Category: Uncategorized

Controlling Liability

• Making a reasonable effort to maintain a safe environment for the public
• Refraining from slander
• Warning about an unsafe condition or product

Who is responsible?

• Copies of communications with your customers or employees about safety and risk
• Records of your efforts to verify that someone you hired was not a risk to others
• Testimony that you provided warning signs or other warning signals regarding a hazardous condition on your property
• Evidence from other professionals in your field that the decisions you made and the actions you took were consistent with acceptable professional standards
• Records that knowledgeable technicians regularly serviced your equipment

Crime Insurance – Money & Securities Coverage

Even though law firms aren’t a very cash-heavy business, that doesn’t mean they don’t have some on the premises.  Surprisingly, cash is one of the items listed as “property not covered” on the standard property policy.  Not to worry, though, there is actually a specialty policy that will cover cash, but it is on a different policy than your property.  The proper way to cover cash is actually on a Crime Insurance Policy.

A Crime Insurance Policy is specifically designed for various types of claims excluded from the standard property policy, including money and securities, and computer fraud, to name a few.

What is considered money on an insurance policy? On a Crime Policy, money is defined as currency, coins, banknotes, travelers’ checks, register checks, and money orders held for sale to the public.

What types of scenarios are covered? The Crime Policy covers the following types of losses to money and securities:

• Robbery
• Burglary
• Theft
• Disappearance
• Destruction

What are the standard limits for crime insurance?

A standard crime policy will have two limits: “On-premises Coverage” and another for “Off-premises Coverage.” The limits can be any amount you choose, but we will typically see a $10,000 limit for “On-premises Coverage” and a $2,500 limit for “Off-premises Coverage.”

Are there any major exclusions on a crime insurance policy?

Although coverage is comprehensive, there are some key exclusions contained in the coverage form to be aware of:

• Employee theft is excluded.  A separate employee dishonesty coverage form needs to be purchased to cover the theft of money by employees.
• Accounting or arithmetical errors or omissions as the sole evidence of loss are excluded.
• Voluntary parting of property is excluded.
• Unauthorized transfer or surrender of money is excluded.  This can be covered to some degree by computer fraud coverage.
• For money off-premises to be covered, it needs to have your employee.

How much does this type of coverage cost?

Depending upon the type of policy you have and the limits required, coverage is typically very cheap, usually starting around $250 to $500 per year.  However, in some policies, insurance companies add it for no additional cost.

Common Workers Compensation Questions for Law Firms

If you are looking to start a new law firm, you might have some workers compensation questions. Is it needed? How does the audit work? How can I minimize premiums?  Below we have put together a summary of the top worker’s compensation questions and a brief answer to each.

Do I have to carry workers’ compensation insurance if I don’t have employees?

If you have a one-person company, you may be operating in a state that does not require that you maintain workers’ compensation coverage. However, contracts, licensing boards, or other regulations may require that you carry workers’ compensation insurance. Why? In many states, unless a company can show that subcontractors carry their own workers’ compensation insurance, subcontractors will be automatically covered under the hiring company’s policy, at the hiring company’s expense.

Do I still need workers’ comp insurance if I use contractors instead of employees?

Contract employees, leased employees, and some other work-for-hire situations may be exempt from workers’ compensation requirements, but some state laws require companies to cover 1099 contractors. When you hire independent contractors to do work for you, you should require that they carry their own workers’ compensation or assume that you will have to pay an additional premium to cover the subcontractor on your own policy.

Do I have to pay for workers’ comp coverage for myself?

In some states, owners, officers, partners, and other company principals can exclude themselves from their own companies’ workers’ compensation coverage. If you’ve got good health insurance and disability insurance policies, consider your risk low, and want to save on premiums, this may be a good choice for you.

What if I want to cancel my workers’ comp policy?

In virtually every state, the insurance company can charge and retain a minimum premium when a workers’ compensation policy is canceled. So, if you buy a workers’ compensation policy and cancel it two months later, you will still owe the minimum premium, which can be much more than the cost of two months of coverage. In some states, the minimum premium can run from several hundred dollars to more than $1,000. So, read the fine print before you decide to cancel your workers’ compensation policy, and be sure it will actually save you money.

What’s a premium audit?

Your workers’ compensation premium depends on the number of people you employ and what risk classifications those employees fall into, based on each person’s scope of employment. Your carrier will conduct an annual premium audit to determine these numbers and set your company’s workers’ compensation insurance premium for the policy period accordingly. It is important to note that during the audit period, the carrier may adjust the premiums and findings from the current period and make that adjustment retroactive to cover the employees and risk classifications incurred during your previous policy period.

What can I do to minimize my premium?

Audit mistakes can cause you to lose coverage or unnecessarily inflate your company’s workers’ compensation insurance premium, so it’s important to prepare. Designate a knowledgeable contact person for the auditor who is familiar with your employees’ work. Be sure to provide accurate and detailed information because, without it, the auditor may assume the worst-case scenario for risk exposure and increase your premium. Review your payroll documents to ensure that they will allow the auditor to readily break out overtime pay and discount it back to straight time, as is allowed in most (but not all) states’ workers’ compensation rules. Your payroll records should also reflect each employee’s actual hours in each of the different workplace exposure categories. Otherwise, all of the employee’s payroll will go into the most expensive classification applicable. If your company uses 1099 subcontractors, show the certificates of insurance documenting that they have their own workers’ compensation insurance.

What if I have employees in multiple states?

It is essential to break down your payroll by state. If you do not provide the insurance company with accurate information about payroll you have in each state where work is done, the insurance company will likely not pay claims that occur in unreported states, even if the total payroll on your report is accurate. Be sure the person handling the audit in your office is aware of and has access to accurate information on out-of-state payroll and that the audit is fully completed.

Employee or Independent Contractor

There are times when a law firm needs to hire an independent contractor. So how do you know if they should be covered on your workers compensation insurance policy? Under the Workers’ Compensation Law, most individuals providing services to a for-profit business will be deemed employees of that business. The employer must cover them for workers’ compensation insurance. This applies unless those services are specifically excluded as employment under the WCL.

For workers’ compensation insurance purposes, the term employee generally includes day labor, leased employees, borrowed employees, part-time employees, unpaid volunteers (including family members), and most subcontractors.

Many factors are used to decide whether an individual is an employee under the Workers’ Compensation Law. If a business meets any of the criteria listed below, and the individual hired does not meet the criteria listed under independent contractors or the services rendered are not specifically exempted as employment under the WCL, then that business must obtain a workers’ compensation insurance policy.

The factors that are considered to determine whether an individual is an employee within the meaning of the WCL and thus must be provided with workers’ compensation insurance coverage by the employer include:

Right to Control– The degree of direction and control a person or organization exercises over someone they contract with to perform a task is always a central issue in determining an employer-employee relationship. A person or organization controlling how the work is to be performed indicates that an employee performs the task. If the person doing the labor controls the time and manner in which the work is to be done, this may indicate that an independent contractor is doing the task. If an individual is truly independent, the individual generally works under his/her own operating permit, contract, or authority.

The character of Work Is the Same as Employer– Work being done that is consistent with the hiring business’s primary work indicates that an employee is doing the labor. Work done by a person different from the primary work of the hiring business may indicate an independent contractor is performing the task. (For example, someone installing shingles for a roofer is generally considered the employee of that roofer. Conversely, a plumber hired on a one-time basis to fix a broken pipe for a retail store owner is generally considered an independent contractor)

Method of Payment– Employees tend to be paid wages on an hourly, daily. Weekly or monthly basis. Naturally, employment is indicated if the hiring business withholds taxes and/or provides other employee benefits (Unemployment Insurance, health insurance, pensions, FICA, etc.) Whether the labor is paid using a W2 or 1099 Form for tax purposes does not matter determining an employer/employee relationship for workers’ compensation purposes. A business paying cash to an individual for services usually indicates that the individual is an employee. Payment made for the performance of the task as a whole may indicate an independent contractor is doing the task.

Furnishing Equipment/Materials– A business providing the equipment and/or materials used by people in performing the work indicates an employer-employee relationship.

Right to Hire/Fire– A business retaining the authority to hire and fire the individuals performing the work indicates an employee performs the work. An independent contractor retains a degree of control over the time when the work is to be accomplished and is not subject to be discharged by the hiring entity because of the method he chooses to perform the work. Naturally, an independent contractor’s services may be terminated if the services rendered do not meet contractual requirements)

All factors may be considered, and no one factor alone determines whether a person will be considered an employee under the WCL.

Protecting your law firm from employee theft.

1. Surveillance Systems – A surveillance system offers security for your business & security for your employees. Keep backup copies of your surveillance video footage to ensure that you are covered in case of theft, whether that is due to an employee or not – Another good idea is to store the footage offsite in case of a fire, flood, theft, or another disaster – How many people have the keys to your office space?
2. Get Employee Dishonesty Insurance – (Also known as a Fidelity Bond) Protect your business from financial loss due to fraud committed by an employee or even a group of employees. People often ask what is covered by employee dishonesty insurance, and here are the basics:

• • Alteration or Forgery
  • Transfer Fraud
  • Computer Fraud
  • Credit Card Fraud
  • Money Order or Counterfeit Fraud
  • Stolen Goods/Property
  • Remote Access Fraud

3. Track petty cash & items that are commonly stolen – Keeping track of your assets (big or small) is important, as is knowing where/how your petty cash is being spent. Let’s take a look at the top 8 most commonly stolen office items:

• • Pens, pencils, and highlighters. According to Boston.com, 82% of employees have admitted to stealing these items.
  • Paper products. Think of notebooks, sticky notes, and printing paper. 35% of employees admit these items randomly disappear from the office.
  • Paper or Binder Clips. Surveys show 28% of workers noticed these items getting pinched.
  • Staplers
  • Scissors
  • Printer Ink
  •  Binders

4. Check The References – This is an easy and obvious solution to understanding your potential employee’s history & character. Ask specific questions, such as the person’s tardiness, social skills, or any issues with the employee. Other questions include: How did the employee handle conflict/stress? Would you rehire the employee? And Were they promoted during his employment?
5. Reward System – Offer rewards for the employee who turn-in other employees who have stolen goods, cash, or other items. One thing to convey to employees is that stealing a pen, stamp, or a few paper clips shouldn’t be an issue (unless done on a large scale). Things such as giving items/food away for free (such as a family member or friend), stealing key products, or even using company items specifically for personal use fall under this reward system.