Safety Incentive Programs for Employees

On March 12, 2012 OSHA issued a memorandum on Employer Safety Incentive and Disincentive Policies and Practices.  The timing was uncanny, in that I was, at that very moment talking to a client about safety incentive programs.

Many contractors utilize some sort of safety incentive program as part of their overall safety program.  They’re designed to encourage safety through some sort of awards program (something as innocuous as scratch tickets, for example).  The idea is, if they can reward safe behaviors or actions, their company will be better off; the primary driver is to keep insurance costs down.

After reading the OSHA memorandum, many contractors who utilize safety incentive programs, may want to rethink how they’re structured.  Their concern is that employees may feel discriminated against if they report a claim, for fear of retaliation by the employer, or fellow employees.  Therefore, they would be reluctant to get proper medical attention, or put in a workers compensation claim.

OSHA gives four examples of workplace policies or practices that could discourage reporting of claims, and could be the grounds for discrimination.  Their all worth reading, but I’m going to summarize just point #4, that specifically deals with incentive programs.

OSHA doesn’t think employers are doing anything malicious, they just think other methods would be more effective, and less discriminatory.  They give examples of winning a prize in a drawing, or team prizes or bonuses for maintaining a safe work environment. 

OSHA says: “However, there are better ways to encourage safe work practices, such as incentives that promote worker participation in safety-related activities, such as identifying hazards or participating in investigations of injuries, incidents or “near misses”. OSHA’s VPP Guidance materials refer to a number of positive incentives, including providing tee shirts to workers serving on safety and health committees; offering modest rewards for suggesting ways to strengthen safety and health; or throwing a recognition party at the successful completion of company-wide safety and health training.”

So, is it time to re-think your safety incentive program?  It may be.  The last thing any company needs is a potential OSHA violation.

This information brought to you by Chris Sheppard of Smith Buckley & Hunt Insurance Agency, your Massachusetts contractors insurance agent and Massachusetts business insurance resource.


Treatment of Subs on a Contractors WC & Liability Policies

Many subcontractors will sub out a portion of their work to another subcontractor.   The question I often get is:  How do I get charged for subcontractor’s labor on my workers comp and liability policies?  There are really two ways to look at this. 

The critical piece is to know if the sub is insured or uninsured.  Each situation will be handled differently.  From a WC standpoint, if the sub is insured, and you have a certificate of insurance, there will be no charge on your WC policy.  However, if the sub is uninsured (maybe a one man shop, or someone who elects not to cover themselves), you will be charged additional premium.  The sub would be classified in whatever trade they perform, and that rate will be applied to YOUR policy.

Now it’s important to know what the auditor will use in determining the payroll.  If your records don’t break out the payroll vs the contract price, then the entire amount will be used.  Therefore, it’s very important to make sure you keep track of the payroll separately.

Things work a little differently from a general liability standpoint.  Unlike workers comp, you will be charged for subcontractors; whether they’re insured or uninsured.  Insured subs are charged at a very low rate, compared to uninsured subs, which will be charged according to what trade they’re in.  Another difference is how the premium is charged.  The premium is based on the total cost of subs, which will include wages, material, and equipment.

It should be noted, it is never a good idea to use an uninsured subcontractor.  Not only do you get charged additional premium, but more importantly, you’re on the hook for their injuries, and for any bodily injury or property damage they cause to third parties.

This information brought to you by Chris Sheppard of Smith Buckley & Hunt Insurance Agency, your Massachusetts contractors insurance agent and Massachusetts business insurance resource.

Massachusetts Workers Comp Rates on the Rise

I hate to say I told you so, but, I told you so.  For months I’ve been talking about the pounding the workers compensation market has been taking, and we’re finally going to feel it here in Massachusetts.

On March 2, The Workers Compensation Rating & Inspection Bureau of Massachusetts asked the state for an average WC rate increase of 19.3%, starting on September 1, 2012.

The increase is spurred by the rising costs of claims, and the failure by the Bureau to get smaller rate increases over the last few years.  They feel that without the rate increase, we’ll have fewer carriers willing to provide workers compensation insurance to Massachusetts companies.

As we all know, there will be some give and take with the 19.3%, and it’s highly unlikely we’ll get 19.3%.  What this does mean is there will be a negotiation, and the increase will fall somewhere in between.  It’s impossible to guess accurately, but it wouldn’t be unreasonable to expect a 10% increase in rates.  We’ll know more in the weeks and months ahead.

So, what does this mean for Massachusetts contractors insurance?  No need to state the obvious, but your costs are set to increase.  It’s also important to keep in mind the changes to the experience rating formula taking effect in January 2013 (interstate risks) – for some, costs may go up even more.

This information brought to you by Chris Sheppard of Smith Buckley & Hunt Insurance Agency, your Massachusetts contractors insurance agent and Massachusetts business insurance resource.

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