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3 weeks ago · by · 0 comments

The ROI of Safety Programs

Safety programs not only have a positive impact on your bottom line, they improve productivity and increase employee morale. But how can you measure this?

According to the Occupational Safety and Health Administration (OSHA), workplaces that establish safety and health management systems can reduce their injury and illness costs by 20 to 40 percent. Safe environments also improve employee morale, which positively impacts productivity and service. When it comes to the costs associated with safety, consider the following statistics from OSHA:

  • U.S. employers pay almost $1 billion per week for direct workers’ compensation costs alone, which comes straight out of company profits.
  • Injuries and illnesses increase workers’ compensation and retraining costs.
  • Lost productivity from injuries and illnesses costs companies roughly $63 billion each year.

In today’s business environment, these safety-related costs can be the difference between reporting a profit or a loss. Use these tips to understand how safety programs will directly affect your company’s bottom line.

The Cost of Safety – How Can You Measure This?

Demonstrating the value of safety to management is often a challenge because the return on investment (ROI) can be cumbersome to measure. Your goal in measuring safety is to balance your investment vs. the return expected.

Where do you begin?

There are many different approaches to measuring the cost of safety, and the way you do so depends on your goal. Defining your goal helps you to determine what costs to track and how complex your tracking will be.

For example, you may want to capture certain data simply to determine what costs to build into the price of a product, or you may want to track your company’s total cost of safety to show increased profitability, which would include more specific data collection like safety wages and benefits, operational costs and insurance costs.

Since measuring can be time consuming, general cost formulas are available. A Stanford study conducted by Levitt and Samuelson places safety costs at 2.5 percent of overall costs, and a study published by the Economist Intelligence Unit (EIU) estimates general safety costs at about 8 percent of payroll.

If it is important for your organization to measure safety as it relates to profitability, more accurate tracking should be done.

For measuring data, safety costs can be divided into two categories:

Direct (hard) costs, which include:

  • Safety wages
  • Operational costs
  • Insurance premiums and/or attorney’s fees
  • Accidents and incidents
  • Fines and/or penalties

Indirect (soft) costs, which go beyond those recorded on paper, such as:

  • Accident investigation
  • Repairing damaged property
  • Administrative expenses
  • Worker stress in the aftermath of an accident resulting in lost productivity, low employee morale and increased absenteeism
  • Training and compensating replacement workers
  • Poor reputation, which translates to difficulty attracting skilled workers and lost business share

When calculating soft costs, minor accidents costs are about four times greater than direct costs, and serious accidents are about 10 to 15 times greater, especially if the accident generates OSHA fines or litigation costs. According to IRMI, just the act of measuring costs will drive improvement.

In theory, those providing the data become more aware of the costs and begin managing them. This supports the common business belief that what gets measured gets managed. And, as costs go down, what gets rewarded gets repeated.

The Value of Safety

OSHA studies indicate that for every $1 invested in effective safety programs, you can save $4 to $6 as illnesses, injuries and fatalities decline. With a good safety program in place, your costs will naturally decrease. It is important to determine what costs to measure to establish benchmarks, which can then be used to demonstrate the value of safety over time.

Also, keep in mind that your total cost of safety is just one part of managing your total cost of risk. When safety is managed and monitored, it can also help drive down your total cost of risk. For example, a fall protection program implementation reduced one agribusiness’ accident costs by 96 percent – from $4.25 to $0.18 per person/hour.

Considering the statistics, safety experts believe that there is direct correlation between safety and a company’s profit. We are committed to helping you establish a strong safety, health and environmental program that protects both your workers and your bottom line. Contact us today at 831-661-5697 to learn more about our value-added services.

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3 weeks ago · by · 0 comments

IRS CONFIRMS ACA MANDATE PENALTIES STILL EFFECTIVE

The Internal Revenue Service (IRS) Office of Chief Counsel has recently issued several information letters regarding the Affordable Care Act’s (ACA) individual and employer mandate penalties. These letters clarify that:

  • Employer shared responsibility penalties continue to apply for applicable large employers (ALEs) that fail to offer acceptable health coverage to their full-time employees (and dependents); and
  • Individual mandate penalties continue to apply for individuals that do not obtain acceptable health coverage (if they do not qualify for an exemption).

These letters were issued in response to confusion over President Donald Trump’s executive order directing federal agencies to provide relief from the burdens of the ACA.

ACTION STEPS

These information letters clarify that the ACA’s individual and employer mandate penalties still apply. Individuals and ALEs must continue to comply with these ACA requirements, including paying any penalties that may be owed.

Background

The ACA’s employer shared responsibility rules require ALEs to offer affordable, minimum value health coverage to their full-time employees or pay a penalty. These rules, also known as the “employer mandate” or “pay or play” rules, only apply to ALEs, which are employers with, on average, at least 50 full-time employees, including full-time equivalent employees (FTEs), during the preceding calendar year. An ALE may be subject to a penalty only if one or more full-time employees obtain an Exchange subsidy (either because the ALE does not offer health coverage, or offers coverage that is unaffordable or does not provide minimum value).

The ACA’s individual mandate, which took effect in 2014, requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. The individual mandate is enforced each year on individual federal tax returns. Individuals filing a tax return for the previous tax year will indicate, by checking a box on their individual tax return, which members of their family (including themselves) had health insurance coverage for the year (or qualified for an exemption from the individual mandate). Based on this information, the IRS will then assess a penalty for each nonexempt family member who doesn’t have coverage.

On Jan. 20, 2017, President Trump signed an executive order intended to “to minimize the unwarranted economic and regulatory burdens” of the ACA until the law can be repealed and eventually replaced. The executive order broadly directs the Department of Health and Human Services and other federal agencies to waive, delay or grant exemptions from ACA requirements that may impose a financial burden. However, the executive order does not include specific guidance regarding any particular ACA requirement or provision, and does not change any existing regulations.

IRS Information Letters

Office of Chief Counsel issued a series of information letters clarifying that the ACA’s individual and employer mandate penalties continue to apply.

  • Letter numbers 2017-0010 and 2017-0013 address the employer shared responsibility rules.
  • Letter number 2017-0017 addresses the individual mandate.
According to these letters, the executive order does not change the law. The ACA’s provisions are still effective until changed by Congress, and taxpayers are still required to follow the law, including paying any applicable penalties.

More Information

For additional information on the ACA Executive Order and the current tax filing season, please visit www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals.

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4 weeks ago · by · 0 comments

Avoiding CCTV Privacy Liability

In the retail industry, having a system in place to protect your inventory and prevent loss is essential to your bottom line. Since its inception, closed circuit television (CCTV) has helped retailers prevent theft by allowing as few as one or two employees to monitor an entire store at once.

While CCTV provides overwhelming possibilities to not only catch crimes in progress but also to deter them from even being attempted, where you install CCTV equipment is extremely important. Ill-advised camera placement can potentially lead to costly invasion of privacy suits by your customers and employees.

Expectation of Privacy

CCTV cameras are legal to use in public areas because they are just that–public areas. When an individual is in a public area where they can be clearly observed by those around them, they cannot have a reasonable expectation of privacy. However, in areas deemed to be private spaces, individuals do have a right to expect a certain amount of privacy. Most commonly, private spaces are places like a person’s home or a restroom in which, by law, an individual can expect a certain protection from unwanted intrusions.

Problems can arise when it comes to CCTV placement in private spaces that exist in public settings. When a customer or employee uses a public restroom or changing room, they have a reasonable expectation of privacy even though that space may be part of a larger public space. CCTV cameras installed in these areas could be seen as an invasion of privacy that could, in turn, open the door for legal action.

While installing cameras in restrooms is never a good idea, how CCTV monitoring is conducted inside changing rooms is a chief concern in the retail industry. While it can deter shoplifting, its legality exists in a grey area when it comes to privacy law. Retailers must be extremely careful how they use CCTV equipment in this situation. Unless you are experiencing an abnormally high amount of loss that cannot be contributed to other factors, the level of return on CCTV cameras in changing rooms is not likely to offset the liability risks.

Instead of CCTV, try instituting a different method of loss control that does not make privacy an issue. Staff changing rooms so there is someone to monitor what is being brought in and out. Also, you may consider using an electronic tagging system that will activate an alarm if customers try to leave the store without paying for an item.

Notifying the Customer

A good way to protect your business from invasion of privacy claims is to establish procedures that lower the expected amount of privacy. Post signs at the entrances to the building notifying the use of security cameras on the premises. Many privacy cases involve a discrepancy between the amount of privacy an individual believes they were entitled to and how much they were actually provided with. Proper notification can make it clear to both customers and employees as to what expectations they can have for their privacy upon entering an establishment.

This type of notification is especially important when it comes to CCTV cameras in changing rooms. Notifying customers of any monitoring and the procedures that are being used, alerts them of exactly how much privacy they can reasonably expect. Often times, when CCTV cameras are located in changing rooms, posted notices inform customers that camera operators are of the same gender. In such cases it is important that you back up these notices by enforcing the claims that they make.

CCTV Policy

Establishing a company CCTV policy can also help. The policy should outline the provisions for camera placement and proper camera use. By instituting a company policy for CCTV use, camera operators will know what practices are acceptable and which could put the company at risk for litigation.

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Scurich Insurance Services
Phone: (831) 661-5697
Fax: (831) 661-5741

Physical:
783 Rio Del Mar Blvd., Suite7,
Aptos, Ca 95003-4700

Mailing:
PO Box 1170
Watsonville, CA 95077-1170

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(831) 661-5697

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