Commercial Insurance – Page 10 – Setnor Byer Insurance & Risk

What Does Florida’s New Medical Marijuana Law Mean for Employers?

Florida has joined the growing number of states that regulate and permit the medical use of marijuana after more than 6.5 million Floridians voted to approve Amendment 2. As a result, the Florida Constitution now includes the right for people with one or more of the following Debilitating Medical Conditions to use marijuana if such use has been certified by a physician:

Cancer;
Epilepsy;
Glaucoma;
Positive status for human immunodeficiency virus (HIV);
Acquired immune deficiency syndrome (AIDS);
Post‐traumatic stress disorder (PTSD);
Amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease);
Crohn’s disease;
Parkinson’s disease;
Multiple sclerosis; or
Other debilitating medical conditions of the same kind or class as or comparable to those enumerated.

The use of medical marijuana requires written certification from a licensed physician that in the physician’s professional opinion, the patient suffers from a debilitating medical condition and that the medical use of marijuana would likely outweigh potential health risks. The certification, which must state the recommended duration of use, may only be provided after the physician has conducted a physical examination and fully assessed the patient’s medical history.

Amendment 2 becomes effective on January 3, 2017. (An amendment without a specific effective date becomes effective on the first Tuesday after the first Monday in January following the election.) As of the effective date, the Florida Department of Health has six months to issue procedural regulations and nine months to begin issuing identification cards and registrations to those who qualify for the medical use of marijuana.

The extent to which Amendment 2 may affect employers is uncertain. However, there are limits to how far employers must go to accommodate the medical use of marijuana. For example, Amendment 2 expressly states that it does not require any accommodation for the on‐site medical use of marijuana in any place of employment or for smoking medical marijuana in any public place. It also doesn’t require health insurance providers to reimburse expenses related to the medical use of marijuana.

Perhaps the most significant limitation of Amendment 2 comes from the fact that marijuana is an illegal drug under federal law, regardless of what the Florida Constitution provides. This is important because the Americans with Disabilities Act does not cover individuals who are currently using drugs that are illegal under federal law. As a result, the protections afforded to qualified individuals with disabilities under the ADA do not apply to the use of medical marijuana even if it is legal under Amendment 2.

Another aspect of the state vs. federal distinction may limit the impact of Amendment 2 even more. Since 2013, the U.S. Department of Justice’s policy has been to defer the right to challenge state marijuana legalization laws. This voluntary hands-off policy may change under the new administration.

Despite these limitations and uncertainties, employers can start the process of adapting to Amendment 2 by updating handbooks and policies to clarify that the use of any illegal drug, including the medical use of marijuana pursuant to a physician’s certification, is strictly prohibited. Until procedural regulations are issued, employers should proceed cautiously when it comes to medical marijuana.

Since the likelihood of inadvertent violations can increase dramatically when the law changes, employers should consider Employment Practices Liability Insurance to protect against the financial consequences associated with employment-related claims. Please contact us if you would like to learn more about protecting your business with employment practices liability insurance.

To receive regular updates about developments which may affect your business, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.

Florida Workers’ Compensation Insurance Rates Increasing 14.5 Percent

In a previous article, we discussed the possibility that Florida employers may soon be paying substantially more for workers’ compensation insurance. Unfortunately, this possibility has become a reality.

On October 5, 2016, the Florida Office of Insurance Regulation (OIR) issued a final order approving an overall statewide workers’ compensation insurance rate level increase of 14.5 percent. This rate increase was prompted by the National Council on Compensation Insurance (NCCI), which is a licensed rating organization authorized to submit workers’ compensation insurance rate filings on behalf of Florida insurance companies.

On June 30, 2016, NCCI submitted an amended rate filing to the OIR requesting:

A 19.6 percent rate increase;
To be effective October 1, 2016;
For all new, renewal and outstanding policies.

After holding a public hearing and disapproving NCCI’s proposed rate increase, but conditionally approving a modified rate increase, the OIR finally approved:

A 14.5 percent rate increase;
That will be effective December 1, 2016;
For new and renewal policies (rates will not change for current in-force policies).

According to the OIR, this rate increase is justified by three recent legal developments that have affected Florida’s workers’ compensation system.

The Castellanos Case. Attorney’s fees in workers’ compensation cases are governed by a statutory fee schedule. Under this mandatory schedule, attorney’s fees must be a fixed percentage of the workers’ compensation benefits secured on behalf of an injured worker. For example, attorney’s fees must equal 20 percent of the first $5,000 of benefits secured and 15 percent of the next $5,000.

On April 28, 2016, this statutory fee schedule was deemed unconstitutional by the Supreme Court of Florida. Without this statutory cap, attorneys may be entitled to collect more fees than before.

The Westphal Case. On June 9, 2016, the 104-week statutory limitation on temporary total disability benefits was deemed unconstitutional by the Supreme Court of Florida. According to the Court, injured workers who have not yet reached maximum medical improvement before their 104 weeks of temporary total disability benefits end do not have a reasonable alternative to tort litigation.

This, the Court held, effectively denies these workers of their constitutional right of access to courts. As a result of the Court’s ruling, injured workers may now collect temporary total disability benefits for up to 260 weeks.

Updated Health Care Provider Reimbursement Manual (HCPRM). The Florida Workers’ Compensation HCPRM sets out the policies, guidelines, codes and maximum reimbursement allowances for services and supplies furnished by health care providers under the workers’ compensation statutes. The most recently updated manual, which includes higher allowances, became effective July 1, 2016.

According to the OIR, the decision to approve an overall combined average statewide rate increase of 14.5 percent was made after a thorough review of NCCI’s rate filing and careful consideration of hundreds of public comments and testimony received from interested stakeholders. Since workers’ compensation insurance rates are set by the OIR, Florida employers affected by this decision will not be able to avoid the rate increase.

However, there are ways for employers to lower workers’ compensation insurance costs, such as promoting employee safety and maintaining a safe work environment.

Please contact us if you would like more information about controlling workers’ compensation insurance costs.

Additional information is also available in our weekly Risk Management Newsletters.

Insurance 101: Understanding Certificates of Insurance

Have you ever been asked to provide or review a Certificate of Insurance? If not, chances are you will. A growing number of business agreements have mandatory insurance requirements, including those involving landlords, contractors, subcontractors, manufacturers, suppliers, vendors and service providers, to name a few. Certificates of Insurance are used when these businesses need to prove or confirm the existence of satisfactory insurance coverage.

A Certificate of Insurance provides a superficial snapshot of insurance coverage that an insured has in place as of the date it is issued. The Certificate Holder is the person or entity requesting the Certificate of Insurance to verify insurance coverage. Though common and relatively straightforward, there is quite a bit of confusion about what Certificates of Insurance do, and more importantly, do not do.

Contrary to what many believe, a Certificate of Insurance:

Is NOT an insurance policy.
Does NOT provide the Certificate Holder with any rights under the insured’s policies. Being identified in the Certificate of Insurance doesn’t mean the Certificate Holder has the right to file a claim, demand coverage or request a defense under the insured’s policy.
Does NOT amend, extend or alter the coverage provided by the insured’s policies. This can only be accomplished with an endorsement, rider or amendment to the policy.
Does NOT create a contract between the insurance company and the Certificate Holder.
Does NOT guarantee that insurance coverages listed on a Certificate of Insurance will continue in the future. A Certificate of Insurance issued today may not be accurate tomorrow.
Is provided for informational purposes ONLY.

Though there are different kinds of Certificates of Insurance, those developed by ACORD (Association for Cooperative Operations Research and Development) are widely used and relied upon to provide specific information about insurance coverage, such as:

The insurance companies issuing the policies;
Policy numbers;
Effective dates;
Types of insurance (ex. general liability, automobile, property, workers’ compensation);
Coverages and limits;
Additional insured status; and
Subrogation waivers.

These forms also have a space to add a description of operations, locations and vehicles. Despite being intended for brief explanatory remarks, this space is often used to add specific wording about whom and what is covered by the insurance policies identified in the Certificate of Insurance. This practice can create serious problems.

For example, a Certificate Holder may want their Certificate of Insurance to expressly state that it is an additional insured under the policy, that any and all damages shall be paid by the insured’s policy, or that any obligation by the insured to indemnify the Certificate Holder is covered by the policy. It’s important to understand that adding these statements to a Certificate of Insurance does not make them true.

Remember that Certificates of Insurance do not affect, extend or change insurance coverage. The policy dictates the scope of insurance coverage, including who is considered an additional insured and which claims are covered. Not the Certificate of Insurance. Broad, incorrect or contradictory statements are essentially meaningless to an insurance company.

The same cannot be said for businesses that use Certificates of Insurance to prove or confirm the existence of insurance coverage. Certificate Holders must look beyond the illusion of coverage created by sweeping statements in a Certificate of Insurance and confirm the coverage that actually exists. Those providing Certificates of Insurance must avoid statements that could be considered misleading or fraudulent.

Unfortunately, costly coverage gaps and lawsuits often occur when Certificates of Insurance are misunderstood and misused. These may be avoided by working with an experienced insurance agent when issuing or receiving Certificates of Insurance.

Please contact us to discuss how Setnor Byer Insurance & Risk can help your business manage Certificates of Insurance.

Additional information is also available in our weekly Risk Management Newsletters.

Insurance Applications: Small Lies Can Create Big Problems

Is it wrong to lie on an insurance application? Many believe that it’s no big deal, like lying to the IRS. In reality, it can have serious consequences, like lying to the IRS. If an insurance application contains false or incorrect information, a claim that may have otherwise been covered may end up being denied. To keep this from happening, it is important to understand what is required when completing insurance applications.

When it comes to completing applications, whether it’s for business, homeowners, auto or another kind of insurance, not all lies are created equal. A majority of states have statutes that strictly limit an insurance company’s ability to deny coverage because an application contains false information. These statutes aren’t intended to protect those who lie on their applications, but to prevent insurance companies from relying on insignificant misstatements to deny coverage.

Under these statutes, insurance companies are typically allowed to deny coverage only if the misrepresentation, omission, concealment of fact or incorrect statement is significant enough to warrant such a harsh result. In other words, only material misstatements, omissions, etc. justify a denial of coverage.

False or undisclosed information submitted in an application is generally considered material if the insurer would have altered the terms of the policy had the true facts been known, or if the true facts would have served as a basis for denying the policy application. In Florida, for example, an insurance company can deny coverage under a policy only if:

the misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer; or
if the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith 1) would not have issued the policy or contract; 2) would not have issued it at the same premium rate; 3) would not have issued a policy or contract in as large an amount; or 4) would not have provided coverage with respect to the hazard resulting in the loss.

In some states, insurance companies don’t need to establish that a false statement was made knowingly or intentionally. Even innocent mistakes can be used to deny coverage if they are material. In other states, like Massachusetts and Tennessee, an insurance company cannot avoid coverage unless a misrepresentation increases the risk of loss or is made with the actual intent to deceive.

Depending on the applicable law, if an insurance company is able to establish the materiality of a misstatement or that it was made with the actual intent to deceive, it may be able to deny a claim or void the entire policy. In the event of a claim, insurance applications are often reviewed to determine whether there are any material misstatements that can be used to deny coverage. This should be incentive enough to complete applications truthfully and accurately.

Please contact us if you have questions or concerns about completing an application for insurance.

Please subscribe to our weekly newsletters.

Business Interrupted? Don’t Let a Property Loss Jeopardize Your Business

Did you know that nearly 40% of businesses do not reopen and another 25% fail within a year after a catastrophe or disaster? The actual loss or damage to buildings, facilities and property is often the reason for this frightening statistic, but it isn’t the only reason. Businesses are increasingly struggling to recover after a property loss because of the economic impact caused by the interruption of business operations during and after the event.

It’s common for business operations to be suspended temporarily after a property loss. Depending on the severity of the loss, a business may be forced to shut down for weeks, possibly months. Though revenue often stops, expenses continue. The inability to pay expenses (payroll, mortgage, suppliers, taxes, etc.) can turn a temporary suspension of business operations into a permanent shut down. Business interruption insurance can prevent this from happening.

Business Interruption, also known as Business Income, is a type of commercial insurance that protects against loss of income when a covered loss causes a business to reduce or suspend its operations. In the event of a covered loss, business interruption insurance will cover lost revenue and fixed expenses, like rent and utilities, during the suspension of operations. Extra expense coverage is also available to reimburse costs over and above normal operating expenses, like temporary relocation costs.

Business interruption coverage is triggered when there is direct physical damage to property that was caused by a covered peril. For example, if wind damage is covered under a commercial property insurance policy, there would be business interruption coverage if operations were suspended due to a windstorm. On the other hand, if wind damage is not covered, there would be no business interruption coverage.

To calculate a business interruption loss, insurance companies need to determine how much the business would have earned if the loss had not occurred. They may review and consider various financial documents, such as tax returns, bank statements, profit and loss statements and balance sheets, to establish the amount of a business interruption loss.

According to the Insurance Information Institute, a recent report found that the economic impact from business interruption is often much higher than the cost of physical damage. Business interruption losses now make up a much larger part of overall property losses than they did just ten years ago. The increasing interdependence among businesses locally and globally also means that business interruption losses are expected to increase in frequency and severity.

Businesses should consider adding business interruption coverage to their existing insurance program. Though many aspects of this coverage are relatively standard, there are some variations among insurers and policy forms. For example, some policies may provide Civil Authority coverage. Given the relative complexity of business interruption coverage, an experienced and reputable insurance agent should be consulted to help identify needs and evaluate options.

Please contact us to learn how business interruption insurance can protect your business.

If you’d like to subscribe to our weekly newsletters, please click here.

Psst. Do You Know The Most Common Workplace Accidents and Injuries?

Did you know that maintaining a safe workplace can lower the cost of workers’ compensation insurance? It’s true. Employers with fewer workplace injury claims may enjoy valuable premium credits. Alternatively, employers with more injury claims may suffer higher insurance premiums. The resulting premium difference can be significant, particularly for employers, like those in Florida, who may be facing substantial premium increases.

Employers wanting to take advantage of the correlation between workplace injuries and insurance premiums need to implement safety programs that effectively reduce, if not eliminate, workplace injuries. The first step to developing an effective safety program is to identify the most common workplace accidents and the most common employee injuries.

Travelers recently analyzed more than 1.5 million workers’ compensation claims submitted from 2010 though 2014 to learn more about the most common and costliest workplace accidents and injuries. According to Travelers Injury Impact Report, the top five causes of workplace accidents were:

Material handling (32%)

Slips, trips and falls (16%)

Being struck by or colliding with an object (10%)

Tools (7%)

Cumulative trauma injury caused by overuse or strain over time (4%)

Material handling was actually the most common cause of accidents for all businesses and across all industries analyzed in the report. The most frequent material handling injuries were strains/sprains, cuts/punctures, contusions, inflammation and fractures. These injuries typically occur when employees are lifting, lowering, filling, emptying or carrying items.

The top five workers’ compensation injuries were:

Strains and sprains (30%)

Cuts or punctures (19%)

Contusions (12%)

Inflammation (5%)

Fractures (5%)

Except for small businesses, strains and sprains topped all lists for the most common type of injury. For small businesses, cuts or punctures were the most common injury—strains and sprains were second.

The average number of days away from work for the top 5 workplace injuries was:

Strains and sprains (57 days)

Cuts or punctures (24 days)

Contusions (27 days)

Inflammation (91 days)

Fractures (78 days)

It’s interesting, and perhaps fortunate, that the costliest injuries did not turn out to be the most common injuries. According to the report, the injuries with the highest average cost per claim were:

Amputation ($102,500)

Dislocation ($97,100)

Electric shock ($55,200)

Crushing ($54,600)

Multiple trauma ($42,400)

The average cost per claim involving the five most common injuries was:

Strains and sprains ($17,000)

Cuts or punctures ($8,200)

Contusions ($8,000)

Inflammation ($24,500)

Fractures ($42,400)

Employers have the ability to affect their workers’ compensation insurance premiums , for better or worse. Knowing how and why workplace injuries occur puts employers in a better position to develop and implement their own safety and training programs. When done effectively, employers may have fewer workplace injuries and may end up paying less for workers’ compensation insurance.

Please contact us if you would like more information about controlling workers’ compensation insurance costs.

Additional information is also available in our weekly Risk Management Newsletters.

Now What? Preparing for the New FLSA White Collar Overtime Exemptions

On December 1, 2016, it will be more expensive for employers to take advantage of the Fair Labor Standards Act’s (FLSA) so-called white collar overtime exemptions. Since FLSA violations have always been expensive, employers should begin the process of determining whether and to what extent they will be affected by the new overtime exemption regulations .

The new rules focus primarily on the minimum salary and compensation levels needed to qualify for the FLSA’s executive, administrative, professional, and computer employee overtime exemptions. Employers can ask the following questions to determine the potential impact of the new overtime rules.

Are there any employees classified as exempt under one of the FLSA’s white collar overtime exemptions? If no, you should not be affected by the higher standard salary levels under the new rules. If yes, move on to the next question.

Do any of these employees ever work more than 40 hours in a workweek? If no, you should not be affected by the higher standard salary levels under the new rules. If yes, move on to the next question.

Do any of these employees earn a salary of less than $913 per week? (This works out to $1,826 biweekly, $1,978 semimonthly, $3,956 monthly or $47,476 annually.) If no, you should not be affected by the higher standard salary levels under the new rules. If yes, exemption classifications and compensation practices will need to be adjusted before December 1, 2016 to avoid violating the new rules.

Various adjustments can be made to ensure compliance under the new rules. However, the most appropriate adjustment(s) will likely depend on each employer’s specific circumstances, such as the number of newly-nonexempt employees, their salaries, how often they work overtime and how much overtime they work.

Depending on their circumstances, employers may implement one or more of the following adjustments.

Increase Salaries. The obvious adjustment, and the one likely envisioned by those enacting the new rules, would be to increase the salaries of exempt white collar employees to no less than $913 per week. Though this may be the simplest and least disruptive adjustment, it may also be the most unrealistic. Though salary increases for some employees may be nominal, they can be more than double for others.

[Remember, employees are not exempt simply because their salaries satisfy the increased salary levels under the new rules. Their primary job duties must also involve the kind of work associated with the specific white collar exemption. Employees must satisfy the minimum salary level requirement and the applicable “standard duties test” to be exempt.]

Pay Newly-Nonexempt Employees Overtime Compensation. The alternative to increasing salaries is to re-classify these exempt white collar employees as overtime-eligible employees. If they work more than 40 hours in a workweek, they must be paid one and a half times their regular rate. As with other nonexempt employees, employers must track the number of hours worked each day and the total hours worked each workweek by newly-nonexempt employees. For many, this will be an entirely new experience and will take some getting used to.

This may not be a problem for employees who rarely work or who work very little overtime. These employees can continue working the same number of hours. Though employers will pay more for occasional overtime work, they may still be paying substantially less than $913 per week. The same cannot be said about employees who regularly work or who work a lot of overtime. The cost of paying time and a half to these employees could be very high, and may even approach $913 per week.

Prohibit Overtime. Newly-nonexempt employees can be prohibited from working overtime. If no overtime is worked, no overtime compensation is required. This option may be simple, but it may not be easy. Exempt employees typically work more than 40 hours in a workweek because they have more than 40 hours of work to do. This work must still get done, but someone else will have to do it.

Adjust Personnel, Schedules or Assignments. Those who prohibit overtime may have to make various operational adjustments. For example, workload distribution and workforce scheduling may need to be adjusted to compensate for the loss of overtime work. In some cases, new employees may need to be hired to make up for any lost productivity.

Adjust Wages. If newly-nonexempt employees are allowed to continue working overtime as always, employers will end up paying more money for the same amount of work. Reallocating regular wages and overtime compensation is a way to keep the hours worked by and the amount paid to newly-nonexempt employees largely the same. However, employers may not reduce an employee’s hourly wage below the highest applicable minimum wage (federal, state, or local) or continually adjust wages each workweek in order to manipulate the regular rate.

Employers cannot wait too long to begin planning for the upcoming change. It takes time to properly implement organizational adjustments to exemption classifications and compensation practices, particularly if they are substantial or complex. With all the publicity surrounding the new white collar overtime exemption rules, it’s probably safe to assume that violations will be noticed not only by those employees who are affected by the new rules, but by the Department of Labor too.

Since the Final Rule is sure to bring a level uncertainty and confusion, employers may benefit from having Employment Practices Liability Insurance to protect against various employment-related claims. Limited coverage for wage and hour claims may be available.

Please contact us if you would like to learn more about complying with the FLSA’s new white collar overtime exemption rules.

To receive regular updates about developments which may affect your business, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.

Florida Supreme Court Ruling May Increase Workers’ Compensation Premiums

A recent decision by the Florida Supreme Court may soon have employers paying substantially more for workers’ compensation insurance. In Castellanos v. Next Door Company, the Court ruled that Florida’s mandatory workers’ compensation attorney fee schedule is unconstitutional. In response to this ruling, the National Council on Compensation Insurance (NCCI) proposed increasing Florida’s workers’ compensation rates by 17.1%.

Under Florida Statute 440.34, attorneys who successfully secure workers’ compensation benefits for injured clients may be awarded attorneys’ fees. However, any attorney fee award, which is based on the amount of workers’ compensation benefits secured, must equal:

20 percent of the first $ 5,000;
15 percent of the next $ 5,000;
10 percent of any remaining benefits that will be provided during the first 10 years after the claim is filed; and
5 percent of any benefits secured after 10 years.

In Castellanos, the Florida Supreme Court considered whether this mandatory fee schedule is constitutional.

Marvin Castellanos suffered an injury on the job. The workers’ compensation insurance company refused to authorize the medical treatment recommended by its own designated doctor and raised twelve affirmative defenses to avoid paying compensation. After a final hearing, the Judge of Compensation Claims (JCC) ruled entirely in Mr. Castellanos’ favor.

Mr. Castellanos’ attorney spent 107 hours working on the case and requested an award of attorneys’ fees calculated at $350 per hour. Despite finding this request to be reasonable and warranted, the JCC was required to follow Florida’s mandatory fee schedule. Based on the actual value of the benefits secured, Mr. Castellanos’ attorney was awarded fees in the amount of $164.54, or $1.53 per hour.

The Court noted that the mandatory fee schedule does not consider the reasonableness of a fee and does not permit the review of grossly inadequate or grossly excessive fees. “Without the ability of the attorney to present, and the JCC to determine, the reasonableness of the fee award and to deviate where necessary, the risk is too great that the fee award will be entirely arbitrary, unjust, and grossly inadequate.” Accordingly, the Court ruled that Section 440.34 is unconstitutional.

As a result, the statute’s immediate predecessor, which was construed to provide for a “reasonable” award of attorney’s fees, was essentially revived. Though the statutory fee schedule remains the starting point for calculating fees, claimants must now be allowed to present evidence to show that its application will result in an unreasonable fee.

Though the Court emphasized that its ruling does not mean that claimants’ attorneys will receive a windfall, insurance companies disagreed. On May 27, 2016, NCCI, which is a licensed rating organization authorized to submit workers’ compensation insurance rate filings on behalf of Florida insurance companies, submitted a proposed rate increase to the Office of Insurance Regulation (OIR).

According to NCCI, the first year impact of Castellanos will be a 15% increase in overall Florida workers compensation system costs. (The total proposed rate increase of 17.1% includes factors that are not related to Castellanos.) NCCI proposes applying the increased rates to new and renewal policies that are effective on or after August 1, 2016. NCCI also proposes applying the increased rates to all policies in effect on August 1, 2016 on a pro-rata basis through the remainder of the term of these policies.

If NCCI’s proposal is approved, Florida would have the highest workers’ compensation rates in the Southeast. The OIR plans to hold a public hearing regarding NCCI’s proposed rate increase in the coming months, so stay tuned.

Even if the OIR approves all or part of NCCI’s proposed rate increase, there are ways to lower workers’ compensation insurance costs, such as promoting employee safety and maintaining a safe work environment.

Please contact us if you would like more information about controlling workers’ compensation insurance costs.

Additional information is also available in our weekly Risk Management Newsletters.

Are You Ready for the 2016 Hurricane Season?

Alex, which became the first Atlantic hurricane to form in January since 1938, obviously didn’t know that hurricane season runs from June 1st through November 30th. However, for those living or working in the Atlantic hurricane region, the first day of hurricane season rarely passes unnoticed.

At Setnor Byer Insurance & Risk, we understand that preparing for hurricane season is rarely easy and often stressful. We also understand that a lack of awareness and preparation can lead to disaster. Taking preventative measures before a hurricane is the most effective way to limit the damage. Start your preparations now by using our 2016 Hurricane Season checklist.

According to researchers at Colorado State University’s Tropical Meteorology Project, the 2016 Atlantic hurricane season will have approximately average activity and a near-average probability for major hurricanes making landfall along the United States coastline and in the Caribbean. During the 2016 Atlantic hurricane season, the Tropical Meteorology Project predicts:

12 Named Storms (winds of 39 mph or higher)
5 Hurricanes (winds of 74 mph or higher)
2 Major Hurricanes (Category 3 – 5 storms with winds of 111 mph or higher)

The probability that a major hurricane (Category 3 – 5) will make landfall somewhere on:

The entire U.S. coastline is 50% (the average for last century is 52%);
The U.S. East Coast, including the Florida peninsula, is 30% (the average for last century is 31%); and
The Gulf Coast, from the Florida Panhandle westward to Brownsville, Texas, is 29% (the average for last century is 30%).

Despite their predictions for an average 2016 hurricane season, researchers at the Tropical Meteorology Project remind us that coastal residents should prepare the same for every season, regardless of how much activity is predicted.

Since it only takes one hurricane making landfall to make it an active season for you, here are a few tips that can help your home and business weather a storm.

Before the Storm

Monitor the news to allow time to prepare.
Identify all tools and equipment that will be needed to secure property before a storm and limit the damage after the storm (flashlights, batteries, caulking, tarpaulins, sandbags, cutting and fastening equipment, etc.).
Clear drains and downspouts to minimize the risk of flooding.
Move items inside.
Unplug electrical equipment and move property away from windows.
Check and secure all documents and records.
Take or update photographs of real and personal property.
Gather insurance policies and agent/insurer contact information.

After the Storm

Only after it has been declared safe to do so, take reasonably necessary steps to protect against any further property damage.
Report fallen power lines to power company immediately—stay away from them!
Check exterior walls and roof for damage from wind, rain, flying objects or rising waters.
Check all interior perimeter walls, floors and roof for leaks and water damage.
Document all damage with photographs and video.
Prepare detailed damage reports.
Call your insurance company or agent as soon as possible to report damage.

While preparing for hurricane season is never easy, our team of experienced and responsive professionals can help ensure that your personal and business property is protected in the event of a hurricane. With over 30 years of experience dealing with tropical storms and hurricanes, Setnor Byer Insurance & Risk has a long history of helping clients prepare before the storm and, more importantly, being there through the process of rebuilding after the storm.

Please contact us if you would like more information about protecting your personal and business property during the 2016 Hurricane Season.

You can receive regular updates about developments that may affect your home or business by subscribing to Setnor Byer Insurance & Risk’s weekly risk management news brief.

New White Collar FLSA Overtime Rules Are Here! Will You Be Ready By The Effective Date?

They’re heeeere. No, not a poltergeist, though for many they may be just as unsettling. We’re talking about the new minimum wage and overtime exemption regulations for white collar employees under the Fair Labor Standards Act (FLSA). The long-awaited Final Rule has been released and is scheduled for publication on May 23, 2016.

The Final Rule focuses primarily on salary and compensation levels for the executive, administrative, professional, outside sales and computer employee exemptions, which are the FLSA’s so-called white collar exemptions. Since the Final Rule is not identical to the proposed rule published on July 16, 2015, let’s look at some of the differences.

Effective Date: The effective date of the Final Rule is December 1, 2016. This gives employers more time than initially expected since the Solicitor of Labor previously indicated that the effective date would be 60 days after publication.

Minimum Salary: The Final Rule sets the initial standard salary level for the white collar exemptions at $913 per week or $47,476 annually. [The current salary level is $455 per week or $23,660 annually.] This is lower than expected because it’s calculated using Census data from the lowest-wage region (currently the South), rather than nationwide Census data.

Highly Compensated Employees (HCEs): The Final Rule sets the total annual compensation requirement for HCEs at $134,004, which is the annual equivalent of the 90th percentile of full-time salaried workers nationally. Under current regulations, the minimum salary requirement for HCEs is $100,000 annually.

Automatic Adjustments: Under the Final Rule, salary and compensation levels will automatically be adjusted every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption. The proposed rule provided for annual adjustments.

Duties Test: The proposed rule requested comments on whether changes need to be made to the duties test currently used to determine eligibility for the white-collar exemptions. However, the Final Rule did not make any changes to the standard duties test.

Though not included in the proposed rule, the Final Rule allows nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary test requirement. For example, bonuses for meeting set production goals, retention bonuses and commission payments based on a fixed formula. By contrast, discretionary bonuses are awarded at the employer’s sole discretion and not in accordance with any preannounced standards.

Under the Final Rule, if an employee does not earn enough in nondiscretionary bonuses and incentive payments in a given quarter to retain their exempt status, employers can make a “catch-up” payment at the end of the quarter. Employers have one pay period to make up for the shortfall (up to 10 percent of the standard salary level for the preceding 13 week period). Payments can only be allocated to the prior quarter, not the quarter in which it was paid. If an employer chooses not to make a catch-up payment, the employee would be entitled to overtime pay for any overtime hours worked during the quarter. Employers cannot use nondiscretionary bonuses or incentive payments to satisfy the salary requirement for HCEs.

Despite legislative efforts to nullify the Final Rule, like the Protecting Workplace Advancement and Opportunity Act, employers should begin planning now to make sure they are ready to comply with the Final Rule beginning on December 1, 2016. Since the Final Rule is sure to bring a level uncertainty and confusion, employers may benefit from having Employment Practices Liability Insurance to protect against various employment-related claims. Limited coverage for wage and hour claims may be available.

Please contact us if you would like to learn more about protecting your business with employment practices liability insurance.

To receive regular updates about developments which may affect your business, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.