Florida Announces $8.65 Minimum Wage Rate for 2021

Florida has published new minimum wage posters announcing an $8.65 minimum wage rate for 2021. Florida’s minimum wage rate is adjusted annually to reflect changes in the cost of living.

The new rate becomes effective Jan. 1, 2021. Employers should be mindful of local laws, ordinances and any rule or regulation that may increase an employee’s minimum wage rate.

Tipped Employees

Florida allows employers to pay their tipped employees a minimum wage rate of at least $5.63 per hour.

A tipped employee is an employee who engages in an occupation where he or she customarily and regularly receives more than $30 per month in tips.  Employers are required to subsidize a tipped employee’s minimum wage rate if the employee’s tips and gratuities are insufficient to allow the employee to receive wages that are at least equal to the state’s minimum wage rate.

Posting Requirement

Employers must display the 2021 minimum wage poster in a location where employees can easily see it. The Florida 2021 minimum wage poster is available in English, Spanish and Creole.

Next Steps for Employers

Florida employers should review and adjust their payroll systems to make sure nonexempt employees receive wages that are at least equal to the state’s minimum wage rate.

If you have any questions regarding your required posting notices, please reach out to Libertate Insurance Services at 888-501-0014.

Workers’ Compensation Capacity for Professional Employer Organizations (PEO)

Workers’ Compensation has long been a foundational pillar in the product offering of the PEO model.  Not all carriers are up to the task of offering this line of coverage to a PEO, however, mostly due to the actuaries and legislative complexities and rules that are different by State.  In no State, statute insurance regulations and actuarial rules (NCCI, WCIRB, etc.) actually integrate.  While there are added levels of complexity for carriers to administer and service PEO clients, especially with regard to master policies, there are many reasons our carrier partners have dedicated themselves to this space.  PEO workers’ compensation programs consistently enjoy lower loss ratios and shorter claims development trends that non-PEO monoline comp.  Most PEOs are sophisticated risk management and underwriting organizations with a commanding understanding of how to manage and implement a profitable workers’ compensation program.  Typically, PEOs offer robust loss control and prevention guidance to their client companies; assisting small business with attaining much safer work environments than they would otherwise be able to achieve.  They also employ internal claims management staff who are dedicated to ensuring their injured workers are treated thoroughly and expeditiously, providing the best possible outcome for all parties.  For these reasons, carriers who decide to entertain PEOs as clients are rewarded with reliable, profitable, long-term carrier/client relationships.

Recent movements

This space continues to evolve.  The last 12-18 months has borne witness to many marketplace adjustments as each carrier strives to find their ideal niche within the space.  Key Risk Insurance Company (a WR Berkley Company) is a powerful new addition to this elite club.  Having been working in the comp space for nearly 35 years, they entered the PEO arena just this year, bringing with them an impressively diversified portfolio with over $2 billion in financial prowess and an A+ (Superior) AM Best rating.

Current players

A workers’ compensation program can be structured in a few different ways, depending on the needs, client makeup and financial positioning of the PEO.  For this reason, it is very important that any given PEO has the right carrier partner at their side.  Typically, these programs can be broken up into two main categories, Guaranteed Cost and Loss Sensitive.  A Guaranteed Cost program can offer a PEO a clear and understood total liability.  Pricing is based on 100% coverage of all approved exposures and rates are understood from the onset of the policy through policy expiration.  Guaranteed Cost programs, however, can have more restrictive underwriting and jurisdictional limitations than a Loss Sensitive program.  There are many different ways to structure a Loss Sensitive program.  In general, these programs are splitting the total anticipated claims costs between the PEO and the carrier; this cost is an unknown, however our predictive pricing models have come a long way in nailing down actual program outcomes.  Benefits to this model include broader underwriting guidelines and more competitive pricing.  These programs can tie a PEO’s assets up for an extended period of time, however, as collateral is held by the carrier until all claims for a given policy term have fully matured, which can take years.  

Impacts of COVID-19 on Workers’ Compensation Market Appetite

The advent of COVID-19 has brought about major changes to the marketplace for all workers’ compensation carriers, not just PEO partners.  Many carriers have issued a moratorium on covering any healthcare exposures.  Others are now adding jurisdictional considerations to these risks, with exclusions applying specifically in presumptive states.  Some carriers have added additional underwriting requirements for industries with residential delivery exposures, such as requiring a deductible to cover smaller frequency issues such as dog bites.  Nearly all carriers have added additional pandemic screening questions to their underwriting requirements to include supplemental applications, especially for front line industries such as restaurants, nursing homes, home health and retail.  This is likely a change which will endure long after this current pandemic passes. 

These market adjustments aside, PEO carriers continue to remain engaged and enthusiastic about their PEO clients.  That being said, PEOs should look closely at their composition of clients and take care to place high risk or high exposure entities outside of their master policies as makes sense in an effort to protect their experience modification and loss sensitive positions.

Call to Action

Every PEO carrier is as different in their approach to thriving in this industry as is every PEO.  How do you know your PEO workers’ compensation program is placed with the best carrier partner to cater to your needs and methods of operations?  Thankfully, this industry has been graced with the benefit of the lifelong dedication of some really brilliant minds to help answer that question.  My mentor, Paul Hughes, for example, has successfully created 7 workers’ compensation insurance programs specific to PEO over the past 19 years.  Under his guidance, these programs have rendered nearly $2 billion in workers’ comp placements for PEOs to date, with no signs of slowing down. 

If you would like to better understand all market and program offerings available to your PEO, we would love to help.

Paul Hughes321.217.7477phughes@libertateins.com
Sharlie Reynolds305.495.5173sreynolds@libertateins.com
David Burgess321.436.8214dburgess@libertateins.com

Layoff Considerations and How to Prepare for Potential Claims

Layoffs are an unfortunate reality for many businesses. Whether a layoff is planned or unplanned, a business can suffer major reputational harm or even be taken to court following a large-scale termination.

In fact, it’s not unheard of for layoffs (and even just the threat of layoffs) to increase workers’ compensation claims, particularly in a tight job market. This is because individuals faced with a loss of income, temporary unemployment benefits and the likelihood of unaffordable health insurance may look to workers’ compensation as a way to sustain their income.

Although employers must never attempt to stop any individual from filing a workers’ compensation claim (legitimate or otherwise), there are steps you can take to help minimize your business’s liability for future claims.

Communicate With Your Insurance Carrier and Legal Professionals First and foremost, it’s crucial that you let your insurance carrier know about any downsizing plans. This is because your carrier can provide tips for dealing with any workers’ compensation claims that may follow the downsizing.

Working closely with a legal professional can also help you understand the relevant workers’ compensation laws in your jurisdiction.

If a claim does arise, you should immediately report any suspicions you have about the claim —along with all the reasons for your suspicions—to both your workers’ compensation carrier and legal professionals. The earlier you voice concerns, the more opportunities you’ll have to investigate the claim, gather medical evidence and discuss defense strategies.

Have Strong Reporting and Investigation Procedures in Place

Workers’ compensation claims are not often decided by a singular bit of information or evidence. Rather, employers must cover multiple angles in order to defend against questionable claims effectively.

For instance, employers could provide documentation of anecdotal evidence (e.g., no one saw the individual get hurt). Objective evidence (e.g., an independent medical exam’s X-ray or MRI) is also important for a strong defense. To help gather this kind of evidence and stay ahead of potential claims, accident reporting and investigation is crucial.

Regularly revisit your accident reporting policies, and require all employees to report accidents immediately, no matter how minor. Following a reported incident, you should investigate immediately. Consider separating witnesses from each other in order to get an accurate picture of what happened. Document these incidents and investigations thoroughly, and secure witness statements and signatures whenever possible.

Finally, as part of an employee’s exit interview, you should consider having the employee sign a form stating whether he or she has been involved in any unreported accidents or hazardous exposures while on the job. This can help you defend against unexpected claims that arise after a layoff.

Maintain Strong Recordkeeping Practices

When it comes to combating questionable future claims, accurate recordkeeping can make all the difference. Above all, employers need to know where employee records are kept and should secure photocopies of them as backups. Employers should also:

  • Assign a trustworthy employee to oversee employee records. This individual should be able to provide and explain these records in court.
  • Maintain a photographic or video record of your premises. This can help illustrate the conditions of your building and workspaces in the event of a claim.
  • Consider using and keeping records of termination interviews in order to help determine the risk of any future workers’ compensation claims. You may also want to consider performing termination physicals, as these can be useful in case an employee files a claim after being laid off. Specifically, these physicals can help establish an employee’s health and fitness at the time their employment ended.

Finally, employers should ensure employee records are not destroyed, since payroll, schedules and accident reports may become vital evidence.

Invest in Employee Assistance Programs

Terminations can put employees in an antagonistic frame of mind, which can lead them to bring questionable claims that they wouldn’t make otherwise. However, this risk may be reduced if an employer demonstrates that it cares about an employee’s well-being during an exit interview.

To accomplish this, many employers provide resume counseling, therapy and other services that demonstrate concern for a former employee’s welfare. These simple actions can ensure employees don’t take a layoff personally.

Watch for Risk Indicators

To better protect themselves, employers should be aware of certain indicators that they may be at risk of a future claim:

  • The employee is disgruntled after being fired or laid off.
  • The employee has been told his or her employment is about to end.
  • The employee is having financial difficulties.

It should also be noted that a lack of witnesses and medical evidence can indicate that a claim is questionable. Make note of these instances, as they can come in handy in the event of a claim.

Have a Strategy in Place

While employers must never attempt to prevent an employee from making a workers’ compensation claim, the above tips can assist in avoiding and defending against questionable claims. Employee reductions can pose a significant challenge for employers and are often devastating turns of events for employees. It is important for employers to have a layoff strategy broken down into goals and an action plan for the company.

For more workers’ compensations strategies and advice, contact Libertate Insurance Services today.

Summary of 2020 Employer Health Benefits Survey

Each year, the Kaiser Family Foundation conducts a survey to examine employer-sponsored health benefits trends. This document summarizes the main points of the 2020 survey and suggests how they could affect employers.

Health Insurance Premiums

In 2020, the average premium rose by 4% for both single coverage and family coverage. The average premiums were $7,470 and $21,342, respectively.

However, premiums for single coverage under high deductible health plans with a savings option (HDHP/SOs) were noticeably lower than the average single coverage premium. The family coverage average between HDHP/SOs and other plans was largely the same. HDHP/SOs’ annual premiums for single and family coverage were $6,890 and $20,359, respectively.

Worker Contributions

The average worker contribution toward the premium was 17% for single coverage and 27% for family coverage. Employees at organizations with a high percentage of lower-wage workers (where at least 35% make $25,000 or less annually) made above-average contributions toward family coverage—35% vs. 24% when compared to employees at firms with a smaller share of lower-wage workers.

In terms of dollar amounts, workers contributed $1,243 and $5,588 toward their premiums for single coverage and family coverage, respectively. Workers enrolled in HDHP/SOs contributed less on average, paying $1,061 for single coverage and $4,852 for family coverage.

Plan Enrollment

The following were the most common plan types in 2020:

  • Preferred provider organizations (PPOs)—47% of workers covered
  • HDHP/SOs—31% of workers covered
  • Health maintenance organizations (HMOs)—13% of workers covered
  • Point-of-service (POS) plans—8% of workers covered

HMO enrollment has gone up and down over the last several years (enrollment was up to 19% in 2019), so it’s unclear how this will trend in the near future.

Employee Cost Sharing

Most workers must pay a share of their health care costs, and the average deductible for all workers was $1,644 in 2020. The average annual deductible has increased by 25% over the past five years and nearly 80% over the past decade. The prevalence of HDHP/SOs has contributed to the increase of deductible amounts. The percentage of covered workers with a general deductible of $2,000 or greater has increased to 26% in the last five years.

Beyond deductibles, the vast majority of workers cover some portion of the costs from their health care services. For example, 65% of covered workers have coinsurance, and 13% have a copay for hospital admissions.

In addition, nearly all workers are covered by a plan with an out-of-pocket maximum (OOPM), but the costs vary considerably. Among covered workers with single coverage, 11% have an OOPM of less than $2,000, and 18% have an OOPM of $6,000 or more.

Availability of Employer-sponsored Coverage

Similar to the last few years, 56% of employers offer health benefits to at least some workers. Only 48% of very small employers (three to nine employees) offer coverage, while nearly every large employer (1,000 or more employees) offers coverage.

Health and Wellness Promotion Programs

Wellness programs help employees improve their lifestyles and avoid unhealthy habits. Fifty-three percent of small employers and 81% of large employers offer at least one wellness program in the areas of smoking cessation, weight management and lifestyle coaching. Of these large employers, 44% offer participation incentives like gift cards or merchandise.

Telemedicine

The large majority of employers with 50 or more workers have embraced telemedicine, with 85% offering health care services through this method. Within the last year, telemedicine offerings have increased significantly, especially among employers with between 50-199 workers.

Self-funding

Twenty-three percent of workers with small employers are enrolled in plans that are either partially or entirely self-funded, compared to 84% of workers with large employers. In the past few years, level-funded plans have become more popular. Level-funded plans are health plans provided by insurers that include a nominally self-funded option for small or mid-sized employers that incorporates stop-loss insurance with relatively low attachment points.

Conclusion

This year continues a period of a stable market, characterized by relatively low-cost growth for employer-sponsored coverage. While premium growth continues to exceed earnings and inflation increases, the differences are moderately small. Additionally, while there have been some changes in terms of employer-sponsored health benefits, no trends have gained significant traction.

However, it’s still unclear how the COVID-19 pandemic will affect employer health plans in 2021. Given the economic impact, employers may need to shift more costs to employees than they have in the past. Alternatively, employers may look to other funding models to provide competitive health benefits.

What’s more, 2020 is an election year, and a Supreme Court case regarding the Affordable Care Act is scheduled for around the same period. Both of these events could significantly impact employer health plans in unforeseen ways.

Looking forward, employers should begin to identify tools and resources they can use to offset higher premiums. As costs continue to rise and possible political changes ensue, employers and employees may begin to see increased market movement.

For more information on benefits offerings or on what you can do to control your health care costs, contact Libertate Insurance today.

Cyber Crime Continues to Rise. Are you protected?

October is National Cybersecurity Awareness Month and a good time to insure your business is protected. The continued rise in the amount of information stored and transferred electronically has resulted in a remarkable increase in the potential exposures facing businesses. In an age where a stolen laptop or hacked account can instantly compromise the personal data of thousands of customers, or an ill-advised post on a social media site can be read by hundreds in a matter of minutes, protecting yourself from cyber liability is just as important as some of the more traditional exposures businesses account for in their general commercial liability policies.

Why Cyber Liability Insurance?

A traditional business liability policy is extremely unlikely to protect against most cyber exposures. Standard commercial policies are written to insure against injury or physical loss and will do little, if anything, to shield you from electronic damages and the associated costs they may incur. Exposures are vast, ranging from the content you put on your website to stored customer data. Awareness of the potential cyber liabilities your company faces is essential to managing risk through proper coverage.

Possible exposures covered by a typical cyber liability policy may include the following:

  • Data breaches: Increased government regulations have placed more responsibility on companies to protect clients’ personal information. In the event of a breach, notification of the affected parties is now required by law. This will add to costs that will also include security fixes, identity theft protection for the affected and protection from possible legal action. While companies operating online are at a heightened risk, even companies that don’t transmit personal data over the internet, but still store it in electronic form, could be susceptible to breaches through data lost to unauthorized employee access or hardware theft.
  • Intellectual property rights: Your company’s online presence, whether it be through a corporate website, blogs or social media, opens you up to some of the same exposures faced by publishers. This can include libel, copyright or trademark infringement and defamation, among other things.
  • Damages to a third-party system: If an email sent from your server has a virus that crashes the system of a customer, or the software your company distributes fails, resulting in a loss for a third party, you could be held liable for the damages.
  • System failure: A natural disaster, malicious activity or fire could all cause physical damages that could result in data or code loss. While the physical damages to your system hardware would be covered under your existing business liability policy, data or code loss due to the incident would not be.
  • Cyber extortion: Hackers can hijack websites, networks and stored data, denying access to you or your customers. They often demand money to restore your systems to working order. This can cause a temporary loss of revenue plus generate costs associated with paying the hacker’s demands or rebuilding if damage is done.
  • Business interruption: If your primary business operations require the use of computer systems, a disaster that cripples your ability to transmit data could cause you, or a third party that depends on your services, to lose potential revenue. From a server failure to a data breach, such an incident can affect your day-to-day operations. Time and resources that normally would have gone elsewhere will need to be directed towards the problem, which could result in further losses. This is especially important as denial of service attacks by hackers have been on the rise. Such attacks block access to certain websites by either rerouting traffic to a different site or overloading an organizations server.

Cyber liability insurance is specifically designed to address the risks that come with using modern technology; risks that other types of business liability coverage simply won’t. The level of coverage your business needs is based on your individual operations and can vary depending on your range of exposure. It is important to work with a broker that can identify your areas of risk so a policy can be tailored to fit your unique situation.

Libertate Insurance, Your Coverage Guide

As reliance on technology continues to increase, new exposures continue to emerge. As your business grows, make sure your cyber liability coverage grows with it. Libertate Insurance is here to help you analyze your needs and make the right coverage decisions to protect your operations from unnecessary risk.

When Robert Hartwig Talks, People Listen…

As I was pulling this post together, for good reason, the old EF Hutton commercials we grew up with (dating myself)…

https://www.youtube.com/watch?v=2MXqb1a3Apg

…came to mind. “When E.F. Hutton talks, people listen”…

As EF Hutton was considered (or at least advertised) as “the smartest guy in room” for all things investments; the same holds true for Robert Hartwig @Bob_Hartwig when it comes to insurance economics. He is the guy insurance company CEO’s call to help predict the future and someone I have had the pleasure to meet and see present on a few occasions. You will not see anyone provide more data and direction in a short session that is credible and meaningful.

Robert, a PHD/CPCU, was the former Chief Economist of the Insurance Institute of America and currently serves as the Clinical Associate Professor of Finance, Risk Management & Insurance @ USC’s Darla Moore School of Business. His latest presentation points to some areas that are important to understand and budget for.

https://www.uscriskcenter.com/wp-content/uploads/2020/09/Inland-Marine-UW-Association-American-Institue-of-Marine-Underwriters-9-30-2020.pdf

I have listed some of my key take-aways below and the slide number you can reference for the detail:

Slide 12 – 12.5-25% reduction in workers’ compensation premiums based on rate reductions coupled with drop in exposure basis due to COVID-19. COVID-19 Claims will not be used for rate-making purposes in most states until 2021. All other lines are seeing material drops in written premium due to usage, but rates at the same time are on the rise.

Slide 13 – Range of workers’ compensation losses on a national basis due to presumption is $.2 – $92B … quite a delta and as you will note, and a far greater one than any other line (which are also not yet understood). The range for Business Interruption losses is next with anywhere from $2B – $22B expected. The courts will be the most impactful on where this end result comes in based on policy interpretation. Policy language and intent will be the battlefronts.

Slide 15 – Cost of COVID v comparable pandemics in recent age – the cost and number of countries impacted by COVID-19 versus other pandemics (SIKA, Swine Flu, SARS etc.) is staggering and exponential.

Slide 30 – Presents the investment yield trends for 10-year US Securities which is a foundational “safe” investment for insurance carriers – down 61%. Puts more pressure on operational results which in turn, more pressure on upward pricing.

Slide 31 – 9 of the the top 10 ever point drops on the S and P ever occurred in 2020. The 3’rd largest percentage drop in history occurred on 3/16/20 at -11.98%/-324.9 points. This volatility is of grave concern to the investment strategies of the insurance carrier community. This also puts upward pressure on pricing.

Slide 41 – Business closures will cause debt of $3T for at least a generation to overcome. This is very saddening and a complex issue to make a call on. Be safe and put us in debt for another generation or open up and hope for the best? Question of the century –

Slide 47 – Rates on most lines of insurance (with the exception of Workers’ Compensation) are rising at a rapid pace. Umbrella (20%) and Directors and Officers insurance (16.8%) being hammered the hardest, with Business Interruption (9.7%), Commercial Auto (9.6%) and Employment Practices Liability insurance (9.4%) also expecting hefty increases.

Slide 50 – Business Interruption insurance will be highly litigated going forward, especially on those policies that do not have a pandemic disease exclusion. This and the presumption issue in regard to workers’ compensation are what will cause the greatest uncertainty going forward as to the exposure to the insurance community and how they react as a result the pandemic.

In conclusion, it has been a long cycle of premium reductions. Drop of exposure basis (payrolls, sales, miles travelled etc) may neutralize overall premiums to some extent, but the “as is or lower” rate renewals of the last decade will be very tough to navigate this year. Get out ahead of your renewals, especially on the specialty casualty side. Let us know if we can help.

NAPEO White Paper on How PEO Clients Fared in the First Months of the COVID-19 Pandemic: A Comparative Analysis

Laurie Bassi and Dan McMurrer
McBassi & Company
September 2020

The National Association of Professional Employer Organizations has completed a comprehensive review of the impacts a PEO partnership has had in benefiting small businesses during the first few months of the COVID-19 Pandemic.

The full report can be reviewed at the following link:

https://napeo.blob.core.windows.net/cdn/docs/default-source/white-papers/2020-white-paper-final.pdf?sfvrsn=992b2bd4_16

Scams and Fraud Alerts issued by SBA

The SBA has published information relating to scams and fraud identified surrounding the CARES Act. Read through the article below for tips and links to better protect yourself and your business.

____________________________________________________________________________

SBA Programs – Scams and Fraud Alerts

Effective Jul 14, 2020

By Office of Inspector General


DOWNLOAD .PDFhttps://www.sba.gov/sites/default/files/2020-06/SA2001-1.pdf

Beware of Scams and Fraud Schemes

The Office of Inspector General recognizes that we are facing unprecedented times and is alerting the public about potential fraud schemes related to economic stimulus programs offered by the U.S. Small Business Administration in response to the Novel Coronavirus Pandemic (COVID-19).  The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the largest financial assistance bill to date, includes provisions to help small businesses. Fraudsters have already begun targeting small business owners during these economically difficult times.  Be on the lookout for grant fraud, loan fraud, and phishing.

Scams and Fraud Schemes

Grants

  • SBA does not initiate contact on either 7a or Disaster loans or grants.  If you are proactively contacted by someone claiming to be from the SBA, suspect fraud.

Loans

  • If you are contacted by someone promising to get approval of an SBA loan, but requires any payment up front or offers a high interest bridge loan in the interim, suspect fraud.
  • SBA limits the fees a broker can charge a borrower to 3% for loans $50,000 or less and 2% for loans $50,000 to $1,000,000 with an additional ÂĽ% on amounts over $1,000,000.  Any attempt to charge more than these fees is inappropriate.
  • If you have a question about getting a SBA disaster loan, call 800-659-2955 or send an email to disastercustomerservice@sba.gov.
  • If you have questions about other SBA lending products, call SBA’s Answer Desk at 800-827-5722 or send an email to answerdesk@sba.gov.

Phishing

  • If you are in the process of applying for an SBA loan and receive email correspondence asking for PII, ensure that the referenced application number is consistent with the actual application number.
  • Look out for phishing attacks/scams utilizing the SBA logo.  These may be attempts to obtain your personally identifiable information (PII),to obtain personal banking access, or to install ransomware/malware on your computer.
  • Any email communication from SBA will come from accounts ending with sba.gov.
  • The presence of an SBA logo on a webpage does not guaranty the information is accurate or endorsed by SBA.  Please cross-reference any information you receive with information available at www.sba.gov.

Report Fraud

Report any suspected fraud to OIG’s Hotline at 800-767-0385 or online at, https://www.sba.gov/about-sba/oversight-advocacy/office-inspector-general/office-inspector-general-hotline.