-bikes can go faster than traditional bikes, riders may be more likely to suffer from road rash or other injuries if they crash. 

Weight

E-bikes tend to be heavier than traditional bikes, meaning they have more momentum and require a longer stopping distance. This can be dangerous if the rider is not prepared for sudden stops or has poor visibility of their surroundings. So riders may be more likely to suffer from musculoskeletal injuries if they fall off or are involved in an accident. 

Technology 

Since e-bikes have lithium ion batteries, riders may be at risk of electrical shocks if the batteries are damaged. Like any vehicle, electric bikes can malfunction or be subject to defects. It’s important for all riders of electric bicycles to make sure their bike is regularly serviced and maintained according to manufacturer guidelines in order to ensure their safety. 

To reduce the risk of an accident, riders should pay attention to their speed and make sure to obey the local laws. Additionally riders should always wear a helmet and exercise caution when navigating busy streets or other areas with traffic.

e-bike rules and regulations

Riders also need to be familiar with the laws and regulations regarding e-bikes in their area in order to stay safe on the road. Many states and cities have different laws regarding electric bikes, so it is important that riders know the rules before taking their e-bike out for a ride. Additionally, riders: 

  • should never ride an e-bike if they are under the influence of drugs or alcohol
  • must be mindful of the potential dangers posed by other riders on the road 
  • need to be aware that pedestrians, vehicles, and other e-bike riders can all present hazards to the rider 
  • should always be aware of their surroundings and take extra care when overtaking or being overtaken by another rider

It is important to remember that when operating an e-bike, rider responsibility and caution are key. With the right knowledge, riders can enjoy this newer form of transportation while staying safe and responsible!

e-bike laws and regulations in california

In California, e-bike riders must be at least 16 years old, and must wear a helmet when riding an e-bike.

The California Vehicle Code states that e-bikes are not allowed on public roads with speed limits over 25 mph, sidewalks, or bicycle paths—unless the e-bike is classified as low-speed. Additionally, e-bikes must have functioning brakes and lighting systems when used at night.

It is important for e-bike riders to remember their responsibility and the potential danger of riding an e-bike. E-bikes are powerful machines that can accelerate quickly and reach high speeds—which means they require extra caution when traveling in traffic. Riders must obey laws, signs, and signals to ensure the safety of all nearby riders, pedestrians and drivers.

Riders should plan their route ahead of time by following bike routes where possible, and they should always ride defensively. By following safety precautions and e-bike laws and regulations in California, riders can have an enjoyable yet responsible experience on the roads!

safety guidelines for riding an e-bike

Riding an e-bike comes with risks and responsibilities. To ensure that you are safe and responsible on the road, keep these guidelines in mind:

  1. Wear a Helmet – A helmet is essential to protect your head if you were to accidentally fall off your e-bike. Additionally, it is important to make sure your helmet fits properly as an ill-fitting helmet will not provide adequate protection.
  2. Follow Traffic Rules – As with any vehicle, it is important to stay aware of your surroundings and follow traffic rules such as speed limits, stop signs, and red lights.
  3. Don’t Ride Too Fast – Riding too quickly can make it difficult to react quickly in case of an emergency. Make sure you are aware of potential obstacles on the road and ride at a reasonable speed.
  4. Follow Rules for Paths and Trails – If you are riding your e-bike on a path or trail, be sure to follow all posted rules and regulations. Additionally, when passing other riders, make sure to give them plenty of space.
  5. Have the Right Equipment – Make sure that your e-bike is fitted with the proper equipment for riding such as lights and reflectors for visibility. Also, it’s a good idea to inspect all components of your e-bike before each ride to ensure everything is in working condition.
  6. Be Aware of Your Surroundings – When riding, it is important to be aware of potential obstacles such as potholes, rocks, and other objects that may not be visible. Be mindful of traffic around you and the direction in which it is moving.
  7. Dress Appropriately – To ensure your safety while riding an e-bike, it is important to dress appropriately. Consider wearing clothing with reflective strips, brightly colored clothes, gloves, long pants, and closed-toe shoes that provide adequate protection.
  8. Don’t Ride Under the Influence – Riding an e-bike while under the influence of drugs or alcohol is dangerous and illegal in most places. Avoid riding when impaired for your own safety and for those around you.
  9. Be Aware of the Battery Life – Make sure that your e-bike battery is fully charged before you start riding. Furthermore, be aware of how far you can travel with the current charge and plan accordingly.
  10. Be Aware of Electric Components – Be sure to stay away from any wires or electric components on your e-bike when charging it or making repairs. Never ride with any exposed wires or faulty parts that could create a hazard.

These safety guidelines can help ensure that you are riding your e-bike responsibly and safely. Enjoy your ride!

final thoughts

By following the safety guidelines outlined in this blog post, riders can enjoy all that e-bikes have to offer while staying safe and taking responsibility. E-bikes can be a wonderful way to get around, but riders must take the time to familiarize themselves with the potential dangers they present in order to keep themselves and those around them safe.

In short, it is important for all e-bike riders to always obey traffic laws, plan ahead, and remain aware of their surroundings while on the road. By doing so, they can minimize the risks of accidents and ensure a safe ride for all.

At benchmark, we recommend insuring your e-bike for an extra layer of protection. Reach out to us or read about e-bike insurance coverage on our blog to learn more. 

A male teenager sitting on a curb, dialing on his phone with a wrecked car in front of him

what is vicarious liability?

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Vicarious liability, sometimes called imputed liability, is a legal concept that extends responsibility for one person’s actions to another person.

This other person does not have to be directly responsible for the incident — they only need to have a business, organizational or family connection to the person who committed the act.

Examples of vicarious liability include:

  • When an employer is held accountable for the actions of one of its employees
  • When individual business partners are held liable for the actions of fellow partners
  • When parents are considered responsible for the negligent acts of their children or other people’s children while under their supervision
  • When directors and officers are held accountable for acts committed while they were performing duties on behalf of a corporation

why is vicarious liability applied?

The concept of vicarious liability rests on the legal doctrine called “respondeat superior,” a Latin term meaning “let the master answer.” Essentially, it shifts responsibility for negligence, libel, wrongful conviction and other civil complaints to the individual or organization that is assumed to be senior in the relationship.

The primary reason for invoking vicarious liability in a lawsuit or insurance claim is to shift the burden of payment to the party who is considered most likely able to cover the legal expenses, medical costs, or settlements or judgments that result.

how is vicarious liability justified?

Business owners, parents and organizational leaders are given the assumed right to control the actions of those they supervise. These leaders have a legal duty to maintain a safe environment and train or educate on proper behavior and skills.

Because of this presumed control, they can be considered at fault if the person under their supervision fails to perform their duties appropriately, damages another individual’s property or causes physical harm to someone else.

With regard to businesses, this responsibility is in effect only when the employee is on the clock and working within their scope of employment.

This can be a somewhat disputable definition. For example, an employee can be involved in an accident on their way to work or at an after-hours social event. Therefore, the courts have developed more definitive guidelines to clarify vicarious liability.

  • Most states exclude incidents that occur during an employee’s commute to or from work. Exceptions may be made when an employee’s personal car is used as part of their job, such as for on-site client visits, or if an accident occurs when an employee’s car is being used for a work-related errand.
  • If a company-sponsored social event is mandatory or the employer benefits from the employee’s attendance, the employer could be held vicariously liable for a related incident. An example might be an employee who is involved in an incident at a client networking event, especially if alcohol was served.
  • If an employee is involved in an incident while completing a personal errand but that personal errand was carried out during a job-assigned task, the case will be reviewed to see how it relates to a legal concept called “frolic and detour.”
    • A frolic is a major departure in either time or distance traveled from the assigned work responsibility.
    • A detour is only a minor departure.
    • The assignment of vicarious liability depends on when the incident occurred — during a frolic, which is considered off the clock, or a detour, which is considered on the clock.
  • Any time a business-owned vehicle is used, whether by an employee or a nonemployee, vicarious liability is typically admissible in a claim or lawsuit.

what about independent contractors?

Typically, independent contractors are held solely liable for their own negligent acts. However, there are some exceptions:

  • If the contractor chosen is considered incompetent or not suitable for the task, the contracting organization could be sued based on negligent hiring.
  • If the contracted work is inherently dangerous, the employer retains primary responsibility.
  • If the business passes responsibilities it isn’t legally able to delegate to a contractor, it can be held liable. This is most often related to workplace safety issues but may also include other issues of supervision and leadership.

protecting yourself and your organization from vicarious liability

While you may be unable to fully control the actions of others, you can control how you protect your assets. An agent or broker who specializes in liability insurance can help you address your risk of vicarious liability with a range of insurance options.

These may include small-business liability policies, general liability coverage, commercial auto, professional liability (errors and omissions), workers’ compensation, directors and officers insurance, and other policies that can help with any legal fees or expenses related to a claim that invokes your vicarious liability.

When appropriately designed, these same policies can also protect your employees and other related individuals. Reach out to us to learn more.



A billboard with work safety elements written on different pieces of paper, pinned to it.

increase workplace safety and decrease insurance costs

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​​Workplace accidents happen more often than we would like to think. In fact, according to the National Safety Council, there are about four million worker’s compensation claims filed every year in the United States. That is a lot of people who are injured on the job! Fortunately, there are ways that we can decrease these numbers.

 

Workers’ compensation insurance protects your business from claims by employees who are injured at work. The cost of not having workers’ compensation insurance can be much higher than the cost of investing in it. This might be the motivation you need to start considering your options.

 

In this blog post, we will discuss how increasing workplace safety can help reduce insurance costs for your business.

how to improve safety 

As the cost of healthcare continues to rise, so do worker’s compensation claims. In fact, worker’s compensation costs have increased by over 50% in the last decade. This is a significant expense for businesses, and one that can be decreased by increasing workplace safety. 

 

Steps to improve workplace safety :

  • Conduct a hazard assessment to identify potential risks in the workplace.
  • Train employees on proper safety procedures.
  • Implement safety measures such as guards, barriers, and signage.
  • Inspect equipment and work areas for hazards on a regular basis.
  • Invest in personal protective equipment for employees.

 

By taking these steps to increase workplace safety, you can help to reduce worker’s compensation claims and improve the overall health and well-being of your employees. A safe workplace is a happy workplace!

 

Not only will increasing workplace safety help to decrease worker’s compensation claims, it will also help to improve morale and productivity. Employees who feel safe in their work environment are more likely to be engaged and productive as well. 

how to handle an employee injury

First and foremost, ensure that the injured employee receives proper medical care. Then:

  • Notify your worker’s compensation insurance carrier as soon as possible.
  • Fill out any required paperwork and documentation.
  • Work with the injured employee to create a return-to-work plan.

 

If an employee is injured on the job, it is important to take quick and appropriate action. By following the steps above, you can help to ensure that the injured employee receives the care and support they need. 

how to handle an employee claim

Steps to handle the claim with your worker’s compensation insurance carrier :

  • Notify the insurance carrier as soon as possible.
  • Cooperate with any investigations that they may conduct.
  • Provide any requested documentation in a timely manner.

 

If an employee is injured on the job, you will need to file a worker’s compensation claim with your insurance carrier. It is important to notify them as soon as possible and to cooperate with any investigations that they may conduct. By taking these steps, you can help to ensure a smooth and efficient claims process.

 

After an employee files a worker’s compensation claim, it is important to work with your insurance company to investigate the claim and identify any areas where you can improve safety in the workplace. By taking action to prevent future accidents and injuries, you can help to reduce worker’s compensation costs for your business.

a final word

By implementing safety measures such as regular safety training, hazard identification and mitigation, and safety equipment, you can decrease the number of workplace accidents and injuries.

 

Implementing these safety measures will help to reduce workplace accidents, improve morale, and save your business money. Worker’s compensation claims can be expensive, but by increasing workplace safety you can decrease the number of claims filed and save your business money. 

 

If you have any questions about how to increase workplace safety, or if you would like more information about worker’s compensation claims, please contact us today. 

employee injured at work

looking at workers’ compensation post-pandemic

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Before COVID-19, the workers’ compensation (WC) process was fairly efficient. The pandemic, however, has brought a unique set of challenges to the workers’ compensation industry, including remote and hybrid work models, job elimination, and more.


Let’s chat about workers’ compensation post-pandemic.

what is workers’ compensation?workers' compensation overview infograhpic

Workers’ compensation is insurance purchased by employers “that provides cash benefits and/or medical care for workers who are injured or become ill as a direct result of their job.”

According to the U.S. Department of Labor, workers’ comp can provide the following to the injured:

  • “Wage replacement benefits
  • Medical treatment
  • Vocational rehabilitation
  • Other benefits”

do all employers need workers’ compensation?

Yes, yes, and yes again.

According to the California Department of Industrial Relations, “all California employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700. If a business employs one or more employees, then it must satisfy the requirement of the law.”

why is workers’ comp important post-pandemic?

In 2020, employers’ workers’ comp premiums decreased by 10% due to decreased payrolls and fewer claims, according to the National Council on Compensation Insurance.

Fast forward to 2022, however, and things have shifted again. As more employers begin to adopt greater safety in the workplace as well as remote and hybrid work models, workers’ compensation has changed post-pandemic.

Many employers are facing the question of workers’ compensation for their remote employees: Do I need it?

In short – Yes. You need workers’ compensation for ALL employees, no matter where they are working from.

Whereas many remote businesses won’t experience the same ‘on-the-job’ type of workers’ compensation claims, they will likely experience more claims coming from ergonomic concerns (i.e. neck and back pain, finger and hand pain, etc.)

Read on for more information on workers’ compensation in the hybrid workforce.

Workers’ compensation is important for the same reasons pre-pandemic as post-pandemic. Workers’ compensation helps employers avoid hefty out-of-pocket costs in the event an employee is injured.

(PS: When it comes to small businesses, these out-of-pocket costs may be enough to shut operations down entirely—so don’t risk it!)

workers’ compensation costs are on the rise

Workers’ compensation rates have been gradually increasing over recent years.

This increase was bolstered, however, in July 2022, when the Workers’ Compensation Insurance Rating Bureau of California® (WCIRB) submitted its September 1, 2022, pure premium rate filing to the California Department of Insurance (CDI).

The California Department of Insurance helps regulate workers’ comp rates using the WCIRB’s recommendations.

In this 2022 filing, the WCIRB proposed a set of increased premium rates that are, on average, 7.6% higher than those approved the year prior on September 1, 2021. Wow!

Read on for the WCIRB filing.

why are workers’ compensation costs increasing?

Simply put, workers’ compensation rates are rising because there are more claims being filed.

Research shows claims might be increasing because:

  • Inflation
  • Workforce changes
  • Increasing age of the workforce
  • Increased indemnity costs, and
  • Rising wages

Claims—regarding unsafe working conditions, COVID exposures, and/or workplace accommodations—might also increase as individuals begin to return to in-person work.

what can business owners do to reduce workers’ compensation claims?

Considering the high increase in the cost of workers’ compensation coverage, business owners should do everything possible to reduce claims being filed. As a business owner, you can mitigate workers’ comp claims by:

  • Encouraging mental health awareness
  • Focusing on risk mitigation
  • Conducting proper employee training
  • Updating your employee handbook and code of ethics, and
  • Maintaining a safe workplace

Interested in learning more about how to reduce the number of workers’ compensation claims that your business faces? Read our article “how to avoid the most common workplace injuries.”

"workers' compensation" written on a notepad sitting next to money on a desk

your workers’ compensation policy annual carrier audit

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Workers’ compensation insurance coverage is an important part of business protection for any employer. But have you heard of a workers’ compensation policy audit? Here’s what you need to know about your workers’ comp policy audit.

why do you need workers’ compensation policies?

So, what is workers’ comp, and why do you need it as an employer?

Workers’ compensation is “insurance, paid by employers, providing wage replacement and medical benefits to employees who are injured during the course of working for the insured.”

Why do you need workers’ comp insurance? Well, there are a couple of reasons, First, investing in workers’ compensation helps businesses avoid hefty costs of an employee’s medical expenses and lost wages following a workplace injury or illness.

If an employer failed to have workers’ compensation (which is a criminal offense according to Section 3700.5 of the California Labor Code), they’d be responsible for all medical expenses out of pocket—which, depending on the illness or injury, could cause significant financial harm to their business.

Moreover, workers’ compensation wages and benefits are provided in exchange for removing the employee’s right to file a lawsuit against their employer.

what is a workers’ compensation audit?

A workers’ compensation audit is an annual review of records. These audits are requested by an insurance company to verify that your business has paid the correct premium for workers’ compensation insurance.

how does a workers’ compensation audit work?

Workers’ comp audits can be conducted:

  • In-person
  • Over the phone
  • By mail

How your audit is conducted depends on your auditor and business type. 

Moreover, audits “determine if the payroll and class codes quoted at inception accurately reflect the actual payroll and scope of work performed during the policy period. Audits also ensure that sub-contractors had their own coverage in place.”

If records don’t match up, the price of the workers’ comp insurance will be adjusted for the policy year.

why do you need a workers’ compensation audit?

So, why do you need a workers’ compensation audit as a business owner?

As mentioned above, your initial workers’ comp premium estimate may not always match the actual payroll and scope of work for your business. Depending on a variety of factors throughout the year, this payroll figure might actually land below or above your estimate.

A workers’ comp audit is necessary—and is actually required by most state regulators—so that adjustments to the initial premium can be made if necessary.

how to prepare for an audit

Now you know what a workers’ compensation insurance audit is, how it works, and why you need one. Let’s briefly discuss how to prepare.

  1. Gather Your Records: Your auditor will, of course, need access to your financial data for the policy period (Think: General business information, payroll records, insurance records, cash disbursement records, etc.)
  2. Revise Job Descriptions: Workers’ comp premiums are determined by the risk that your employees face at work and on payroll. Revising employee job descriptions, and knowing what each role does thoroughly, is a great way to help prepare for an audit.
  3. Ask Questions: When the time comes for your audit, don’t be afraid to ask questions. Review all documents clearly and only provide the information requested, as to not create additional work for your auditor.

interested in learning more?

In conclusion, a workers’ compensation policy audit is a crucial part of any employer’s risk management strategy. It helps to ensure that businesses have adequate coverage in place and are paying the appropriate premiums for their workers’ comp policies. Conducted annually, workers’ comp audits can be performed in-person, over the phone, or by mail, and involve a review of financial and insurance records to determine if the initial premium estimate accurately reflects the actual payroll and scope of work for the business. 

By preparing in advance and being open to communication during the audit process, employers can help to make the process as smooth and efficient as possible.

Read on for information about workers’ compensation in the hybrid workforce.

 Read on for information about workers’ compensation in the hybrid workforce.

construction worker sitting on job site injured

how to avoid the most common workplace injuries

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Between 2015 and 2019, workplace injuries kept workers out of work for more than 17 million days when looking at 1.5 million workers’ compensation claims. That’s right—we said 17 million days, according to The Travelers Injury Impact Report. Workplace injuries are an employer’s biggest nightmare for a variety of reasons.

Let’s chat about how to avoid the most common workplace injuries and what they are.

what are the most common workplace injuries?

The most common workplace injuries across all employees and industries were ranked as follows:

  • Overexertion
  • Slips, trips, and falls
  • Struck by an object
  • Motor vehicle accidents

Moreover, for first-year employees, cuts, punctures, and being caught in or between hazards also accounted for a significant portion of injuries.

how to avoid workplace injuries

At benchmark, we bring these statistics to light to provide businesses with an understanding of what is happening (or can happen) in their workplaces. 

We’d like to help your business avoid workplace injuries by discussing four tips on how to avoid them. Check them out below.

prioritize a safety-first culture

In your business, it’s important that your employees know safety is a priority. Implementing a solid safety program will look different for each industry; however, your safety program will likely include safety meetings, tests, the proper safety equipment and tools necessary to complete work, and of course, safety training.

When you implement a safety program, it should be your number one priority to do everything in your power to prevent employees from getting injured or sick. (Yes, this includes making sure all of your carpets have non-slip grip or are secured to the floor to prevent slips!)

stabilize your employee population

Accidents happen more frequently when businesses don’t have adequate staffing levels. One way that you can avoid injuries in the workplace is by ensuring you have a stable employee population.

Why? Overworked employees are more likely to suffer from exhaustion, which can lead to cutting corners to make ends meet. A solution could be hiring part-time or even seasonal staff to help prevent these common workplace injuries.

implement a safety-incentive program

Most employees just want to know that they’re valued and to be recognized for their efforts. A great way to do so, while also increasing workplace safety, is by implementing a safety-incentive program.

In fact, the Occupational Safety and Health Administration, more commonly known as OSHA, recommends safety-incentive programs, which reward “workers for reporting near-misses or hazards.”

According to OSHA, effective safety-incentive programs can “provide positive reinforcement for reporting illnesses and injuries,” making the workplace a safer environment altogether.

invest in insurance

Insurance is one of the most important things a business owner can invest in to keep their business safe. The types of insurance your specific business might need will vary depending on your industry, state, and business itself. However, some common types of insurance include:

  • Commercial Property Insurance
  • Cyber Liability Insurance
  • Commercial Auto Insurance
  • Workers’ Compensation Insurance
  • General Liability Insurance

infographic on How to Avoid the Most Common Workplace Injuries

Speak with a professional—like our team at benchmark commercial insurance—to learn what types of insurance you need to keep your business protected. Read on for your complete guide on workers’ compensation in the hybrid workforce.

construction worker

workers’ compensation in the hybrid workforce: your complete guide

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Over the past two years, more employees have become comfortable with working remotely. In fact, Nationwide reports that “83% of employees who can work remotely said they would like to continue doing so… while 32% want to work from home full time.”

The bottom line? Remote work is here to stay—or at least on a hybrid model.

Remote and hybrid work, however, brings up questions about workers’ compensation. Questions we frequently receive from clients/employers include:

  • Do I need workers’ compensation for my remote workers?
  • What limitations occur with remote, out-of-state employees?
  • Can my premium become less expensive with remote workers?
  • If an injury occurs, what proof can be used in a remote setting to make a worker’s comp claim?

do I need workers’ compensation for remote employees? 

The short answer is yes.

Employers must provide workers’ compensation for ALL of their employees. This means coverage for employees whether they are:

  • In office
  • Remote
  • Hybrid, or
  • In the field

All employees must have coverage in case of an injury.

If an employee is uninsured for some reason and faces an injury, civil or criminal penalties could be directed toward the employer who failed to provide coverage.

Common remote injuries or exposures include:

  • Slips, trips, and/or falls
  • Ergonomic injuries (for example, back pain from sitting at a computer desk all day)

how does workers’ compensation work for 1099 independent contractors?

As previously mentioned, your workers’ compensation policies must cover all of your employees. (Yes, this includes your 1099 independent contractors!)

The caveat, however, is that 1099 independent contractors should have their own workers’ comp that they can use if they are injured on the job. This is part of what classifies them as true independent contractors.

While your workers’ compensation will cover an independent contractor in case of injury, as an employer, you may not want to cover that injury.

Let’s paint a picture: Say you hire someone to fix the loose entryway door of your company’s building. Then, the door falls on the 1099 worker and injures them. Their own workers’ compensation insurance would ideally cover the cost of the injury—not yours.

what can you do to protect yourself as an employer?

When hiring an independent contractor, make sure you’re asking the right questions to avoid costly mistakes.

Verifying a certificate of insurance (COI) ensures that the workers you hire are covered in case of an on-the-job accident.

how do i know if my workers are 1099 independent contractors?

We’ve all just filed our taxes (aren’t you glad that’s over!?) However, this means it’s now audit season. During this time, it’s especially important for employers with remote employees to make sure they have all of their ducks in a line.

But how do you know if your remote workers are 1099 independent contractors or standard employees? The ABC test.

In order to be considered a 1099 independent contractor, the worker must meet all three criteria of the ABC test:

ABC test criteria

  1. “The worker is free from the control and direction of the hiring entity in connection with the performance of the work, under the contract for the performance of the work.
  2. The worker performs work that is outside the usual course of the hiring entity’s business. 
  3. The worker is customarily engaged in an independently established trade occupation or business of the same nature as that involved in the work performed.”

Read on to learn more about AB-5 as it relates to workers’ compensation.

Moreover, business owners must be aware of Assembly Bill 5 (AB-5) worker classification changes. This way, you can avoid paying workers’ comp for independent contractors who should have their own coverage—and therefore, avoid an employment development department (EDD) misclassification audit.

No one wants an audit!

what does workers’ compensation actually cover? 

For remote workers, most policies and carriers will have the same workers’ compensation coverage compared to in-office workers.

According to the California Department of Industrial Relations (DIR), workers’ compensation typically covers basic benefits, including:

  • Medical care
  • Temporary disability benefits
  • Permanent disability benefits
  • Supplemental job displacement benefits
  • A return-to-work supplement, and
  • Death benefits

There are, however, differences in premiums and rates for employers depending on a couple of factors, which include:

  • Industry of work
  • Employee payroll
  • Number of employees per class code within industry

An important factor to note, however, is the new ‘telecommuting’ class code that was created as a result of increasing remote work: Class code 8871.

class code 8871

Class Code 8871, or “Clerical Telecommuter Employees” is currently in effect in California.

According to Vantreo, in order to fall into class code 8871, an employee must:

  • “Spend more than 50% of their time performing clerical duties from a clerical work area located within their home or any other office space away from any location of their employer
  • Spend the remainder of their time engaged in clerical duties at the employer’s place of business.”

what compensation limitations are there for out-of-state employees?

Now more than ever, a fluid workspace brings more work environment options. Gone are the days when an employee must reside in the same state as the company they work for.

For example, it’s possible for an employer to have employees living in California, Texas, and Georgia simultaneously!

However, if a company has the same policies for all employees, with some employees working in another state, they are at risk for liability exposure. It’s important to know how to avoid liability exposure.

Let’s discuss.

how to avoid liability exposure

In order to avoid liability exposure when employing workers from different states, it’s important to understand what factors need to be considered if an injury occurs. This includes:

  • What state the company is located in
  • What state the injury occurs in
  • What state the employee resides in

Most of the time, in the case of an injury claim, the answer to all of the three questions above is the same state.

While it depends on the state, some states have extraterritorial provisions which would include injuries that occur outside of the state boundaries (again, it depends on the state).

Another way to avoid liability exposure is to make sure the proper state is listed in the workers’ compensation policy. If the employer purchases coverage in separate states but lists each on record, there will be a lower risk of liability exposure.

how can businesses protect remote workers from occupational hazards?

Businesses can protect their remote workers from occupational injuries (and therefore lower the risk of workers’ comp claims being filed against them) by implementing the following practices:

  1. Establish work hours to reduce false claims that occur outside of working hours
  2. Make sure workstations are set up ergonomically
  3. Conduct regular employer-employee check-ins
  4. Create a clear remote work policy for employees to follow to avoid injury
  5. Take injury and illness reports seriously

how does a remote employee provide proof of injury?

So, a remote employee is injured “on the job.” How do they prove it?

This is where remote work and workers’ compensation can get tricky. In general, remote employees who file workers’ compensation claims can expect more questions and explanations needed to prove a work-related injury.

In addition to higher levels of investigation, if a false claim is suspected, an applicant’s attorney might need to get involved.

can my premium become less expensive with remote workers?

In short, no.

It is not necessarily less expensive to insure a remote worker. There is a rating code used to determine your premium for remote and hybrid workers, and this rate typically runs the same for an in-office employee.

workers compensation in the hybrid workforce is vital

If you’re looking to find a way to save on insurance premiums, read our article on how to stabilize or reduce your insurance costs.

It’s also important to note that the high amount of work-from-home employees has created a vulnerable spot for companies with cyber attacks. Read on to learn how to educate your team to avoid email scams.

AB 5 & Workers' Compensation Explained

ab 5 & workers’ compensation explained

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We partnered with John Milikowsky, the founder and managing attorney of Milikowsky Tax Law to discuss Assembly Bill 5 and how it correlates with Workers’ Compensation. John is a seasoned tax lawyer who understands the ins and outs of government agency audits. Through his experience working with hundreds of EDD, CSLB, and IRS audit cases, John and his team of experts understand how to protect business owners in the face of an audit. Get to know the Milikowsky Tax Law office here.  

what does assembly bill 5 mean for companies?

Assembly Bill 5 (AB-5) is a federal law that passed in January 2020 that introduced further regulations for independent contractor classification.  Previously, there was only the 13-Factor Borello Test. Under AB-5, the ABC test is used to set the standard for worker classification. All workers are considered W-2 employees unless they meet all three of the following criteria according to the California Labor Workforce Development Agency:  

  1. “The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
  2. The worker performs work that is outside the usual course of the hiring entity’s business; and
  3. The worker is customarily engaged in an independently established trade occupation or business of the same nature that is involved in the work performed.” 

Let’s unpack the three criteria. First, when it comes to your 1099 independent contractors, employers cannot hold control over workers. Examples of areas businesses can control workers, intentionally or unintentionally include: 

  • Uniforms 
  • Your company’s business card with your independent contractor’s name on it
  • Requiring the independent contractor work specific hours 
  • Accepting money from a customer and then paying your contractor 

Generally, if you employ an independent contractor, they function as an independent business. The worker has the freedom to work when they choose, and how they choose within the parameters of their contractual agreement. Independent contractors should receive money directly from the third party that is receiving their services. 

The second element is that your company’s services and the services of independent contractors should be different. If an independent contractor is providing your core services, the second element cannot be met. 

For example, let’s say you own a plumbing company that hires both W-2 and independent contractor plumbers. They both provide the same services and do not meet the second criteria of the ABC test. However, a residential plumbing company hired for a commercial job may decide to hire a specialized commercial plumber. Since the residential plumbing company typically does not do commercial work, they might qualify under the second element of the ABC test to distinguish between what the contractor does and what your company does. 

The third element is that the contractor has to have an independent trade or business. The EDD generally requires a business license, and potentially an EIN number. Having a corporation or an LLC is a great added bonus. The independent contractor should have entrepreneurial risk in their company to show that they have an independent business. 

what does that mean for workers’ compensation? 

Workers’ compensation carriers are indifferent to the distinction between an independent contractor and a W-2 employee. As far as they’re concerned, if you’re on a job and your work product is under the control of the insured, then that employee is a covered employee. 

This process typically comes to light during the annual audit at the end of the workers’ compensation policy. The insurance company will ask, “do you hire independent contractors?” If the answer is yes, and that independent contractor cannot prove that they have their own workers’ comp coverage, then the carrier will pay heavy fines and penalties for that exposure because ultimately, there’s coverage there.

what happens when a workers’ compensation carrier finds an independent contractor? 

In the construction industry, when a workers’ compensation carrier identifies an independent contractor, the Contractor and State Licensing Board (CSLB), EDD, Labor Commissioner, and OSHA, will descend upon a job site and start asking questions of everyone on site. If the government agency finds people who are independent contractors without a license, that potentially becomes a criminal issue, and also a rise for an EDD audit. 

if a carrier finds a misclassification on the stateside for payroll, how does that affect the audit on the workers’ comp side?

At that point, the workers’ compensation policy auditor will determine the value of compensation paid to that supposed independent contractor. They then will charge the employer the premium for the wages related to that relationship. This occurs whether or not the employer or policyholder knew that their policy was not limited to covering only W-2 employees. If any insured or uninsured independent contractors wanted to, they could make claims on the employing companies’ workers’ compensation policy.

This creates liability for the hiring company. Business owners who have any doubts about whether a worker is an independent contractor or not should be sure to do their research and make sure that they meet the three elements of the ABC test. As previously advised, limit your liability because anybody can file a claim against your business. The workers’ compensation carrier then would have to make that determination. Learn more about what you need to know about changes in tax codes here.