September 17, 2014

 

Cavalcade of Risk #217 is live, covering such wide-ranging topics from the Audacity of Dope to the state of the residual property market. Rebecca Shafer hosts at the WC Roundup blog - check it out!

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September 15, 2014

 

Over the years, we've devoted a few dozen posts to the issue of FedEx and its drivers. Here's the issue in a nutshell: FedEx thinks its Ground drivers are independent contractors and the drivers generally disagree.

For the eleven years we've been blogging, this issue has been wending its way through state courts, with a win for the company here, a win for the drivers there. On August 27, FedEx suffered a massive one-two punch at hands of the Ninth U.S. Circuit Court of Appeals in San Francisco, who overturned a lower court's decision in Alexander v. FedEx, ruling that 2,300 drivers were indeed employees. Within a few days, the same court ruled that some 360 Oregon drivers were also employees (Slayman v. FedEx.) In making the ruling, the Court found that when the rubber hit the road, the lower court had overstated the entrepreneurial opportunities factor that benefited the so-called independent contractors. It apparenly wasn't enough of a benefit to sway the court.

To paraphrase our illustrious VP, "...this is a big effing deal."

Contractors and small business are being chased down aggressively by state authorities (and rightly so, we think) to make them shoulder responsibility for employment obligations that other businesses carry. But in the land of the giant employers, many use independent contractor and subcontractor mechanisms to shield themselves from workers comp, Social Security, unemployment insurance, the provision of benefits like healthcare and paid vacation, and the obligation to protect workers in a variety of ways.

For your further edification on this important issue, we defer to business and legal experts. We've gathered opinions and analyses from a variety of sources and offer excerpts.

What court rulings against FedEx mean for workers
"It seems likely FedEx will want to appeal the 9th Circuit decisions to the Supreme Court. But it may face some difficulty in doing so, because -- even though made at the federal level -- the two decisions concern matters of state law rather than federal. Their reach is similarly limited; they apply only to FedEx drivers in California and Oregon. But there's a decent chance the 9th Circuit's decisions will influence future decisions in other jurisdictions. At the very least, they are shining more light on corporations' maddening reluctance to take responsibility for the folks who represent them most directly to the public."

FedEx Latest Company Slammed Over 'Independent' Employees
"What the 9th Circuit did was to apply the more traditional measure. Judge Stephen Trott, a Reagan appointee in a concurring opinion, quoted Abraham Lincoln: "'If you call a dog's tail a leg, how many legs does a dog have?' His answer was, 'Four. Calling a dog's tail a leg does not make it a leg.'" Trott also admonished FedEx for presenting some information out of context and told the company's lawyers that they "would be well advised not to elide the truth, the whole truth, and nothing but the truth."

Reagan Appointee 'Unravels FedEx's Business Model' In Court Ruling

"FedEx is largely credited with having pioneered the "independent contractor" work model in the logistics industry. Under this system, workers function as self-employed drivers with their own routes, covering the costs of their own trucks, gasoline, uniforms and so forth.

While corporations claim the contractor system gives drivers flexibility and strong incentives as "small businesses," critics say it's simply a way to shift the costs of employment onto workers and avoid payroll taxes and workers'-compensation costs.

The basic question in lawsuits involving the independent contractor model is whether or not a company like FedEx still maintains control over the work itself. In Wednesday's ruling, the judges asserted that it does."

Employment Law Summer Recap 2014: Part 1 of 11 - FedEx sings Nico & Vinz's "Am I Wrong"...to Classify Our Drivers as Independent Contractors?

"The decision will likely upend FedEx's driver business model in part because it makes it more expensive for FedEx to operate its business - an added expense that we can expect it will pass along to us, the consumers. Why more expensive? Because, among other things, FedEx will now have to (i) make the required employer contributions on behalf of these individuals (i.e. to Social Security and unemployment benefit funds); (ii) take out new insurance policies (i.e. for workers' compensation insurance); (iii) offer them health insurance and (possibly) pension benefits along with other benefits like paid vacation; (iv) incur the administrative and operational costs associated with treating these individuals as employees (i.e. additional training and development, compliance, etc.); and (v) potentially pay them back for millions in lost wages. Further, these individuals can now sue FedEx under many of the employment laws that did not previously cover them (i.e. Title VII) - yet another potential expense for FedEx."


Who's the Boss
"It has become harder and harder for workers to tell who their employer is. Companies have engaged in vertical dis-integration as franchised businesses have become increasingly prominent and contracting out of operations by traditional firms has increased. The expanded reach of private equity funds as owners of Main Street companies has also undermined the traditional employment relationship.

In both cases, a complex web of legally distinct entities has been put in place whose aim is to separate a business's actual owners and managers from responsibility for the effects of their decisions on workers."


'Seismic' 9th Cir. rulings nix FedEx claim its drivers aren't employees, could cost company millions
"By retaining independent contractors to perform work instead of employees, companies can potentially save a lot of money that would go toward overtime pay and other benefits such as social security. FedEx also has reportedly required its drivers to pay for their own uniforms and trucks. But if companies are determined to have misclassified employees as independent contractors, they can wind up paying not only the original employee costs they avoided but substantial penalties, as an earlier ABAJournal.com post about the FedEx litigation details."

Is this the end of the independent contractor as we know it?
"This case also confirms that if you exercise any control over how workers perform services for you, it is likely that they should be classified as employees, not independent contractors. This distinction is important, because, unlike contractors, employee are subject to a host of employment laws, including the anti-discrimination laws, workers' comp laws, and wage-and-hour (minimum wage and overtime) laws.

While this case only covers employers governed by California law in the 9th Circuit, I would expect the filing of copycat lawsuits under the laws of different states in different courts. In other words, this case is not the final word on this issue. Thus, to answer the specific question I posed in the title to this post, while this case does not necessarily spell the end of the independent contractor, it very well could be the beginning of trend of cases leading down this path."

FedEx Refuses to Treat Your Friendly Delivery Guy Like a Real Employee And an important new court ruling could change that
"This is a classic example of employee misclassification, but such employer malfeasance is not limited to FedEx. It's a nationwide problem that shifts significant costs to workers, eliminates employment-related protections, deprives the government of billions of dollars in revenue and prevents workers from unionizing. On Wednesday, labor earned a big victory when the Ninth Circuit Court of Appeals ruled in two cases that the shipping company misclassified the employment status of 2,300 California drivers and 363 Oregon drivers. It's an important, if limited, step towards rectifying this widespread problem."

Court rejects FedEx Ground's driver business model
"Ross said that FedEx now requires its contractors based in California to hire a secondary workforce of FedEx drivers, who do the same work as the plaintiffs under the same contract. She said the Alexander decision "calls into question FedEx's strategy of making plaintiffs the middle men" between the secondary workforce of drivers and FedEx. "We have heard of many instances where the secondary drivers are earning such low wages that they have to rely on public assistance to make ends meet."

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September 11, 2014

 

David Williams posts the first issue of the fall season at Health Business Blog - Health Wonk Review: September 11, 2014. Topics include Obamacare, Medicare, performance measurement, power plants and more...

And speaking of 9/11...

Our condolences to all who lost loved ones on 9-11 -- our thoughts particularly go to the many heroic 9-11 first responders - both those who lost their lives, and those who continue to suffer today with the mental and physical after-effects.

Our thoughts also gravitate to the many in our industry who lost their lives while doing their jobs. Marsh lost 293 colleagues and 63 consultants and Aon lost 176 colleagues. Astounding still today. Hug a colleague in their memory. Be kind to those around you.

Robert Hartwig and Claire Wilkinson of the Insurance Information Institute have produced some reports on the impact of 9/11 on the insurance industry - as well as the documented need for renewal of a terrorism insurance backstop.

Terrorism and Insurance: 13 Years After 9/11 The Threat of Terrorist Attack Remains Real

The 20 most costly terrorist acts by insured property losses

Terrorism Risk: A Constant Threat - 2014 - download the report here


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September 11, 2014

 

If you're looking for something about workers' compensation, might as well stop reading now, because this isn't about workers' compensation, although we know that 9/11 produced a slew of claims .

No, this is a brief post to share my 9/11 tribute song recorded on 28 September 2011 at one of the three greatest small concert halls in American - Mechanics Hall in Worcester, MA. Peter Clemnte is on guitar. As the song says:

We must be strong
For friends who've gone.

I hope the song brings comfort on this sad anniversary.

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September 10, 2014

 

Trust for America's Health and The Robert Wood Johnson Foundation recently released The State of Obesity: Better Policies for a Healthier America, a 136 page report that can be downloaded in PDF.

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This is the most recent in a series of updates on the topic of obesity, and while the report is guardedly more optimistic about the nation's obesity rate -- "there is increasing evidence that obesity rates are stabilizing for adults and children" -- the overall situation is still plenty bleak. Here are some highlights:

  • Adult obesity rates rose in Alaska, Delaware, Idaho, New Jersey, Tennessee and Wyoming
  • More than a third of adults (34.9 percent) were obese as of 2011 to 2012.
  • More than two-thirds of adults were overweight or obese (68.5 percent).
  • Over the past 35 years, obesity rates have more than doubled. From 2009 to 2010 to 2011 to 2012, rates remained the same. The average American is more than 24 pounds heavier today than in 1960.
  • Two states have adult obesity rates above 35 percent (Mississippi and West Virginia), 20 states have rates at or above 30 percent, 42 states have rates above 25 percent and every state is above 20 percent. In 1980, no state was above 15 percent; in 1991, no state was above 20 percent; in 2000, no state was above 25 percent; and, in 2007, only Mississippi was above 30 percent.
  • The 10 states with the highest rates of type 2 diabetes are all in the South. Alabama had the highest rate at 13.8 percent.

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Related medical conditions
The report also discusses obesity's link with other serious, life-limiting illnesses. Here's a sampling:

  • Diabetes rates have nearly doubled in the past 20 years -- from 5.5 percent in 1988 to 1994 to 9.3 percent in 2005 to 2010.
  • More than 25 million American adults have diabetes and another 79 million have prediabetes. The CDC projects that one-in-three adults could have diabetes by 2050.
  • One in four Americans has some form of cardiovascular disease.
  • One in three adults has high blood pressure, a leading cause of stroke.
  • Approximately 30 percent of cases of hypertension may be attributable to obesity, and the figure may be as high as 60 percent in men under age 45.
  • People who are overweight are more likely to have high blood pressure, high levels of blood fats and high LDL (bad cholesterol), which are all risk factors for heart disease and stroke.

The report contains significant detail about adult demographics and a special focus on childhood obesity rates, recommendations and policy initiatives.

Obesity and the Work Comp Nexus
How does obesity affect workers' comp? Here are a variety of studies, reports and news related to workers compensation and obesity - from our own pages and from other sources. .

Weighing the Obesity Factor in Workers' Compensation

The Influences of Obesity and Age on Functional Performance During Intermittent Upper Extremity Tasks

New Study Shows Significant Health Risks for Long-haul Drivers

AMA declares obesity a disease

Comorbidities in Workers Compensation, NCCI 2012

Indemnity Benefit Duration and Obesity, NCCI 2012

Safety 2012: Ergonomic Strategies for Managing Obesity in the Workplace

Plump my workforce: new studies document obesity-related work costs

The Not-So-Hidden Cost of Obesity

New York Weighs In on Obesity

Compensable weight loss surgery? A new wrinkle in obesity

The effect of obesity and other comorbidities on workers comp

Weighty matters: the high cost of obesity in the workplace

Obesity in Workers Comp: Duke Sounds the Alarm

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September 5, 2014

 

Tim Dodge makes his CavRiskhosting debut with an impressive collection of risky posts: Cavalcade of Risk #216: Workers' Comp, Cat Losses, Kayaks, and Did a Doctor Prescribe That Joint?

As always, there's sure to be something that strikes your fancy, so do check it out.

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August 27, 2014

 

A stake through the heart.

That's what it felt like yesterday when Allstate published its 10th annual America's Best Drivers Report and awarded Worcester and Boston, two Massachusetts cities 38 miles apart, with the gold and silver medals, respectively, for most car crashes per capita in the nation.

Upon learning of this dubious distinction, local television stations instantly knew that such a story cried out for "man in the street interviews," and we got plenty of those. Maybe there were people interviewed who were horrified, but most interviewees who made the cut for broadcast seemed to treat it as if it were a badge of honor.

Frankly, I felt a bit like Claude Rains in the film Casablanca who, just prior to collecting his winnings, exclaimed "I'm shocked, shocked to find that gambling is going on here."

Boston drivers are legendary in their demolition derby attitudes. The driving Zeitgeist has forever treated traffic rules as purely advisory. A green light means "go," and a yellow light means "go like hell." Pedestrian crosswalks might as well not be there. If you're riding a bike, you'd better have good radar. So, one learns early on that driving in Boston is not for the faint of heart.

And right now it's at its worst as 152,000 college students return to 35 colleges for the next school year. Thirty-seven thousand live on campus in the heart of the city. Another 50,000 live in apartments around the city. The rest are commuters. The majority of the commuters ride the oldest-in-the-nation transit system. Boston University, alone, has more than 31,000 students.

So, I can absolutely understand Boston, a city I love, winning the trophy for 2nd place. But, geez, Worcester? Really? The most dangerous city in the America for car crashes? Worcester's like a home town to me (so is Boston, by the way, so I'm doubly hurt).

Worcester has 181,000 people spread out over about 38 square miles. There are ten colleges in the city, not 35. Students total less than 35,000. Worcester never seems to have the driving hyperactivity one finds in Boston. Although the two cities are connected by the Massachusetts Turnpike umbilical cord, they are like yin and yang. They don't even have the same water supply. It's true that Worcester has a lot of traffic lights, so the yellow light "go like hell" possibility exists, but the traffic density is so much less than Boston's that one rarely sees the Boston mania. Friends from Boston visit Worcester and think they've gone to the land of Zen.

Right now, you may be asking, "So, where's the safest place to drive in America?" That, according to the driving gods at Allstate, would be Fort Collins, Colorado, a city of more than 56 square miles with a population nearly 30,000 less than Worcester's. A city of two, count 'em, two colleges, one a community college, the other Colorado State University. A city with 30,000 college students, and I'm assuming that most of them always wear a smile and speak kindly of everyone.

Actually, Fort Collins looks like a beautiful place where everyone rides bikes without a worry and where the average blood pressure is so low that nobody has to worry about getting life insurance. Congratulations, Fort Collins.

The question I'm left with is this: How did Worcester, the city of the seven hills, home to the Hanover Insurance Group (and everyone knows that insurance employees are good drivers) earn Allstate's first place, bottom of the bird cage award? Beats me. I'm stumped and, yes, shocked. My Great Mandala has been poleaxed.

I'm going out for a drive.

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August 26, 2014

 

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Workers' compensation benefits rose by 1.3 percent to $61.9 billion in 2012, while employer costs rose by 6.9 percent to $83.2 billion, according to a report released today by the National Academy of Social Insurance. The Academy notes that this reflects the continued economic recovery as employment and earnings rise, and that despite the uptick, program spending as a share of covered payroll remains below historical levels. Employers' costs as a share of covered wages increased by $0.03 in 2012, to $1.32 per $100 of covered wages; benefits paid to injured workers decreased by $0.03, to $0.98 per $100 of covered wages.

You can view and download the full report from the Academy site for state-by-state detail -- REPORT: Workers' Compensation: Benefits, Coverage, and Costs, 2012 -- along with a press release and an infographic, from which we've illustrated this post. The Academy notes these highlights from the state-by-state results, which show that between 2010 and 2012:


  • The number of covered workers and amount of covered wages increased in all jurisdictions

  • Benefits per $100 of covered payroll decreased in 39 jurisdictions.

  • Employers' costs per $100 of covered payroll increased in 42 jurisdictions.

  • In 2012, medical benefits exceeded cash benefits in 33 jurisdictions.

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