My mother used to say, “you need a Philadelphia lawyer to figure this out”… seems you might. #1 on the list –
From our friends at insurancejournal.com
The 2019-2020 top Judicial Hellholes are:
https://www.insurancejournal.com/news/national/2020/01/21/555106.htm
This article was originally published on InsuranceJournal.com.
Time is running out for employers to familiarize themselves with new federal rules on overtime pay.
Starting January 1, the threshold for who is entitled to overtime pay — and who is not — changes. It’s the first change since 2004.
The new rule raises the income threshold that employees must reach to $684 per week, or $35,568 per year, to qualify as exempt from overtime. Employers are allowed to count up to 10% (or $3,556.80 per year) in bonuses or commissions towards the threshold.
Workers making less than the threshold are entitled to earn one and one-half times their regular rate of pay for all hours over 40 during a work week.
Failure to properly implement the new regulations could expose employers to wage-and-hour type claims under the Fair Labor Standards Act (FLSA).
For some employers, that could mean employment practices liability insurance claims.
That’s one reason Chris Williams is trying to raise awareness. Williams is employment practices liability product manager for Travelers. He is responsible for employment practices underwriting strategy, including policy language, target markets, overall profitability of the book, marketing, and serving as a general resource for underwriters on employment practices.
In a recent talk with Insurance Journal, Williams discussed the overtime rule change and what it means for employers, employees and insurance.
There’s so much else going on in the area of employment practices, the overtime pay issue hasn’t gotten much attention.
“That is a concern because the law’s already fairly complicated for employers to comply with,” Williams said. “Then, anytime you have a change in a complex law, you’re likely to see one, compliance challenges, and two, potential litigation coming out of that.”
Williams said the starting point is understanding the basics of the current rule compared to the new rule that starts in January.
Under the FSLA, employees that satisfy three requirements — they are paid on a salary basis, they are paid more than $23,660 per year, and they perform certain functions considered executive, administrative, or professional duties — are currently not entitled to overtime wages.
“For example, if you’re an executive, you’re a manager in an organization, you’re managing folks, you have the ability to hire, to fire people, and you make more than $23,660 per year, you are not entitled to overtime,” he explained.
Exempt executive, administrative and professional employees include teachers and academic administrators in elementary and secondary schools, outside sales employees and employees in certain technology occupations, according to the Department of Labor. Certain casual, seasonal and farm workers are also exempt from the overtime requirement.
For the new year, while the definitions and exemptions for those doing executive, administrative, professional and other work remain, the key change for employers to be aware of is that the salary threshold is going up from $23,660 to $35,568 per year.
“As a result of that, you’re going to have folks that are now within that pay band that are going to be entitled to overtime that previously weren’t entitled to overtime,” Williams said.
“Employers are going to have to one, figure out who those individuals are. And two, they’re going to have to make sure they’re tracking their time, and if those folks are working more than 40 hours per week, they’re going to have to make sure that they’re compensated on a time-and-a-half basis for that time in excess of 40 hours per week.”
While $35,568 is the threshold and where the primary impact is felt, there is also an upper limit as well. The high threshold under what is called the highly-compensated employee rule is going from $100,000 to $107,432.
“In other words, if you make more than $107,000, you have some administrative or executive functions within the organization, and you’re doing non-manual work, you’re not going to be entitled to overtime,” he explained.
The upper limit rarely is an issue. “We don’t see very much claim activity arising out of those individuals. It’s much more on the lower spectrum,” Williams noted.
In addition to the federal rule, depending on the state they are in, employers may have state laws on overtime pay they must follow as well. California is one such state.
“Employers in those situations are obligated to comply with both the state and the federal law. For example, in California, most of our overtime wage claims that we see pertain to state law as opposed to claims under the Fair Labor Standards Act,” he said.
Williams sees a few potential trouble spots for employers.
“One of the things we see today is employers, and I don’t think a lot if it is malicious, I just think it’s a misunderstanding of what their obligations are, but they may not pay their employees overtime.
“They may not correctly classify individuals as exempt or not exempt, meaning they’re entitled to overtime. They may not track their time correctly.”
Another area is claims for not compensating workers for time they spend putting on their gear to prepare for work. “If you work in a meat processing plant or something like that, you have to put on protective gear, and then you weren’t compensated for that time,” he said.
There are things employers should do to prepare for the new overtime situation, according to Williams.
“Employers will want to go back and make sure that they’ve correctly identified who is now entitled to overtime and are they, in fact, tracking their time and making sure those individuals are compensated correctly.
“It’s probably a good idea, given this change in the law, to review all your employees and make sure that you classify them correctly and you’re tracking their time properly and that you’re compensating them appropriately.”
Williams also noted that some employers may decide to raise the salary of their workers above the threshold of $35,568 to avoid an overtime issue. However, in order to avoid paying overtime for those workers, the employer would need to make sure the worker also qualified for an exemption under professional, administrative or executive.
“In other words, if the employer raised the salary of a worker above $35,568 per year, and the worker did not qualify for one of the exemptions, the worker would still be entitled to overtime,” he said.
Williams recalled that happened in some cases after the Obama Administration in 2016 initiated an even high threshold of $47,000. Some employers increased the pay of some of the workers beyond that threshold. But then the Obama change was struck down in court in September 2017 when a judge ruled that the ceiling was set too high and might apply to some management workers who are supposed to be exempt from overtime pay protections. Business groups and 21 Republican-led states had sued to challenge the 2016 rule.
The Department of Labor estimates that 1.2 million additional workers will be entitled to overtime pay as a result of the increase to the standard salary level, while an additional 101,800 workers will be entitled to overtime pay as a result of the increase under the highly-compensated employee rule.
Williams urges agents to advise their clients to take advantage of resources available to them to be sure they are in compliance— whether that be a human resources department, payroll processor or general counsel. He also recommends the DOL’s website that has information about the final rule.
Williams added that a number of insurance carriers including Travelers also have resources available. “It’s sort of a matter, one, of employers educating themselves, and then, two, taking action on that information,” he said.
Wage-and-Hour Claims
Those caught not in compliance could face wage-and-hour claims. Defense costs only for such claims may be covered under employment practices liability insurance (EPLI) but only for those purchasing a separate endorsement under their EPLI. It’s not part of the traditional EPLI. (Coverage of unpaid wages may be available to large firms with sizable self-retentions but this coverage is not typically available to small and medium firms.)
“A lot of carriers, including Travelers, will provide a sublimit that applies to defense expenses only for wage-and-hour claims. That generally includes issues like failure to pay overtime, misclassifying workers as exempt, potentially misclassifying workers as independent contractors when they’re in fact employees,” Williams explained.
There are certain state statutes, like in California, where employers are obligated to provide rest and meal periods. The separate coverage would include defense expenses for those types of claims as well.
Travelers offers a sublimit up to $250,000. “I think the market’s generally between $100,000 and $250,000, and there may be some outliers beyond that,” he said.
Since it’s been 15 years since the overtime rule was changed, this is in a way a new exposure, one agents may want to explore with clients.
“I think that’s a good idea. We sell this coverage to privately held companies and nonprofits, and we try to be proactive in selling it because it’s an exposure for employers that’s out there,” Williams said.
He noted that these claims are attractive to the plaintiffs’ bar because there is a fee shifting provision in the statute so that if the plaintiff prevails on the claim, they’re entitled to their attorneys’ fees. “You can have cases where the actual recovery amount may not be that significant in terms of the unpaid wages, but the attorney fee is potentially significantly more than that unpaid wage portion,” he said.
Other EPLI Issues
Overtime is hardly the only pressure on employment practices liability insurance (EPLI) these days when workplace issues are in the news on a regular basis.
EPLI provides protection against many kinds of employee lawsuits including claims alleging sexual harassment; discrimination based on age, race, gender or disability; wrongful termination, hiring or promotions; retaliation and wrongful infliction of emotional distress.
According to Williams, there are two areas in particular where EPLI is currently seeing increasing claims activity: sexual harassment and privacy.
“I’ll start off with the sexual harassment, and there’s been an uptick, particularly in severity, on those claims. There’s been an uptick in the frequency of those claims as well. It’s a challenging environment to litigate one of those cases in,” he said.
The second issue is biometric claims, driven by the Illinois biometric information privacy act.
“One of the requirements under that is that if you’re going to use biometric information of your customers or employees, you have to get a signed release from the employee or customer,” he said.
A number of employers have been using fingerprint technology to scan employees in and out and to clock when they’re coming and leaving work. In many cases, they did not get a signed release from the employee. “That’s resulted in class action claims brought against those employers alleging violation of this statute, sort of quasi-invasion-of-privacy claims,” he said.
Other claims areas that are relatively new include websites not in compliance with the Americans with Disabilities Act. “The website isn’t compliant if it doesn’t allow the disabled individual full use of that website because it hasn’t been programmed properly,” he said.
Travelers is among the insurers that will provide workplace violence expense reimbursement coverage that reimburses employers for certain expenses in the event of a workplace violence event. The expenses might include counseling, additional security, and services of a public relations firm to help a business through the crisis.
An employment practice claim is not a recommended experience.
“No one’s ever gone through an EPLI claim— which is a tremendously burdensome process in terms of the documents that have to be turned over, all the emails, the personnel files, the deposition the employer has to go through— no one’s gone through that process and ever said, ‘Boy, we’d like to do that again,’” Williams said.
Many companies are increasingly turning to staffing agencies to meet their personnel needs for a variety of reasons, including increased workloads and high employee turnover rates. Companies that use staffing agencies can save money because they avoid selecting, hiring and training new full-time employees. In addition, using staffing agencies frequently offers companies peace of mind because they know that workers will show up and perform their duties consistently.
But what happens if one of the staffing agency workers is hurt on the job? Who is responsible for covering the injury? What if the injured worker wants to sue the staffing agency’s client company for negligence? Answering these questions requires a thorough understanding of the employment relationships between the staffing agency worker and the client company. And the way employees are classified affects how the staffing agency and the client company’s workers’ compensation and commercial general liability (CGL) policies apply to work-related injuries.
Workers’ Compensation Versus CGL
Generally, companies are required to cover an injured employee’s medical treatment and lost wages through a workers’ compensation policy. This is a system of no-fault insurance that affords employees some security while recovering from work-related injuries. In exchange for these benefits, employees waive their right to sue their employers for negligence and related damages. Workers’ compensation provisions apply only where an employer-employee relationship exists between a company and its workers.
CGL policies protect companies when third parties (non-employees) are hurt because of the company’s negligence or misconduct. The issue of CGLs is particularly important for companies with staffing agency workers because it is not always clear whether an employment relationship exists between the company and the staffing agency workers. To fully appreciate the complexity of the issue, companies must be able to properly
Leased Versus Temporary Workers
The definitions for leased and temporary workers vary from state to state, so an adequate classification of staffing agency workers requires a solid understanding of state and local requirements.
For CGL purposes, a leased worker is an individual leased to a client company by a labor leasing firm under an agreement between the company and the labor leasing firm to perform duties related to the conduct of the company’s business. The leased worker category does not classify staffing agency workers as either leased workers or temporary workers.
Leased Versus Temporary Workers
The definitions for leased and temporary workers vary from state to state, so an adequate classification of staffing agency workers requires a solid understanding of state and local requirements.
For CGL purposes, a leased worker is an individual leased to a client company by a labor leasing firm under an agreement between the company and the labor leasing firm to perform duties related to the conduct of the company’s business. The leased worker category does not include temporary workers. Under this definition, leased workers are considered employees of the client company and are, therefore, excluded from the client company’s CGL.
CGL policies define a temporary worker as an individual furnished to a client company to substitute for a permanent employee who is on leave or to meet the company’s seasonal or short-term workload conditions. Temporary workers are considered employees of the staffing agency and are covered by the staffing agency’s workers’ compensation policy and could be covered by the client company’s CGL.
The Coverage Gap
An insurance coverage gap exists when a leased employee is injured while in the client company’s employ. Leased employees are considered to be employees of the client company for CGL purposes, but they may not necessarily qualify as employees under applicable workers’ compensation regulations.
This results in employing individuals who could sue the client company for negligence (because they are not limited by applicable workers’ compensation provisions). A company with no CGL coverage must pay any court-ordered damages (because CGL coverage does not apply to the company’s employees).
Solutions to the Coverage Gap
To bridge the gap created by leased workers, companies can look at shifting work-related injury liability to the staffing agency through an alternate employer endorsement or an extension of their CGL coverage to injury to leased workers.
Client companies can negotiate with staffing agencies to include an alternate employer endorsement on the staffing agency’s workers’ compensation and employer liability policies. This endorsement protects the client company, providing coverage to the client company in the case of a tort action and by giving the client company all the workers’ compensation coverage the staffing agency enjoys.
This endorsement can be added to the client company’s CGL policy by changing the language that excludes leased workers and temporary coverage from CGL coverage. However, companies should recognize that insurance carriers will disfavor this solution as it effectively removes an exception they intentionally built into the CGL policy.
The joint employer saga continues…see below from Insurance Journal regarding the Trump Administration’s announcement yesterday.
The Trump Administration announced a final rule setting forth standards for determining joint employer status under the Fair Labor Standards Act (FLSA), a rule that has been sought by franchisers and companies that employ contract workers.
The new rule from the Department of Labor, which will become effective in 60 days, is a departure from a legal interpretation adopted by the Obama Administration in 2016 and a 2015 ruling by the National Labor Relations Board (NLRB) that expanded joint employment situations and made it easier for workers to sue their employers.
The new DOL rule, while not legally binding, does guide consideration of whether companies are classified as joint employers of workers and thereby can be held responsible for labor violations including requirements on minimum wage and overtime pay. The rule can affect franchising companies, contractors, temporary staffing, cleaning agencies and similar firms.
The issue has been central to several cases involving the chain McDonald’s and whether it can be held liable for alleged labor violations in its franchisees’ restaurants. Last month McDonald’s won a 2-1 victory before the current NLRB with Trump appointees—agreeing to pay $170,000 to settle workers’ claims against its franchisees but also winning a ruling that frees it from direct responsibility as a joint employer.
The Obama administration had backed worker advocacy groups in the litigation against McDonald’s.
The Obama standards for determining whether there is joint employer status themselves departed from long-standing precedent and made it easier for workers to sue their employer.
In its final rule, the Trump DOL provides a four-factor balancing test for determining FLSA joint employer status in situations where an employee performs work for one employer that simultaneously benefits another entity or individual. The balancing test examines whether the potential joint employer:
A business would not have to meet all of these criteria to be considered a joint employer.
The rule also sets forth when additional factors may be relevant to a determination of FLSA joint employer status and identifies certain business models, contractual agreements with the employer, and business practices that do not make joint employer status more or less likely.
Recent History
In a decision known as Browning-Ferris Industries, the NLRB in August 2015 overturned established precedent for determining whether a joint employer relationship exists under the National Labor Relations Act. Legal guidance adopted by the Obama DOL in 2016 reflected the expansion of joint employer liability cited in the Browning-Ferris ruling. For example, it considered a franchiser a joint employer not only if it exercised direct control of employees’ activities, but also if it had “indirect” or even “potential” control.
The Trump DOL withdrew the Obama guidance in 2017.
Writing in the Wall Street Journal, DOL Secretary Eugene Scalia and White House Chief of Staff Mick Mulvaney said the new rule should clarify the situation affecting these relationships and relieve companies of a potential liability.
“The new rule also gives companies in traditional contracting and franchising relationships confidence that they can demand certain basic standards from suppliers or franchisees—like effective antiharassment policies and compliance with employment laws—without themselves being deemed the employer of the other company’s workers. That will help companies promote fair working conditions without facing unwarranted regulatory costs,” the Trump officials wrote in the Wall Street Journal.
The International Franchise Association (IFA) praised the new rule as a “return to a simple, clear, and thoughtful joint employer standard.” IFA has argued that the Obama standard increased lawsuits against employers, cost jobs and sapped the American economy of $33.3 billion per year.
Robert Cresanti, IFA president and CEO, said the four-part test to determine employer status can clarify joint employer status, employer liability, and the roles and responsibilities of each party in a business relationship.
Worker groups have argued that a narrowing of the rule will create an incentive for large employers to outsource more jobs.
Rebecca Dixon, executive director of the National Employment Law Project, said the new rule “makes it easier for corporations to cheat their workers and look the other way when workplace violations occur.”
The liberal Economic Policy Institute has said workers could lose $1.3 billion in wages annually under the new rule.
There is more to come on the issue from the Trump Administration. While the DOL standards are not legally binding, the NLRB joint employer rule is. The NLRB is close to finalizing its own rule.
https://www.insurancejournal.com/news/national/2020/01/13/554657.htm
OVERVIEW
On Dec. 20, 2019, President Trump signed into law a spending bill that prevents a government shutdown and repeals the following three taxes and fees under the Affordable Care Act (ACA):
Cadillac Tax
The ACA imposes a 40 percent excise tax on high-cost group health coverage, also known as the “Cadillac tax.” This provision taxes the amount, if any, by which the monthly cost of an employee’s applicable employer-sponsored health coverage exceeds the annual limitation (called the employee’s excess benefit). The tax
amount for each employee’s coverage will be calculated by the employer and paid by the coverage provider.
Although originally intended to take effect in 2013, the Cadillac tax was immediately delayed until 2018 following the ACA’s enactment. A federal budget bill enacted for 2016 further delayed implementation of this tax until 2020, and also:
Then, a 2018 continuing spending resolution delayed implementation of
the Cadillac tax for an additional two years, until 2022.
There was some indication that these delays would eventually lead to an eventual repeal of the Cadillac tax provision altogether. The Cadillac tax has been a largely unpopular provision since its enactment, and a number of bills have been introduced into Congress to repeal this tax over the past several years.
The 2019 continuing spending resolution fully repeals the Cadillac tax, beginning with the 2020 taxable year.
Health Insurance Providers Fee
Beginning in 2014, the ACA imposed an annual, nondeductible fee on the health insurance sector, allocated across the industry according to market share. This health insurance providers fee, which is treated as an excise tax, is required to be paid by Sept. 30 of each calendar year. The first fees were due Sept. 30, 2014.
The 2016 federal budget suspended collection of the health insurance providers fee for the 2017 calendar year. Thus, health insurance issuers were not required to pay these fees for 2017. However, this moratorium expired at the end of 2017. A 2019 continuing resolution provided an additional one-year moratorium on the health insurance providers fee for the 2019 calendar year, although the fee continued to apply for the 2018 calendar year.
The 2019 continuing spending resolution fully repeals the health insurance providers fee, beginning with the 2021 calendar year. Employers are not directly subject to the health insurance providers fee. However, in many cases, providers of insured plans have been passing the cost of the fee on to the employers sponsoring the coverage. As a result, this repeal may result in significant savings for some employers on their health
insurance rates.
Medical Devices Excise Tax
The ACA also imposes a 2.3 percent excise tax on the sales price of certain medical devices, effective beginning in 2013. Generally, the manufacturer or importer of a taxable medical device is responsible for reporting and paying this tax to the IRS. The 2016 federal budget suspended collection of the medical devices tax for two
years, in 2016 and 2017. As a result, this tax did not apply to sales made between Jan. 1, 2016, and Dec. 31, 2017. A 2018 continuing resolution extended this moratorium for an additional two years, through the 2019 calendar year. The moratorium is set to expire beginning in 2020.
The 2019 continuing spending resolution fully repeals the medical devices tax, beginning in 2020. Therefore, as a result of both moratoriums and the repeal, the medical devices tax does not apply to any sales made after Jan. 1, 2016.
PCORI Fees
The ACA created the Patient-Centered Outcomes Research Institute (PCORI) to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. The Institute’s research is funded, in part, by fees paid by health insurance issuers and sponsors of self-insured
health plans. Under the ACA, the PCORI fees were scheduled to apply to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019.
The 2019 continuing spending resolution reinstates PCORI fees for the 2020-2029 fiscal years. As a result, specified health insurance policies and applicable self-insured health plans must continue to pay these fees through 2029.
Source: CBSNews.com
A California law that makes it harder for companies to treat workers as independent contractors takes effect on January 1. Ahead of that date, small businesses in and outside the state are rethinking their staffing.
The law puts tough restrictions on who can be independent contractors or freelancers rather than employees. Supporters say it addresses inequities created by the growth of the gig economy, including the employment practices of ride-sharing companies like Uber and Lyft that use contractors. Company owners with independent contractors must now decide whether to hire them as employees or look for help in other states. Another alternative: Asking these workers to start their own businesses, a setup the law allows.
Although the law affects companies of all sizes and out-of-state businesses that use California contractors, it likely will have a greater impact on the many small businesses that have hired independent contractors because of limited staffing budgets.
Tamara Ellison has used independent contractors in both her consulting and construction businesses. She’s expecting to hire five of her consulting contractors as employees to bring her company into compliance with the law. But she’s also thinking she may have to limit the services she offers because not all her hires will have all the skills she needs for all her clients. She may also have to raise her prices, a worrisome proposition.
“Little companies just trying to start out won’t be able to afford our services,” said Ellison, whose Ontario, California-based company bears her name.
Ellison won’t need to hire her construction contractors; they’re subcontractors, a classification that complies with the new law.
The law approved by the California legislature in September codifies a 2018 ruling by the state’s Supreme Court that said workers misclassified as independent contractors lose rights and protections including a minimum wage, workers’ compensation, and unemployment compensation. The ruling came in a lawsuit brought against the delivery company Dynamex; workers around the country have complained that services like Uber and Lyft have misclassified them as well.
The law is being challenged in state courts, and companies including Uber and Lyft are campaigning for a referendum on the 2020 election ballot on whether they should be exempt from the law. And employment law attorneys expect the state legislature to add to the list of professions the law already excludes.
Independent contractors and freelancers have long been a sore point for federal and state officials who contend that many of these workers are doing work that employees do. When employers classify workers as independent contractors, they avoid taxes including the 6.2% of salary and wages companies must pay for Social Security and the 1.45% they must pay for Medicare. Employers must also pay for workers’ compensation and unemployment and disability insurance and often their health insurance and retirement benefits.
For many small business owners, especially those who do a variety of projects requiring different types of expertise, contractors provide more flexibility. WebConsults, a digital marketing agency with offices in California and Tennessee, bases its hiring decision on the work it has and whether projects are long term or short term.
“We may need a developer who specializes in a specific language to help us build one website,” managing partner John McGhee said. “If we don’t anticipate having to use that language again in the near future, we’ll hire a contractor to build the website.”
The layoffs companies were forced to make during and after the Great Recession encouraged many small business owners to choose independent contractors over employees. Contractors often cost less — they don’t get health insurance, 401(k) contributions and other benefits — and owners don’t have to let people go and pay severance when business slows.
The new law allows workers to be classified as independent contractors only if companies don’t have the right to control their work and how it is done. A number of factors go into making that determination, including how closely the worker is supervised — for example, who sets their hours. The work being done must not be part of the company’s regular business, and the worker’s occupation must be distinct from the company’s; in other words, a graphic designer cannot be an independent contractor for a graphic design firm.
There are exemptions for professionals like doctors, lawyers, architects, and insurance brokers, but they must have the freedom to set their own hours, negotiate their own fees and exercise their own judgment as they do their jobs. Workers like graphic artists, freelance writers, and travel agents can also be exempt if they have similar autonomy. And people who work in barbershops, hair and nail salons and spas can have exemptions, but they have to set their own rates and hours, choose their own clients and be paid directly by the clients.
Marisa Vallbona has transitioned a contractor who has worked for her in California into an employee and is being more selective about the work she takes on in the state. Vallbona, who recently moved the headquarters of her public relations firm, CIM, to Houston from California, is now using only Texas-based contractors.
“I don’t work with freelancers in California anymore because of the gig economy problems,” she said.
Other companies inside and out of California may follow suit. The increase in remote working over the past two decades has made it easier for companies to find workers anywhere.
Companies that don’t comply with the law face the possibility of penalties running into the tens or hundreds of thousands of dollars, said Nannina Angioni, an employment law attorney with Kaedian LLP in Los Angeles. She’s warning clients that the law expands the ability of local officials, and not just state tax officials, to enforce the law starting July 1. Moreover, she says the law can lead to lawsuits brought by workers.
Some owners may believe it’s OK to use independent contractors or freelancers because some workers like being part of the gig economy, said Michael Boro, a consultant with PwC whose expertise is in workplace issues.
“These people don’t want to be employees” is the position owners may take, Boro said. But, he warned, they need to follow the law, not workers’ wishes.
Congrats Andrew – well deserved!
NY-Based Professional Employer Organization (PEO) Ranked #18
– Demonstrating Year-over-Year Growth
PrestigePEO, a Professional Employer Organization (PEO) offering affordable, large-company employee benefits and HR services to SMBs, announced today that it has been named to the 2019 Crain’s New York Business list of the
Each year, Crain’s ranks the area’s privately held businesses by annual revenue. PrestigePEO has been recognized as No. 18 out of 150 companies on this year’s list, demonstrating growth since the company was ranked No. 20 in 2018. In fact, PrestigePEO has achieved a higher rank each year since the company was first named to the Crain’s New York Largest Privately Held Companies list in 2011.
“It is a great honor and achievement to once again be named to this list of high-growth companies. We are experiencing tremendous growth as more SMBs learn about the benefits of PEOs,” said Andrew Lubash, Founder and CEO of PrestigePEO. “Our co-employer relationship allows our clients to free themselves from the administrative burdens of daily HR tasks so they can focus on more important revenue-driving activities. We’re proud to have a hand in cutting costs and helping our clients achieve their goals.”
PrestigePEO has recently received other notable distinctions such as: one of 2019’s Best Places to Work on Long Island by the region’s premier business publication, Long Island Business News. The company was also named a finalist for the 2019 Hauppauge Industrial Association of Long Island’s (HIA-LI) Business Achievement Awards. PrestigePEO has been ranked on Inc. Magazine’s 5000 fastest-growing companies for 2008-2012 and 2015-2017.
Crain’s New York Business publishes daily and weekly digital and print editions of local business news. Crain’s lists are highly regarded in the business community for the NY area’s lists of top companies and business leaders.
About PrestigePEO
PrestigePEO, incorporated as Prestige Employee Administrators Inc., is a Professional Employer Organization (PEO) that partners with small to medium-sized businesses (SMBs) to provide full service human resources, payroll processing, employee benefits, and compliance services. Accredited by the Employer Services Assurance Corporation (ESAC) and IRS Certified Professional Employer Organization (CPEO), Prestige guarantees financial security and reliability for clients. By acting as a full-service HR department, and offering top-tier employee benefits, PrestigePEO’s SMB clients can focus on their business goals to improve productivity and profitability. Headquartered in Melville, NY, PrestigePEO provides services for SMBs in the New York metropolitan area. For more information, visit www.prestigepeo.com.
About Crain’s NY Business
Crain’s New York Business is the trusted voice of the New York business community—connecting businesses across the five boroughs by providing analysis and opinion on how to navigate New York’s complex business and political landscape. Crain’s reports on emerging trends, interviews with thought leaders and industry experts and coverage of commercial opportunities, economic changes, politics and more.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191217005484/en/
Contacts
Jackie Savage, Epoch 5 Public Relations
jsavage@epoch5.com
631-427-1713
Happiest of New Years!
“At present, the state of Florida is considering legislation to close “the gap in coverage issue” that they understand as a PEO issue and not an overall issue in general. It is unfortunate that once again they have targeted a specific industry for an issue that is much bigger than the PEO industry. The issue at hand is employers not providing workers compensation for their employees, whether it be through a PEO or not. This has been an issue for years, which is why I re-post the below to make sure everyone understands what the real issue is. Another thank you to Jon Coppelman, with Workers Comp Insider, for allowing me to express my opinion.” – Paul Hughes
“History doesn’t repeat itself, but it does rhyme.”
— Mark Twain
We are very proud of our PEO client’s ethical fabric, sophistication and professionalism. We consider them family.
Logic would suggest statute, insurance departments and credit rating organizations each play a vital role in how my profession as an insurance agent is governed as well as the insurance carrier community of any given state. The process of formal governance for insurance carriers involves the issuance, and ongoing management of “Certificates of Authority”. This process ensures that only good people with enough money and who have proved to have the management team and platform to operate an insurer are allowed to. What types of products are allowed in the given state for any specific carrier fall on statute; which is then administered through the authorities granted that carrier. Unfortunately, I know of no state where a different size or solvency level needs to be in place to have the authority to offer a large deductible.
Just three years ago, (seven now), author Jon Coppelman was kind enough to allow me a rebuttal to an article inferring that it was the PEO community that rendered another insurance carrier insolvent.
The full story here… my piece below:
http://www.workerscompinsider.com/2012/05/risk-transfer-a-1.html
Follow Up – June 7, 2012
After posting, I received a call from Paul Hughes, CEO of Risk Transfer (now Libertate Insurance Services, LLC), who is quoted above. While not contesting the premise that large deductibles are poorly managed in Florida (and elsewhere), he believes that I unfairly singled out PEOs in the blog. The fundamental issue is the failure of the state to adequately regulate and oversee large deductible programs. I agree.
Please take a few moments to read Paul’s response, which employs the useful metaphor of a casino for the risk transfer industry:
“The core issue to me is the role of the regulator versus the business owner in the management of the “casino” (insurance marketplace). That is one of the parts of Jon’s article in Workers Comp Insider that blurs the line a bit on what the PEO’s role is within the casino and whose job it is to set the rules. The casino is the State as they certify the dealers to play workers’ compensation (Carriers, MGU’s, MGA’s, Agents and Brokers) and the State also certifies that the players are credible (not convicted of insurance fraud) and can pay/play by the rules of the house. The rules are set by the house and the games all require public filings – ability to write workers’ compensation (certificate of authority), ability to offer a large deductible plan (large deductible filings), agent license, agency license, adjusters license and any other deviation from usual business practices (like the allegations that one now defunct insurance carrier illegally charged surplus notes to desperate PEO’s in the hardest market the industry has ever seen). The “three-card monte” that Jon alludes to in this article is managed not by the dealers (carriers), but by the house (state). Would a real life casino consider it prudent to allow one of their dealers to expose 20% of their $5m in surplus through high deductibles sold to PEO’s with minimal financial underwriting and inadequate collateralization? Would any casino write harder to place (severity-driven) clients to include USL&H, roofers etc with the minimum amount of surplus needed to even operate a carrier…? Of course not. These “big boy” bets would never be allowed in Vegas without the pockets being deep enough to cover the losses.”
Unfortunately, it is 2015 and no states that I know of have large deductible language that addresses the inherent credit risk of the product. A few more carriers have gone insolvent as a result of this specific issue, many policyholders with lost collateral and deposit instruments and and the claims continue to pile up on the guaranty funds. The easy scapegoat is the PEO or Staffing Services policyholder, yet in these cases they were the consumer of a very highly sophisticated financial services product. Taking a $1m position on your workers’ compensation program is taking a bet on 90% of your expected losses. This is an extreme shift that deserves more attention by the regulators that manage the product. The carrier then takes the additional bet that the losses are going to be what is expected and that the entity buying the policy will be an “ongoing concern” for the 7-10 year payout pattern associated with the payment of workers’ compensation claims. AM Best does not factor credit risk on earned premiums so that $50m of manual premiums becomes $10-15m after the application of the deductible credit. If the expected losses under the deductible are not properly collateralized, “A” and “B” companies on paper one day are in run off the next.
Logic would tell us that taxpayers should not have to bail out states that create law and the insurance companies that profit under it. Rules around credit risk for loss sensitive workers’ compensation plans must be addressed or logic will tell us the same scapegoats will keep being the target with the same issues not prevented in the future.
