On May 2, 2017, the House of Representatives passed the Working Families Flexibility Act (also known as H.R. 1180). If approved, H.R. 1180 would authorize private employers to offer compensatory time instead of overtime pay for nonexempt employees who work more than 40 hours per week. H.R. 1180 still needs approval from the Senate and the executive branch before it becomes law.
Compensatory time off is already a common practice for many federal and state employers, but it is not currently allowed by the Fair Labor Standards Act (FLSA) for private employers. H.R. 1180 would amend the FLSA to allow this practice, if certain conditions are met.
ACTION STEPS
Because H.R. 1180 is not yet law, no action steps are currently required of any employers.
This Compliance Bulletin is provided for informational purposes only, to assist employers in understanding the changes H.R. 1180 would bring to current overtime compensation practices in the private sector.
Compensatory Time Off
Currently, the FLSA requires employers in the private sector to pay overtime wages to nonexempt employees for all hours of overtime worked. If approved, H.R. 1180 would amend the FLSA to allow private sector employers to provide either overtime pay or compensatory time off to nonexempt employees who work overtime hours.
H.R. 1180 is proposing that compensatory time off be calculated at the rate of 1.5 hours of compensatory time off for every hour of overtime work. As it stands, H.R. 1180 would expire within five years of its enactment. In addition, the bill would limit the amount of compensatory time off eligible employees may receive to 160 hours.
H.R. 1180 would only apply to private sector employers, meaning that if it were to be adopted, it would not affect current compensatory time off requirements for public sector employees.
Voluntary Agreement and Usage
Under H.R. 1180, both employers and employees would have to agree to compensatory time off instead of overtime wages. In unionized environments, compensatory time off would have to be allowed by any applicable collective bargaining agreement. The agreement would need to be preserved in writing and take place before any compensatory time off begins to accrue.
Finally, the language of H.R. 1180 would prohibit employers from coercing or forcing employees to agree to receive or use compensatory time off instead of overtime wages. This means that employers would not be allowed to directly or indirectly intimidate, threaten or coerce (or attempt to intimidate, threaten or coerce) employees to agree to receive or use any accrued compensatory time off.
Eligibility
Under H.R. 1180, employees would be eligible to receive compensatory time off after 1,000 hours of continuous employment during the previous 12 months.
Payment for Unused Compensatory Time
H.R. 1180 would require employers to allow employees to use any earned compensatory time off within a reasonable period, as long as this does not unduly disrupt the employer’s operations.
However, employers would be required to provide monetary compensation to their employees for any compensatory time off that is not used by the end of the calendar year, although employers would be able to determine a different 12-month period as long as it remains consistent.
Unused compensatory time would need to be paid at a rate that would at least be equal to the employee’s regular wage rate. The employee’s regular rate would be the higher of:
- The regular wage rate at the time the overtime work was performed; or
- The regular wage rate at the time the unused compensatory time off must be paid.
Payment for unused compensatory time off would be required within a month of the end of the 12-month period.
More Information
We will continue to monitor the progress of this bill through the legislative process and update you as more information becomes available. In the meantime, contact Scurich Insurance for more information regarding the FLSA and overtime wage payment requirements.
Read more
OSHA Program to Target Southern Auto Part Makers
OSHA has renewed a Regional Emphasis Program (REP) for auto part manufacturers in Alabama, Georgia and Mississippi. The REP was originally established to reduce workplace hazards in the auto parts industry, including electrical, struck-by, caught-in and crushing hazards.
Information released by OSHA revealed that the REP led to 46 safety inspections in 2016, which resulted in 143 violations. Now that the REP has been renewed, OSHA will continue to target auto parts manufacturers in the region for inspections.
Trump Administration Will Not Label China as a Currency Manipulator
President Donald Trump recently announced that his administration will not officially label China as a currency manipulator. This is a reversal from previous statements released by Trump, as he stated during his presidential campaign that he would take steps to label the country as a currency manipulator during his first days in office.
Many experts believe that the Chinese government artificially weakens its own currency to make its goods more affordable for American consumers. However, Trump recently stated that China hasn’t manipulated its currency in months, and that the current strength of the U.S. dollar is hurting exports of domestic goods.
This policy reversal is seen by some as a move to maintain China as an ally against North Korea after recent political unrest in the area. However, the decision to not label China as a currency manipulator has already had an impact. According to S&P Global Platts, an energy information provider, the stocks of 10 major U.S. steel producers fell after Trump’s announcement.
Cyber Insurance on the Rise in Manufacturing
Before now, cyber insurance has usually been purchased by consumer-facing businesses, such as health care providers, retailers and financial institutions. However, cyber attacks are now capable of taking control of manufacturing plants and products, and many businesses in the industry are purchasing cyber insurance policies to protect themselves.
According to Advisen, an insurance data provider, manufacturers paid nearly $37 million in cyber insurance premiums in 2016, an increase of 89 percent compared to 2015. Get in touch with us today at 831-661-5697 to discuss a cyber insurance policy and protect your business.
Read more
In the November 2016 elections, the use of medical marijuana was approved through four state ballot measures, bringing the total to 28 states and the District of Columbia that have legalized medical marijuana in some form. Additionally, the District of Columbia and eight states—Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington—have legalized recreational use of marijuana in some form.
However, under the Controlled Substance Act of 1970, marijuana is classified as a Schedule I substance with no accepted medical use and a high potential for abuse, making it illegal at the federal level. Amid state and federal law contradictions, many workers’ compensation payers are choosing to deny coverage for medical marijuana. Since medical marijuana isn’t currently included in workers’ compensation treatment guidelines, they have every right to do so.
As such, the future of medical marijuana in workers’ compensation remains unclear, and state and federal lawmakers have their own opinions.
States’ Stances
While states have different views on the use of medical marijuana, there are various state rulings that may be setting a new precedent in the workers’ compensation and medical marijuana debate.
New Mexico
New Mexico became the first state to propose a reimbursement rule for medical marijuana in November 2015. The state’s 2016 fee schedule set the maximum reimbursement rate for medical marijuana at $12.02 per gram for injured workers. Under the state’s Lynn and Erin Compassionate Use Act, authorization was considered equivalent to a prescription—requiring employers to reimburse injured workers for medical marijuana. Furthermore, this process allowed insurance carriers to avoid directly paying for a Schedule I substance.
Minnesota
In 2015, Minnesota’s health commissioner decided to include “intractable” pain as a condition that could be treated with medical marijuana. According to the Minnesota Department of Health, intractable pain is defined as, “pain whose cause cannot be removed and, according to generally accepted medical practice, the full range of pain management modalities appropriate for this patient has been used without adequate result or with intolerable side effects.” This decision has opened the door for claimants to request that their workers’ compensation insurers cover the cost for medical marijuana.
Maine
The outcome in a workers’ compensation case involving medical marijuana was different than those in New Mexico and Minnesota, when an employee who sustained a back injury while making deliveries requested reimbursement for medical marijuana. According to Maine’s Workers’ Compensation Act of 1992 (MWCA), “an injured worker is entitled to reasonable and proper medical, surgical, and hospital services, nursing, medicines, and mechanical and surgical aids, as needed, paid for by the employer.”
However, the employer argued that medical marijuana-related services should not be covered under the MWCA, and that by covering such services, the employer would be in violation of federal law and subject to the risks of prosecution. In support of its argument, the employer also cited Maine’s medical marijuana statute, which states that it may not be construed to require a government medical assistance program or private health insurer to reimburse an individual for costs associated with the medical use of marijuana. The employer won the case.
Other states, including Arizona and Montana, are in agreement with Maine and have taken the position that a workers’ compensation insurance carrier cannot be compelled to pay for medical marijuana because the possession and use of marijuana is still illegal under federal law.
Federal Opinion
Workers’ compensation payers rely on evidence-based guidelines when making treatment decisions. Since medical marijuana is considered a Schedule I substance and is not included any workers’ compensation treatment guidelines, many payers are opting to deny coverage.
Benefits of Covering Medical Marijuana
There is significant interest in using medical marijuana as an alternative to opiates for the management of chronic pain. Furthermore, alternative treatments may pave the way for medical marijuana, as meditation, exercise, mindfulness, yoga and cognitive behavioral therapy have proven successful in eliminating opioid use. However, insurers have historically been more likely to pay for opioids than alternative treatments.
Drawbacks of Covering Medical Marijuana
In states that have legalized medical or recreational marijuana, workplace safety is a concern. It is the employer’s responsibility to foster an environment devoid of harmful hazards. If a company employs a medical marijuana user, this person might experience side effects that could lead to a workplace injury.
Furthermore, drug-free workplace policies could be affected since marijuana continues to be categorized as a Schedule I substance. For example, although an employee may be authorized to use medical marijuana, he or she could still be terminated if found positive for marijuana in a random drug test.
Federal Outlook
It’s too early to anticipate President Donald Trump’s official policies with regards to medical marijuana. However, on the campaign trail, he said he was in favor of rescheduling marijuana as a Schedule II substance, which is in contrast to the Obama administration’s stance. In 2016, former President Barack Obama claimed that more research was needed into the drug’s possible medical benefits.
New legislation and court decisions are continuing to develop, which will affect workers’ compensation treatment decisions. For example, on Aug. 29, 2013, the Department of Justice published a memorandum authored by former Deputy Attorney General James Cole, outlining a new set of priorities for federal prosecutors operating in states which had legalized the use of marijuana. The “Cole memo” encouraged law enforcement agencies to focus on the most critical federal priorities, such as preventing the distribution of marijuana to minors. By doing so, the federal government is taking a more hands-off approach in jurisdictions that have enacted laws legalizing marijuana.
Also protecting the marijuana industry is the Rohrabacher-Farr amendment, which prohibits the federal government from spending money to target medical marijuana businesses. However, the federal government could still go after small businesses that don’t have the resources to fight. And if this amendment isn’t renewed by Congress annually, the protection will disappear, and the industry could be set back for years.
Until the discrepancy between state and federal law is resolved—particularly in regard to drug-free workplace policies—Scurich Insurance will continue to monitor the landscape for new developments that could have ongoing ramifications for the industry and could forecast marijuana reclassification.
Read more
Professional liability insurance is essentially there to protect your reputation as a professional.
Things happen. There are unforeseeable circumstances that can botch even the easiest job in the most capable hands. When that happens, most contractors, consultants, professionals and business owners are more than happy to help cover the cost to the client, to injured parties and so on. That’s why the insurance policy is there.
Professional liability is there to protect specifically against claims of negligence by covering the court costs. These are the cases that we fight not because we don’t want to foot the bill, but because a reputation is on the line, and at the end of the day, all any professional really has to lean on is a trusted name. That is the foundation of success in any field. You can lose your office space, you can lose your clients, you can lose some of your best employees, and you can always rebuild from there. Once your name has been stripped of value, however, there’s not much left to do. Top talent will avoid the association with a negligent employer and clients and customers will jump ship.
These are the cases that you want to fight even at a financial loss. Even if you know that you’re not at fault for a visitor who suffered an injury on your property, it may make more sense to take responsibility than to fight it in court and spend more money in front of the judge than you would have on the doctor bill. The more comprehensive your professional liability policy, the less likely you are to have to do this when your reputation is on the line.
Of course, you can’t always have the case dismissed, so professional liability will cover the costs awarded to the plaintiff in a civil suit should you lose the case, meaning that you will be covered even where general liability coverage does not kick in. However, the real value in the policy is in allowing you to defend yourself against that civil suit in the first place, and, wherever possible, protecting your reputation within your industry.
Medical professionals rely on malpractice insurance for the same reasons, while insurers and lawyers will rely on errors and omissions, or E&O insurance. In any field where a professional mistake can prove incredibly costly or harmful, you will find some form of professional liability insurance being sold.
Read more
OVERVIEW
The U.S. Court of Appeals for the 7th Circuit has ruled that Title VII of the Civil Rights Act (Title VII) prohibits employment discrimination based on sexual orientation. The decision in Hively v. Ivy Tech, issued on April 4, 2017, makes it illegal to use an individual’s sexual orientation as a basis for employment decisions.
The ruling applies to employers with 15 or more employees in Wisconsin, Illinois and Indiana.
The decision is groundbreaking because it overturned prior cases and also conflicts with law from other federal courts. However, it aligns with the Equal Employment Opportunity Commission’s (EEOC) position. This makes review of the issue by the U.S. Supreme Court likely in the future.
ACTION STEPS
Affected employers should review their existing policies to ensure they do not allow discrimination based on sexual orientation or gender identity. Employers should also review any applicable state laws and the EEOC’s enforcement guidance to ensure their policies are compliant.
Background
Title VII is a federal law that prohibits employers with 15 or more employees from discriminating against employees and job applicants on the basis of their race, color, religion, sex or national origin. Since Title VII was enacted in 1964, several federal courts, including the 7th Circuit, have held that the law’s inclusion of the word “sex” means that its protections only extend to traditional notions of gender.
For example, the 7th Circuit’s 1984 decision in Ulane v. Eastern Airlines had held that Title VII only makes it unlawful to discriminate “against women because they are women and against men because they are men.” The U.S. Court of Appeals for the 11th Circuit (which includes Alabama, Florida and Georgia) recently issued a similar holding in its March 2017 decision in Evans v. Georgia Regional Hospital.
Although the U.S. Supreme Court has never specifically addressed whether Title VII prohibits discrimination based on sexual orientation, its decisions in other cases have established that:
- The practice of “gender stereotyping” falls within Title VII’s prohibition against sex discrimination; and
- Discrimination based on the race of a person with whom another individual associates is a form of racial discrimination under Title VII.
Relying on these and other Supreme Court decisions in its ruling in Hively v. Ivy Tech, the 7th Circuit expressly overturned all of its prior case law that had excluded sexual orientation from Title VII. Instead, the 7th Circuit held, “a person who alleges that she experienced employment discrimination on the basis of her sexual orientation has put forth a case of sex discrimination for Title VII purposes.” The court further specified that “it is impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex.”
Hively v. Ivy Tech
In 2013, Kimberly Hively, an openly gay woman who had worked as a part-time adjunct professor, filed a Title VII discrimination charge against her former employer, Ivy Tech Community College. Hively alleged that because she was gay, Ivy Tech had rejected her for six full-time positions and refused to renew her part-time employment contract. She argued that these actions constituted unlawful discrimination based on sex under Title VII.
A district court dismissed her case based on prior federal court interpretations of Title VII’s prohibition against sex discrimination. Hively then appealed to the 7th Circuit, which ruled in her favor on April 4, 2017. Under its comparative analysis, the court concluded that Hively’s claim involved discrimination based on her failure to conform to a heterosexual female stereotype. According to the court, this made Hively’s claim “no different from the claims brought by women who were rejected for jobs in traditionally male workplaces, such as fire departments, construction and policing.”
The 7th Circuit also compared Hively’s claims to cases in which the Supreme Court held that employers may not discriminate against an individual based on the race of his or her associates. Noting that the Supreme Court has held that this type of discrimination affects both partners in an interracial marriage, the 7th Circuit applied the same reasoning to Hively’s situation.
Considerations for Employers
While the 7th Circuit’s decision overturned the court’s prior cases to clarify how the federal law applies in the three states under its jurisdiction, two of those states (Wisconsin and Illinois), along with 20 other states in the United States, have already passed laws outlawing sexual orientation discrimination in employment. In addition, the EEOC, which is responsible for the enforcing Title VII, has taken a position that aligns with the 7th Circuit’s decision since 2015. Specifically, the EEOC already interprets and enforces Title VII’s prohibition against sex discrimination as forbidding any employment discrimination based on sexual orientation or gender identity.
Therefore, employers should be aware that the 7th Circuit’s decision does not necessarily represent a radical shift in the law. Instead, the decision merely reinforces the fact that employers may be penalized for discriminating against individuals based on sexual orientation or gender identity. More information about the EEOC’s enforcement policy is available on the EEOC’s website.
The 7th Circuit’s decision provides additional guidance for employers as well. For example, the court stated that “any discomfort, disapproval or job decision based on the fact that a complainant—woman or man— dresses differently, speaks differently, or dates or marries a same-sex partner, is a reaction purely and simply based on sex.”
Finally, employers should be aware that the 7th Circuit’s decision does not address the meaning of sex discrimination in the context of social or public services, nor in the context of employment related to a religious mission. In addition, the issue addressed in the case may undergo review by the U.S. Supreme Court in the near future. Therefore, employers should continue to watch for legal developments affecting Title VII.
Read more
When damage to your property occurs, you may wonder, “Does my homeowners policy cover damage caused by my guests?”
In general, the answer is yes.
However, the real question you should be asking yourself is “Do I want to use my homeowners’ policy to cover damage caused by my guests?”
Part of the benefit of being a homeowner is being able to entertain friends, family and other guests. But what happens when something goes wrong and a guest causes damage? While in a perfect world the guest would apologize and offer to cover the damage, the reality of the situation can be much more complicated.
The answer to this question can be much more complicated. Your guests are responsible for the costs involved with fixing any damage they cause. By instead using your homeowners’ policy to cover the damage, you may end up costing yourself in the long run in the form of increased rates and premiums.
What is covered under homeowners’ insurance can vary from policy to policy. You should review your policy for any situations excluded from coverage. Things to watch out for:
- Your policy may only cover the house or structure, meaning things like walls and floors.
- Coverage may apply only to accidental damage.
Never wonder if you have the appropriate coverage for a certain situation—always consult your policy to make sure you and your family have the protection you need. When questions arise, contact Scurich Insurance for answers.
Guest Liability
When a guest gets hurt on your property as a result of a danger they were not warned about, you are liable for their injuries. However, if a guest damages your property they, not you, are liable for the cost to fix it. Dealing with friends or family who are reluctant to pay for damages can be a sticky situation, but they do have a legal responsibility to reimburse you for the costs you incur. If they refuse to pay, you may have grounds for legal action.
Read more
