G&A Partners Celebrates 25 Years!

Congrats to G&A Partners who celebrates 25 years in business this year!

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HOUSTON–(BUSINESS WIRE)–G&A Partners, a national professional employer organization (PEO) and human resources services provider, is celebrating its 25th anniversary this year. The company is one of the largest and fastest-growing privately owned PEOs in the U.S., boasting a 93% client-retention rate and a Net Promoter Score that is 30-times higher than PEO industry standards.

Founded in 1995 by Chairman and CEO Antonio “Tony” Grijalva and President and COO John W. Allen, G&A Partners is a world-class HR services company that helps its clients build and maintain thriving businesses as they pursue their dreams and passions.

“We put people first at G&A and treat them like family,” Allen said. “Our employees are a cut above and they love what they do. Their energy and their joy are contagious, and that is what provides a phenomenal experience for our clients.”

The company has big plans to further expand over the next quarter-century, with the short-term goal to double in size over the next few years through organic growth and acquisitions.

“Everybody needs to employ good people,” Grijalva said. “Everybody needs to create an inviting culture that attracts and retains top talent. We offer our clients the tools and services to accomplish that goal, which also helps them grow and succeed.”

Grijalva and Allen discovered the need for outsourced HR not long after they formed their own CPA firm in the early 1990s. Their clients with small- and medium-sized businesses came to them asking whether they would consider expanding their services to payroll, employee benefits, and other HR functions.

Enough of a demand was present that Grijalva and Allen decided to purchase a temporary staffing agency and create G&A Partners (originally called G&A StaffSourcing) in 1995.

The business venture paid off and today G&A has evolved into a full-service PEO with nearly 400 employees that serve more than 2,000 companies comprising around 56,000 employees. G&A Partners has been consistently recognized as one of the best places to work in several of the markets where it operates.

About G&A Partners

G&A Partners, one of the nation’s leading professional employer organizations (PEO), has been helping entrepreneurs grow their businesses, take better care of their employees and enjoy a higher quality of life for more than 25 years. By providing proven solutions and technology in the areas of human resourcesemployee benefits and payroll administration, G&A Partners alleviates the burden of tedious administrative tasks and allows business owners to focus their time, talent and energy on growing their companies. Headquartered in Houston, G&A Partners has offices throughout Texas, as well as in ArizonaCaliforniaColoradoIdahoIllinoisMinnesotaNevadaUtah, and Latin America.

Trump Administration Issues New Rule on Joint Employer Liability

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:

  • Hires or fires the employee;
  • Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records.

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

California Workers’ Compensation Written Premium Continues to Decrease in 2019

Source: Insurance Journal

Premium decreases in California workers’ compensation may have escalated in 2019, a new report shows.

The Workers’ Compensation Insurance Rating Bureau of California on Wednesday released its quarterly experience report, an update on California statewide insurer experience valued as of Sept. 30.

The report shows decreases in written premium since 2016 are primarily driven by decreases in insurer charged rates more than offsetting increases in employer payroll.

Written premium for 2018 was 4% below that for 2017 and 6% below that for 2016, according to the WCIRB report.

Highlights of the WCIRB report include:

  • California written premium through the third calendar quarter of 2019 is 7 percent below the same period for 2018, suggesting that premium decreases are escalating in 2019.
  • The average charged rate for the first nine months of 2019 is 11 percent below that for 2018 and 32 percent below the peak in 2014.
  • The WCIRB projects the ultimate accident year loss ratio for 2018 to be three points above that for accident year 2017, driven by higher claim severities for 2018 and lower premium rates.

The full report is available in the research section of the WCIRB website.

Why James River Insurance Dumped Uber Account

Interesting article published today out of the Insurance Journal by Suzanne Barlyn about insuring Uber.  Not surprisingly, carriers continue to be perplexed with gig-economy exposures.

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A Bermuda-based insurer that recently severed ties with an Uber Technologies Inc. affiliate said on Thursday the risk of providing driver ride-hailing coverage had become too great and that it had mispriced policies during its initial years on the account.

James River Group Holdings Ltd said on Oct. 8 it would cut ties with a unit of Uber, its largest client, and cancel all related policies as of Dec. 31 this year.

Florida was an “outsized contributor” to the insurer’s Uber problems, especially in 2016, given a large number of uninsured and underinsured motorists, said James River Chief Financial Officer Sarah Doran in a call on Thursday with analysts to discuss its third-quarter financial results.

The insurer cut back on its exposure to Uber’s Florida market in 2017, Doran said.

James River boosted its cash reserves by a total of $57 million during the 2019 third quarter. Of that, $50 million was for 2016 and 2017 losses stemming from its Uber account, the insurer said.

James River late Wednesday said it withdrew $1.2 billion in funds held as collateral in a trust created by an Uber affiliate to cover current and future claims.

Insurance is one of the largest expenses for ride-share companies, an issue that many analysts cite as a risk for the ride-share industry’s profitability.

“In Uber, we wrote a new type of risk that originally seemed to be highly profitable,” J. Adam Abram, James River executive chairman and chief executive officer, said in the Thursday call.

But the nature of that risk changed as Uber rapidly expanded into new regions, added tens of thousands of drivers, and moved into other business lines, Abram said. Uber’s businesses now include food delivery and freight.

“Candidly, in some years, we mispriced the risk,” Abram said.

James River’s poor results for its Uber account in 2016 and 2017 spurred it to negotiate a “substantial pricing increase” for 2018 and charge similar rates for 2019, Abram said.

James River bought reinsurance for a third of the Uber account in 2019, but does not expect profits on the account for 2018 and 2019 to offset earlier losses, Abram said.

A new California law designed to limit the use of “gig” workers ultimately swayed James River to cancel the Uber account, despite coverage now being “well-priced,” Abram said.

The law, which goes into effect on Jan. 1, 2020, spells out when companies must treat “gig economy” contract workers, such as ride-hailing drivers, as employees. “We believe (it) will adversely alter the claims profile for ride-share companies,” Abram said.

James River expects to process about 18,500 Uber-related claims while winding down the account, Abram said.

PEOs, Hamburgers, and Joint Employment

Happy Monday!  Re-publishing this fantastic update from Mike Miller regarding joint employment.

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Who would have thought that PEOs would have anything in common with McDonald’s, Hamburger University, and joint employment? Well, earlier this month a three judge panel of the United States Court of Appeals for the 9th Circuit issued a decision interpreting California law regarding a joint employment issue that PEOs will be able to utilize with regard to the bourgeoning number of wage claim cases in California and elsewhere that have been filed against PEOs. In this California case, the Plaintiffs, among other allegations, alleged that they were denied proper overtime premiums, meal and rest breaks, and other benefits in violation of the California Labor Code. Most significantly, the Plaintiffs also alleged that McDonald’s and its franchisee are joint employers and that McDonald’s is, therefore, liable for the wage violations. The district court had held that McDonald’s is not a joint employer of the franchisee’s employees and was not liable for these wage claims and had dismissed these claims in a summary judgment action. On appeal, the 9th Circuit affirmed the lower court ruling.

Similar to how PEOs operate, the franchisee, and not McDonald’s, selects, interviews, hires, trains, supervises, disciplines and fires its employees. The franchisee also sets the employees’ wages and their work schedules and monitors their time entries. There was no evidence that McDonald’s performed any of these functions. Interestingly, evidence in the record, if viewed in a manner most favorable to the Plaintiffs (as must be done in a summary judgment proceeding), would have permitted a finding that McDonald’s could have prevented some of the alleged wage-and-hour violations but did not do so, and yet this did not impact the Court in its decision.

Under the franchise agreement, McDonald’s required the franchisee to use its Point of Sale (“POS”) and In-Store Processor (“ISP”) computer systems every day. Managers of the franchisee took various courses at McDonald’s Hamburger University and then trained other employees on topics such as meal and rest break policies. The franchisee also voluntarily used the McDonald’s computer systems for scheduling, time keeping, and determining regular and overtime pay through applications that came with the IPS software.

Under the applicable California Wage Order, an employer is defined as one “who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.” In construing this Wage Order, the California Supreme Court has set forth three alternative definitions as to what it means to “employ” someone. These three alternative definitions, any one of which can establish an entity as an employer, are as follows:

(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law relationship.

With regard to whether McDonald’s exercises “control over the wages, hours or working conditions” of the employees of the franchisee, the 9th Circuit pointed out that McDonald’s does not “retain ‘a general right of control’ over ‘day-to-day aspects’ of work at the franchises.” The Court held that McDonald’s involvement with the workers did not represent control over wages, hours, or working conditions.

With regard to the “suffer or permit to work” definition of employer, here too McDonald’s did not meet the test for being an employer. In one of the more significant aspects for how this case may impact PEOs, the Court stated:

The question under California law is whether McDonald’s is one of Plaintiffs’ employers, not whether McDonald’s caused Plaintiffs’ employer to violate wage-and-hour laws by giving the employer bad tools or bad advice.

I have written previously about the importance of not referring to the manner in which PEOs do business in California as being the “leasing of employees.” The 9th Circuit gave credence to this position when it referred to a staffing agency supplying employees to another entity and having such a manner of doing business fit under the “suffer or permit to work” standard for being an employer. Clauses found in PEO Service Agreements stemming from the early days of the industry such as the PEO shall have the power to “withhold employees’ services from the client,” not only is not an accurate representation of the realities of the PEO/client relationship in 2019, but also is a worrisome clause. As the 9th Circuit pointed out in this decision, the determination of whether an entity is an employer under the “suffer or permit to work” standard turns in part on whether an entity has “the power to prevent plaintiffs from working.” Consequently, in California, a PEO’s not retaining or assuming “a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees” is crucial in avoiding the determination of employer status under California law.

Lastly, with regard to the third part of the test, “to engage, thereby creating a common law relationship,” the Court concluded that according to California common law “[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” The Court stated that while perhaps arguably there was evidence that McDonald’s was aware that its franchisee was violating California’s wage-and-hour laws with respect to the franchisees employees, there was “no evidence” that McDonald’s had the requisite level of control over the Plaintiffs’ employment to establish a joint employer relationship.

While the Court went on to dispose of other peripheral issues, the Court’s discussion did not change the fact that McDonald’s did not have sufficient control to make it an employer. I have talked for many years about making sure your service agreements are 21st century service agreements and this case drives home the importance of updating service agreements.

Latest NAPEO White Paper Shows ROI Of Using a PEO is 27 Percent

See below from our friends at NAPEO.  Solid results!!

AUSTIN, TexasSept. 17, 2019 /PRNewswire/ — The average client of a professional employer organization (PEO) can expect a return on investment – based on cost savings alone – of 27.2 percent, according to a new study released today by the National Association of Professional Employer Organizations (NAPEO) at its annual conference in Austin.

Conducted by noted economists Laurie Bassi and Dan McMurrer of McBassi and Associates, the study is the seventh in a series. Previous research by Bassi and McMurrer examined the benefits of using a PEO, finding increased profitability and growth, higher employee satisfaction, and lower employee turnover for companies that use a PEO.

The new report focused solely on costs and calculated savings for PEO clients in five HR-related areas:

  • HR personnel costs
  • Health benefits
  • Workers’ compensation
  • Unemployment insurance (UI)
  • Other external expenditures in areas related directly to HR services (payroll, benefits, etc.)

The average cost savings from using a PEO is $1,775 per year per employee, according to the study, which also reinforced the findings of earlier research, again showing notably lower employee turnover, higher rates of both employee and revenue growth, and enhanced employee benefit offerings.

“We have known for some time now that using a PEO is good for a company in a variety of ways, and we now have a compelling and impressive number on the actual ROI of using a PEO,” said NAPEO President & CEO Pat Cleary. “When you put this new data on costs savings and ROI together with the data we already had on business growth, turnover, survival and employee satisfaction, it’s clear that there really is no better value proposition than PEOs in the HR space.”

PEOs provide HR, payroll, benefits, workers’ comp, and regulatory compliance assistance to small and mid-sized companies. By providing these services, PEOs help businesses improve productivity, increase profitability, and focus on their core mission. Through PEOs, the employees of small businesses gain access to employee benefits such as 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits typically provided by large companies. A copy of the full study is available here.

About NAPEO
The National Association of Professional Employer Organizations (NAPEO) is The Voice of the PEO IndustryTM. NAPEO has some 250 PEO members that provide payroll, benefits, and other HR services to between 175,000 businesses employing 3.7 million people. An additional 200 companies that provide services to PEOs are associate members of NAPEO. For more information, please visit www.napeo.org 

SOURCE National Association of Professional Employer Organizations (NAPEO)

Report: California Workers’ Comp Medical Payment Trends Fell in 2018

NAPEO is right around the corner!  While in Austin, there’s certain to be quite a bit of discussion around claims trends throughout the country.  That said, I found the some interesting news out of California from the Insurance Journal regarding the continued decline of medical payments, number of claims and paid medical transactions.

See you in Austin!

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Medical payments in California’s workers’ compensation system continued to decline in 2018 as the medical payments per claim decreased, according to a report from the Workers’ Compensation Insurance Rating Bureau of California.

The WCIRB released its California Workers’ Compensation Aggregate Medical Payment Trends report comparing medical payment information from 2016 to 2018.

The report also includes an analysis on utilization and cost of opioid prescriptions over time and by region.

Other findings in the report include:

  • The medical payments for pharmaceuticals and to pharmaceutical providers declined sharply.
  • Physical therapy services experienced the largest increase in the share of medical payments driven by increases in both service utilization and paid per service.
  • Physical medicine and rehabilitation procedures continued to grow the fastest within all physician services and use of anticonvulsants increased more significantly than any other therapeutic groups.
  • Opioid prescriptions and costs declined significantly, mostly driven by fewer claims involving opioid prescriptions. In addition, average doses of opioids prescribed dropped sharply as did the concurrent use of opioids and sedatives.
  • Fresno, Bakersfield and Tulare areas had the highest share of claims involving opioid prescriptions, while the Silicon Valley area and the Los Angeles Basin had the lowest share.

Another WCIRB report issued this week showed a new drug formulary put into effect by the California Division of Workers’ Compensation over a year ago may be working as intended.

AM Best Assigns Credit Rating to Clear Spring Property and Casualty

Congrats to Clear Spring and the recent AM Best rating!

Press Release – AUGUST 14, 2019

AM Best Assigns Credit Ratings to Clear Spring P&C Co.; Downgrades Ratings of Lackawanna Casualty Co. and Other Subsidiaries


CONTACTS:
Jeffrey Stary
Financial Analyst
+1 908 439 2200, ext. 5689
jeffrey.stary@ambest.com

Robert Raber
Associate Director
+1 908 439 2200, ext. 5696
robert.raber@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK – AUGUST 14, 2019
AM Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” to Clear Spring Property and Casualty Company (Clear Spring). Concurrently, AM Best has removed from under review with negative implications and downgraded the FSR to A- (Excellent) from A (Excellent) and the Long-Term ICRs to “a-” from “a” of Lackawanna Casualty Company and its subsidiaries, Lackawanna American Insurance Company and Lackawanna National Insurance Company. The outlook assigned to these Credit Ratings (ratings) is stable. Clear Spring is domiciled in Dallas, TX, while the three Lackawanna companies are domiciled in Wilkes-Barre, PA. The companies are collectively referred to as Lackawanna Insurance Group (Lackawanna).

The ratings reflect Lackawanna’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The ratings assigned to Clear Spring reflect the company’s role as a member of the group. Factors supporting this relationship include common ultimate ownership and management. Explicit support is provided through Clear Spring’s participation in the inter-company pooling agreement.

The rating downgrades reflect a revision in AM Best’s assessment of the group’s operating performance to adequate from strong. This rating action is in response to less favorable comparisons with peer companies assessed as having strong operating performances over the most recent five-year period in metrics such as loss and loss adjustment expense ratio and operating ratio. This places the group more in line with companies in the composite assessed as having adequate operating performances. The assessment also takes into consideration the execution risk associated with the blending of the distinct lines of business and geographic delineation of the member companies, which may affect prospective operating performance.

Negative rating actions would occur with a decline in the group’s risk-adjusted capitalization, operating performance well outside expected ranges, or business profile modifications that fail to gain traction.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’sRecent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.