employment liability – Setnor Byer Insurance & Risk

Employment Law Landscape Expected to Change Under Biden Administration

Setnor Byer Insurance & Risk

Shortly after delivering his inaugural address, President Biden began taking steps to push his policy agenda forward. This is particularly true in the employment law context. Step 1, as expected, was to stop any pending regulatory activity initiated under the Trump administration. This president’s Chief of Staff issued a memorandum ordering an immediate regulatory freeze of all non-emergency regulatory activity pending review by the new administration.

The memorandum, which is nearly identical to the one issued on President Trump’s first day in office, specifically instructed the heads of all executive departments and agencies, including the Department of Labor, to:

not propose or issue any rule in any manner until a department or agency head appointed or designated by President Biden reviews and approves the rule;
immediately withdraw any rules that have not already been published in the Federal Register; and
consider postponing by 60 days the effective date of any rules issued in any manner, including those published in the Federal Register, which have yet to take effect for the purpose of reviewing any relevant questions of fact, law and policy.

The scope of this regulatory freeze is quite broad in that it applies to any:

regulatory actions;
guidance documents;
substantive actions by an agency, including notices of inquiry, advance notices of proposed rulemaking and notices of proposed rulemaking;
agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory or technical issue or an interpretation of a statutory or regulatory issue.

Its effects are already being felt. The Department of Labor’s Final Rule for determining independent contractor status under the Fair Labor Standards Act, which was set to take effect March 8, 2021, is expected to be among the more significant casualties of the regulatory freeze. Three FLSA opinion letters issued by the Wage & Hour Division on President Trump’s last full day in office have already been withdrawn by the Biden administration. Employers should expect more of the same in the coming weeks and months. Unfortunately, the uncertainty that always accompanies regulatory changes significantly increase the risk of employment-related claims and lawsuits. The confusion caused by uncertainty creates an environment where mistakes are inevitable. As a result, employers will likely need Employment Practices Liability Insurance to protect against various employment-related claims. Please contact us to learn more about EPLI coverage.

Did You Know…Florida’s Minimum Wage is Going Up in 2019?

Florida’s minimum wage applies to those employees entitled to receive the federal minimum wage under the Fair Labor Standards Act. It is adjusted annually for inflation. According to the Florida Supreme Court, only upward adjustments are permitted.

Employers are required to pay the federal or their state’s minimum hourly wage, whichever is higher. Since Florida’s 2019 minimum hourly wage will be higher than the federal minimum hourly wage of $7.25, Florida employees entitled to minimum wage cannot be paid less than $8.46 per hour.

Florida employers must prominently display a minimum wage poster in a conspicuous and accessible place wherever minimum wage employees are employed. This poster must notify employees of the minimum wage and of their rights and protections under Florida’s Minimum Wage Act.

Employees can sue employers for minimum wage violations, but they must first provide written notice of their intent to sue, which must:

identify the minimum hourly wage to which the employee claims entitlement;
provide the actual or estimated work dates and hours for which payment is sought; and
state the total amount of alleged unpaid wages.

Upon receiving such notice, an employer has 15 calendar days to pay the total amount of unpaid wages or resolve the claim to the employee’s satisfaction. Otherwise, the employee will be allowed to file a lawsuit for unpaid minimum wages. The Florida Attorney General can also bring a civil action against employers. Each willful violation can result in a $1,000 fine.

To protect against employment practices liability claims, employers should implement a training program and explore their options for insuring against wage and hour claims.

Please contact us for more information about protecting your business from employment-related liabilities.

Workers’ Compensation Rates Decreasing in 2018: When Will Your Premiums Go Down?

Good news for Florida employers! Workers’ compensation insurance premiums are going down in 2018. The Office of Insurance Regulation approved a statewide overall premium decrease of 9.8 percent. This should provide welcome relief, particularly after last year’s 14.5 percent increase. The premium reduction for new and renewal policies started January 1, 2018.

Why are premiums going down?

Last year, the Florida Supreme Court decided two cases that were expected to increase workers’ compensation costs. The Office of Insurance Regulation responded by approving a 14.5 percent rate increase, but the actual impact of these cases turned out to be less than initially projected. Other marketplace factors also contributed to the premium reduction, including:

Reduced assessments;
Increases in investment income;
Declining claims frequency; and
Lower loss adjustment expenses.

When will premiums go down?

Most employers did not see lower premiums on January 1st. That’s because the premium calculation for an existing policy will not change until the policy renews in 2018. This means that premiums for policies that renew early in the year will go down before those renewing later.

Rather than wait, some are asking whether they can simply cancel their current policy and replace it with a new one that has an earlier effective date. However, this isn’t really necessary for most employers. Remember, those with early renewal dates are not saving more, they’re just saving sooner.

For those that simply don’t want to wait, this course of action may ultimately lead to a premium increase in 2018. Before deciding to cancel and rewrite a worker’s compensation policy, employers must consider a number of factors, such as:

Experience Modification. A new policy means a new Experience Modification Factor (“Experience Mod”). Experience Mods, which are used to make sure premiums reflect an employer’s actual loss experience, are calculated by comparing an employer’s loss history with that of similar employers operating in similar industries. A better-than-average loss history, typically over a three-year period, means a lower Experience Mod and lower premiums.

Insurance companies look at an employer’s loss history during a specific experience period, which can range from less than 12 months up to 45 months. The experience period is based on the policy’s effective date, so a different experience period will be used to calculate the Experience Mod under a new policy. If this new experience period covers new claims, your premiums will go up.

Short-Rate Cancellation Penalty. Insurance companies impose a penalty to discourage early cancellations. A short-rate cancellation lets the insurance company keep a larger percentage of the unearned premium if the policy is terminated before the normal expiration date. The manner in which the penalty is calculated often varies by insurance company and policy form. Depending on the circumstances, the penalty may be substantial and must be considered in any cost-benefit analysis.

Dividends. Some insurers offer policyholder dividends as an incentive for employers to implement safety programs that eliminate or reduce claims. The opportunity to collect a dividend, which is essentially a return of premium, may be lost if the policy is cancelled early.

Employers must also consider the time, effort and inconvenience of getting a new policy (applications, inspections, underwriting requirements, etc.). Some insurance companies may refuse to cancel and rewrite a policy, so changing the effective date would mean changing insurance companies.

The decision to cancel and replace your workers’ compensation policy needs to be based on more than just wanting next year’s premium reduction sooner than later. For most employers, this benefit will not be worth the expense.