Ten Employee Lawsuit Risks During Covid-19 – July 2020


THE NOVEL coronavirus that broke out in the winter has caused immeasurable suffering, both physical and economic. For employers struggling to stay in business, this is a fraught time where mistakes in managing their workforces could lead to employee lawsuits. Here are 10 potential trouble spots to watch for.

1. Workplace safety – Businesses that still have employees working on-site run the risk that a single infected worker may send the virus ripping through the entire workforce. While workers’ compensation laws may prevent employees from suing, their family members who become ill or suffer through a worker’s illness face no such constraints.

2. Sick time and paid leave – Congress enacted the Families First Coronavirus Response Act in March, guaranteeing full-time employees of small businesses 80 hours of sick leave (part-timers get a prorated amount.) Mistakes in administering these benefits could prompt lawsuits.

3. Workplace discrimination – Because the coronavirus originated in China, there have been reports of Asian-Americans being targets of racist actions. Employers must take care to avoid the appearance of making workplace decisions based even partly on employees’ race.

4. Americans with Disabilities Act – The ADA prohibits discrimination against disabled individuals and requires employers to make reasonable accommodations for these workers. Employees who become ill from COVID-19 (the illness caused by the virus) may suffer after-effects that include trouble breathing, speaking, and working at their former pace. Employers must accommodate these workers to the extent that is practical.

5. Wage and hour violations – Non-exempt employees working remotely may be working more than their regular hours, missing rest and meal breaks, and using their own equipment. Employers must keep careful records, reimburse employees for their use of personal equipment where warranted and remind employees to take mandatory breaks.

6. Battered retirement plans – Stock markets have cratered since the beginning of the year, taking retirement account balances down with them. Questions may be asked about whether fund managers did enough to limit the damage. Employees who are not satisfied with the answers may go to court.

7. Health information privacy – Employee health information privacy is protected by law. Employers must secure the records of infected employees from unauthorized access by individuals within and outside the company.

8. Union contracts – Collective bargaining agreements may contain provisions that go beyond federal requirements for breaks, paid leave, layoff notices, and workplace safety. Employers must keep their CBAs in mind and work with their unions to avoid contract violations.

9. Disparate impact from layoffs – If layoffs are necessary, employers must take a thoughtful approach when deciding which employees to part company with. An appearance of singling out older workers or other protected classes under discrimination laws could invite lawsuits.

10. WARN Act – The Workers Adjustment and Retraining Notification Act requires some employers to provide at least 60 days’ notice before layoffs. Many businesses’ revenues fell off the cliff so quickly that they were unable to provide that much notice.

A final thought
The pandemic is a crisis that few businesses foresaw. The effects, including the litigation, may haunt them for a long time to come.


CYBER SECURITY – Malicious Coronavirus-related E-Mails Spread – April 2020


AS IF BUSINESSES didn’t have enough to worry about, online scammers have started sending out malicious e-mails to organizations about coronavirus that appear to be from business partners or public institutions. The criminals send these to rank and file employees in the hope that at least one of them will click on a link or attachment in the e-mail, which unleashes malware or tries to trick them into wiring money for supplies purportedly to protect the organization’s workers.

The number of malicious e-mails mentioning the coronavirus has increased significantly since the end of January, according to cybersecurity firm Proofpoint Inc. The company noted that this wasn’t the first time they had seen such widespread cyber attacks associated with some type of disaster. But because this is global in nature, it decided to track the new threat. This practice of launching cyber attacks that are centered around global news and outbreaks (like the current COVID-19 coronavirus) isn’t anything new. Cybercriminals have long employed these tactics to take advantage of users’ desires to keep as up to date with any new information as possible or to evoke powerful emotions (like fear) in the hope that their sentiments will get the better of them and they will not pause to check for the legitimacy of these e-mails.

The cybercriminals are using the public’s ignorance about coronavirus, as well as the conflicting claims of how to protect against it, to lure people into clicking on their malicious links or get them to wire money. Because people are afraid, their guards may be down and they may not be as careful about identifying the e-mail as dangerous.

Some real-life examples

• Japanese workers were targeted in January and February with e-mails that looked like they came from local hospitals. The messages even included legitimate contact information for key personnel. The e-mails were focused on employees of various companies and came in a message that would look like it’s a reply to something or a warning that people are getting from the government. But when they clicked, it was malware. E-mails were sent to companies in the transportation sector that looked like they came from an employee of the World Health Organization.
They included the WHO logo and instructions about how to monitor crews aboard ships for coronavirus symptoms, and they included an attachment with instructions. This phishing e-mail attack was
intended to lure individuals into providing sensitive data, such as personally identifiable information and passwords.
• Companies in the US and Australia have been receiving malicious e-mails that use a display name of “Dr. Li Wei” and are titled “CORONA-VIRUS AFFECTED COMPANY STAFF.”

What you can do

All that it takes to break into your business is a cleverly worded e-mail message. If scammers can trick one person in your company into clicking on a malicious link, they can gain access
to your data. It’s important to train your staff to identify suspicious e-mails. They should avoid clicking links in e-mails that:
• Are not addressed to them by name, have poor English, or omit personal details that a legitimate sender would include.
• Are from businesses they are not expecting to hear from.
• Ask you to download any files.
• Take you to a landing page or website that does not have the legitimate URL of the company the e-mail is purporting to be sent from.
• Include attachments purportedly with advice for what to do. Do not open them even if they come from relatives or friends.


CONSTRUCTION RISK – Why You Need ‘Key Man’ Insurance – April 2020


IF YOU are operating a small business, you are likely relying on a small staff to get the job done. Many employees in small firms have to wear many hats and if one of them or an owner should die, the business could suffer greatly from that sudden loss of talent. If you don’t have “key man” insurance, that setback could be devastating to the viability of your operations, whereas coverage would provide you with extra funding that you would need while recovering from the loss. Keyman insurance is life insurance on a key person or persons in a business. In a small business, this is usually the owner, a founder or perhaps a few vital employees. These are the people who are crucial to a business – the ones whose absence would sink the company. You need key man insurance on those people.

Key man insurance basics

Before buying coverage, give some thought to the effects on your company of possibly losing certain partners or employees. In opting for this type of coverage, your company would take out life insurance on the key individuals, pay the premiums and designate itself as the beneficiary of the policy. If that person unexpectedly dies, your company receives the claim payout. This payout would essentially allow your business to stay afloat as you recover from the sudden loss of that employee or partner, without whom it would be difficult to keep the business operating in the short term.

Your company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner. In other words, in the aftermath of this tragedy, the insurance would give you more options than immediate bankruptcy.

Determining whom to cover

Ask yourself: Who is irreplaceable in the short term? In many small businesses, it is the founder who holds the company together – he or she may keep the books, manage the employees, handle the key customers, and so on. If that person is gone, the business pretty much stops.

Determining amount of coverage

• The amount of coverage depends on your business and revenue.
• Think of how much money your business would need to survive until it could replace the key person, come up to speed and get the business back on its feet.
• Buy a policy that fits into your budget and will address your short-term cash needs in case of tragedy.
• Ask us to get some quotes from different insurers. • Check rates for different levels of coverage ($100,000, $500,000, etc.)


Law Requires Paid Sick Leave, FMLA Benefits – April 2020


LEGISLATION SIGNED into law by President Trump extends sick leave benefits for workers who are stricken by the coronavirus, as well as provide for additional weeks of time off under the Family Medical Leave Act so they can be guaranteed of being able to return to their jobs afterwards.
Employers need to pay extra attention to the added paid sick leave and FMLA provisions of this new law, the Families First Coronavirus Response Act, which only applies to employers with fewer than 500 employees.

Paid sick leave

Employees are entitled to two weeks (80 hours) of paid sick time for coronavirus-related issues. Eligible workers must be paid their regular pay, up to $511 per day and $5,110 in total.
Those caring for someone subject to quarantine due to COVID-19, and parents of kids who can’t go to school or daycare, will receive two-thirds of their regular pay, up to $200 daily with a $2,000 cap. The emergency sick leave benefit can be used immediately, regardless of how long the worker has been employed with you. The law does not require certification of an order by the government or a health care provider. But employers can require reasonable notice procedures, such as not announcing in the middle of a shift that they take COVID-19 sick leave. They cannot require the employee to find a replacement worker to cover the shifts they will miss. Employers must post the law’s requirements “in conspicuous places.”
Employers are not allowed to discipline a worker who takes this sick or FMLA leave for coronavirus purposes. If an employer refuses to provide the leave, they can be subject to paying back pay and statutory damages.
Important: This law provides payroll tax credits to offset costs of providing paid leaves.

FMLA

The law provides for 10 additional weeks of FMLA leave, but only for those who must stay at home to care for a child whose school is closed or their childcare provider is unavailable due to COVID-19- related issues. These 10 weeks will be paid at two-thirds the employee’s regular rate of pay, up to $200 per day with a cap of $10,000. They will also receive 12 weeks of leave
with job protection, though employers of health care or emergency care providers can exclude such employees. The employee would likely use up their two weeks of paid sick leave before applying
for FMLA benefits, which unlike traditional FMLA (which is unpaid), are paid leaves after the first 10 days under the new law. Employees who have been working for more than 30 days are eligible, and the employer can require them to provide reasonable notice that they are taking leave.

A final word

This law only applies to employers with fewer than 500 workers, so it leaves uncovered those people who work for larger companies. Also, employers need to make financial plans, as the credit
cannot be claimed until after the employer pays their payroll taxes. A bigger issue is that the law requires that workers be paid the sick leave even if they are not sick, but have been ordered to self-isolate. In states that have ordered workers to self-isolate, such as California, employers could be faced with an avalanche of paid sick leave claims all at once. This law sunsets on Dec. 31, 2020.


Coverage Gap Concerns as Cyber Threat Grows – January 2020 RISK REPORT


Small and mid-sized businesses are increasingly bearing the burden of cyber threats, as criminals are betting they do not have the resources in place to mount a strong defense. A severe attack on a small company can incapacitate its ability to do business, and the expenses of getting operations back on track – coupled with loss of goodwill – can easily force a firm into bankruptcy.
Unfortunately, with more data breaches hitting the news, one of the main concerns that executives have is if their insurance will cover the costs of recovering from an attack.

If you are running a small or mid-sized company, do not underestimate the growing threat to your business. Your chief priorities should be protecting against the threat and having proper insurance coverage in place.

TOP REASONS FOR CYBER LOSSES

• Malicious breaches resulting in data losses: 52%
• Unintentional data disclosure by staff: 16%
• Physical loss or theft of data: 13%
• Network or website disruptions: 5%
• Phishing, spoofing and social engineering: 5%
• Other: 9%
Source: Advisen and Nationwide Insurance Co.

Insurance concerns

One of the chief concerns for executives is any overlap or gaps between their property, liability, crime and cyber policies when it comes to covering the costs of recovering from an attack, according to a report by insurance news website Advisen and Nationwide Insurance. Some companies feel they don’t need cyber coverage because they believe their property and liability policies will cover any related losses.

EXECUTIVES’ INSURANCE WORRIES

• 95% of respondents named data breach as the number-one risk they expect to be covered by a cyber insurance policy.
• 94.5% said they expect cyber-related business interruption to be covered by a cyber policy.
• 89% said they expect their cyber policy to cover ransom demands.
• 36% said they have cyber-related property damage/bodily injury coverage under another policy, reflecting the belief that some coverage for cyber-related losses can be found under traditional policies.
• 60% of respondents said they are concerned about perceived gaps and overlaps in their insurance coverage.
• 53% of respondents said coverage for funds-transfer losses should be found under the crime policy, but also stated they would like to be able to recover under both crime and cyber policies – or have separate policies with higher limits.

The takeaway

Since cyber insurance is a new and evolving product, all policies do not cover the same thing. That’s why it’s important to weigh your choices carefully and consult with us. While the cyber threat grows, more insurers are changing language in their property and liability policies to limit coverage of cyber events. Because of the high costs associated with a data loss, more
executives want to see higher limits for business interruption coverage on their cyber stand-alone policies.

This market demand may drive insurers to refine their cyber insurance policies, including increasing cyber-related business interruption limits, according to the Advisen report. To find the best coverage for your business, please talk to us. We can help you evaluate your risks and coverages and identify any gaps by looking at your existing policies.


Top New Laws and Regs Affecting Businesses – January 2020 RISK REPORT


The new decade is starting off with a tsunami of new laws and regulations that will affect California businesses. Companies operating in California will have to be prepared for significant changes or open themselves up to potential litigation, fines, and other risks.

Here’s what you need to know coming into the new year:

1. AB 5

The controversial AB 5 creates a more stringent test for determining who is an independent contractor or employee in
California.  Known as the “ABC test,” the standard requires companies to prove that people working for them as independent contractors are:

A) Free from the firm’s control when working;
B) Doing work that falls outside the company’s normal business; and
C) Operating an independent business or trade beyond the job for which they were hired.

Legal experts recommend that employers:

• Perform a worker classification audit, and review all contracts with personnel.
• Notify any state agencies about corrections and changes to a
worker’s status.
• Discuss with legal counsel whether they should now also include them as employees for the purposes of payroll taxes, workers’ compensation insurance, federal income tax withholding, and FICA payment and withholding.

2. Wildfire safety regulations

Cal/OSHA issued emergency regulations that require employers of outdoor workers to take protective measures, including providing respiratory equipment, when air quality is significantly affected by wildfires. Under the new regs, when the Air Quality Index (AQI) for particulate matter 2.5 is more than 150, employers with workers who are outdoors are required to comply with the new rules. These include providing workers with protection like respirators, changing work schedules or moving them to a safe location.

3. Arbitration agreements

Starting Jan. 1, the state will bar almost all employee arbitration agreements. AB 51 bars employers from requiring
applicants, employees and independent contractors to sign mandatory arbitration agreements and waive rights to filing
lawsuits if they lodge a complaint for discrimination, harassment, wage and hour issues. Businesses groups sued to overturn the law on the grounds that it is preempted by the Federal Arbitration Act.

4. Overtime rules

New federal overtime regulations are taking effect for non-exempt workers. Under the new rule, employers will be required to pay overtime to certain salaried workers who make less than $684 per week – or $35,568 per year – up from the current threshold of $455, or $23,660 in annual salary.

5. Consumer privacy

Starting Jan. 1, under the California Consumer Protection Act, businesses that keep personal data of residents are required to safeguard that information and inform website users how their personal data may be used. The law applies to firms with $25 million or more in annual revenues or those that sell personal information as part of their business.

6. Return of the individual mandate

A new law brings back the individual mandate requiring Californians at least to secure health insurance coverage or face tax penalties. This comes after the penalties for not abiding by the Affordable Care Act’s individual mandate were abolished by Congress in late 2017. Starting in 2020, California residents are required to have health insurance or pay excess taxes. This will affect any of your staff who have opted out of your group health plan as it may mean they are going without coverage, unless they have opted to be covered by their spouse’s plan. If you have staff who didn’t enroll in your plan for 2020, they may have to wait until your group’s next open enrollment at the end of the year. That could force them to pay tax penalties.

7. New audit, X-Mod thresholds

The threshold for physical workers’ compensation audits for California policies incepting on or after Jan. 1 is $10,500 in annual premium, a drop from $13,000. This means that any employer with an annual workers’ comp premium of $10,500 or more will be subject to a physical audit at least once a year. On top of that, the threshold for experience rating (to have an X-Mod) has also fallen – to $9,700 in annual premium as of Jan. 1, from $10,000.

8. Harassment training partly pushed back

Employers with five or more workers were required to conduct sexual harassment prevention training for their staff by the end of 2019 under a California law passed in 2018. A new law extends the compliance deadline for some employers who had already conducted training prior to 2019. The original law, SB 1343, required all employers with five or more staff to conduct sexual harassment prevention training to their employees before Jan. 1, 2020 – and every two years after that. If you have never trained your staff, you should have done so in 2019.

But if you have, here are the new rules:
• If you trained your staff in 2019, you aren’t required to provide refresher training until two years from the time the employee was trained.
• If you trained your staff in 2018, you can maintain the two-year cycle and comply with the new Jan. 1, 2021 deadline. You did not have to repeat the training in 2019.

9. Hairstyle discrimination

A new law makes it illegal for employers to discriminate against employees and job applicants based on their hairstyle if it is part of their racial makeup. The CROWN Act (Create a Respectful and Open Workplace for Natural Hair), defines race or ethnicity as “inclusive of traits historically associated with race, including, but not limited to hair texture and protective hairstyles like braids, locks, and twists.” This new definition of race means that natural hair traits fall under the context of racial discrimination in housing, employment and school matters.

10. Reporting serious injuries

A new law broadens the scope of what will be classified as a serious illness or injury which regulations require employers to report to Cal/OSHA “immediately.” The new rules being implemented by AB 1805 are designed to bring California’s rules more in line with Federal OSHA’s regulations for reporting. It will mean that some injuries that were not reportable before will be, such as:
• Any inpatient hospitalization for treatment of a workplace injury or illness will need to be reported to Cal/OSHA.
• An inpatient hospitalization must be required for something “other than medical observation or diagnostic testing.”
• Employers will need to report any “amputation” to Cal/OSHA. This replaces the terminology “loss of member.” Even if the tip of a finger is cut off, it’s considered an amputation. As of yet, there is no effective date for this new law, as enabling regulations have to be written – a process that will start this year.


New State Law Alters Employment Landscape


Governor Gavin  Newsom has signed a bill into law that will codify a court ruling from last year that set new ground rules for what constitutes an independent contractor, and which expands on that ruling.

There’s been a lot written in the media about the law, AB 5, and much of it misses the point. Some news reports have said it will spell the end of independent contractors in the state and that anyone a company hires to do a temporary job on contract must be treated as an employee.

Now that AB 5 is the law, state and federal labor laws will apply to independent contractors who have to be reclassified as employees.  That means they would be afforded all of the associated worker protections, from overtime pay and minimum wages to the right to unionize. Employers would have to cover them under their workers’ comp policies, and extend benefits to them as they do to other employees. The law also gives the state and cities the right to sue employers over misclassification.

AB 5 codifies and expands on a 2018 California Supreme Court decision that adopted a strict, three-part standard for determining whether workers should be treated as employees. Known as the “ABC test,” the standard requires firms to prove that people working for them as independent contractors meet certain standards:

THE ABC TEST
A) Must be free from the company’s control when they’re on the job;
B) Must be doing work that falls outside the company’s normal business; and
C) Must be operating an independent business or trade beyond the job for which they were hired.

 

The first prong aligns with the common-law test for employment and evaluates the degree of control exercised by the company over the worker.

The second prong examines whether the worker can reasonably be viewed as working in the hiring company’s business.

The third prong inquires whether the worker independently made the decision to go into business. The fact that the hiring company does not prohibit the worker’s engagement in such an independent business is not sufficient.

 

Occupations exempted include:

• Doctors
• Some licensed professionals (lawyers, architects, engineers)
• Accountants, securities broker-dealers, investment advisors
• Real estate agents
• Direct sales (compensation must be based on actual sales)
• Builders and contractors (who work for construction firms that build major infrastructure projects and large buildings)
• Freelance writers, photographers (provided the worker contributes no more than 35 submissions to an outlet in a year)
• Hairstylists, barbers (must set their own rates and schedule)
• Estheticians, electrologists, manicurists (must be licensed)
• Tutors (must teach their own curriculum)
• AAA-affiliated tow truck drivers. 

 

What employers should do

Legal experts recommend that employers:
• Perform a worker classification audit, and especially review all contracts with personnel.
• Determine which benefits and protections should be provided to any workers who are reclassified from  independent contractor to employee (think health insurance and other benefits).
• Notify any state agencies about changes to a worker’s status.
• Discuss with legal counsel whether you should also include a worker as an employee for the purposes of payroll taxes, workers’ comp insurance, federal income tax withholding,  ICA payment and withholding.

 

Note: Federal law remains unchanged. The IRS and National Labor Relations Board have their own independent contractor tests.


Do you have a risk management plan? You should.


RISK MANAGEMENT – Even Small Firms Need a Crisis Management Plan

With risks to companies and employees growing, sometimes the unthinkable happens and a business has a real crisis on its hands. While large companies are usually well-prepared for a crisis should one occur, most small and mid-sized firms don’t have the resources or have not put much thought into how they would handle a crisis.

One of the most difficult parts of crisis planning is just what to prepare for, since a crisis could be a number of different events, like:
• The sudden death of a key member of your team.
• A defective product leads to an injury, illness – or worse.
• An accident severely maims or kills a number of your workers.

Your strategy

To get started, assemble a team that includes key members from your organization who will be responsible for creating your crisis-response plan. INC. Magazine recommends the following for your team:
Make a plan – You cannot start planning without first identifying your objectives. Once you identify them, you can make response plans for each type of event. Typically, that includes:
• Safeguarding any person (employee, vendor, customer and/ or the public) who may be affected by the crisis. Your plan would include how to respond to the crisis if people’s health and wellness are at stake.
• Making sure the organization survives. This would include steps you would take to ensure the company can continue as a going concern after a significant disruption.
• Keeping stakeholders (employees, vendors, clients, the public and government) informed on developments.

Create a succession plan – You should clearly outline the necessary steps to follow if you or one of your key managers suddenly became unable to perform their duties. This plan may include selling the company, or transferring ownership to family members or key employees.
Seek advice from the experts – This includes your leadership team, employees, customers, communications experts, investment bankers, exit planners, lawyers and financial managers. Each of these individuals has unique insights that can be invaluable for how to tackle a crisis.
Name a spokesperson – This is important if you have a crisis that spreads beyond your organization and affects the health and safety of a member of the general public, your staff or customers. Funneling all media communications through a spokesperson can help you deliver a clear and consistent message to media, as well as to the public at large.
Honesty is the best policy – A lack of honesty and transparency can lead to rumors, as well as a general distrust of your organization if the truth is exposed. The best approach is to be transparent and truthful about what happened and what you are doing to resolve the crisis.
Keep your staff up to speed – To stop the rumor mill and also keep employees from becoming worried amidst the uncertainty, keep your workers abreast of developments – and what the crisis means for the organization, and what you are doing about it.
Keep customers and suppliers informed – If you have an event that’s causing some disruptions, you also owe it to your clients and vendors to let them know what’s happening. Like your employees, keep them regularly updated on events and the steps you are taking to address the crisis. Put together a plan for how you would keep them posted.
Act fast and update regularly – Keeping the communications alive is important and once you grasp the situation and its effects, you can issue summary statements of the crisis and what’s happened. Then you can follow up with regular updates on your action plans, on people affected, any hotline you may set up, and more.
These days news travels fast and like wildfire on social media. You need to move at the same pace.
Social media is vital – More and more people get their news from social media and the discussions that ensue on posts, so you need to make sure that your company stays on top of the flow. You may want to assign a person or two to monitor social media and post and react to posts on social media. That way, your team can tell the company’s side of the story and put to rest unfounded rumors.
Make a plan for what a social media contact’s responsibilities would be during a crisis.

Get an early start

Your plan won’t be effective if you create it during a crisis. Plan in advance, so everyone can approach the strategizing unrushed and with a clear head.


Finding Coverage for the Latest E-mail Scams


As CYBER scams and hacker attacks grow, the insurance industry has been frantically trying to keep up in providing appropriate coverage for these events. Hacks, viruses, ransomware and exposure of sensitive personal information of your customers or employees, and any resulting regulatory implications, are often covered by cyber liability insurance. But what about the recent trend of criminals spoofing a company executive’s e-mail address, posing as them and ordering accounts payable to cut a check and send it to the fraudsters?

Well, two firms suffered similar incidents, but different federal appeals courts issued opposite opinions – one saying that a crime insurance policy covered the event, while the other court said it didn’t. The fact that two courts came out with two different rulings illustrates how many traditional and even cyber policies are slow to keep up with evolving hi-tech threats to businesses. The devil is always in the details, so read your policies and discuss your concerns with us.

The number of business e-mail compromise scams quadrupled in 2017, and losses averaged $352,000 per business and topped out at $3 million, according to an analysis of insurer Beazley’s clients. The FBI says these schemes are one of the fastest-growing cybercrimes.

Court case one: Covered

Employees of Medidata, a clinical-trial software firm, wired $4.7 million for what they thought was for an acquisition by their employer. They were sent a series of fraudulent e-mails that they thought were from their company president and the firm’s outside lawyer.

The company didn’t have a cyber insurance policy, but it had an executive protection policy, which had a crime section that included coverage for computer fraud, funds transfer fraud and
forgery. The insurer rejected the claim and the firm sued in federal court. The lower court ruled in favor of the insurer, but upon appeal, the federal appeals court ruled that the policy did in fact cover the loss.

The insurer argued the policy applies to only hacking-type intrusions. The appeals court found that while no hacking occurred, fraudsters inserted spoofing code into the firm’s e-mail system, which the court said is part of the computer system. The court held that the insurer must pay under the computer fraud portion of its policy.


Court case two: Not covered

A federal district court found no crime policy coverage after a Michigan tool and die firm wired $800,000 in funds to a fraudster’s account in the belief the account belonged to one of its vendors. The insurer faulted the company for not verifying the bank account with the vendor. The district court agreed with the insurer that the loss was not a “direct loss” caused by the “use of a computer,” and thus the crime policy did not apply.


The takeaway

Computer fraud is evolving rapidly, so it’s important that you talk to us about the types of fraud that appear in the news. We will work with you to ensure that your coverage is forward-looking and covering more than just threats from last year. We can also discuss with you how computer fraud coverage interacts with other types of cybercrime policies.


Worker’s Comp – Construction Dual-Wage Changes Ahead


The Workers’ Compensation Insurance Rating Bureau of California will recommend dual-wage threshold changes to a number of construction classifications for the 2020 workers’ compensation policy year.

The Rating Bureau will make the recommendations to the Department of Insurance during its annual rate filing in June. The recommendations would have to be approved by the state insurance commissioner.

While most workers’ compensation classes have one rate, in some classes the difference in claims costs between high- and lower-wage workers is so great that a dual-wage classification is needed. In those cases, the workers above the threshold rate are assigned one rate, while those below that threshold are assigned a higher rate. This is usually because the higher-wage workers are generally more experienced and tend to suffer fewer workplace injuries compared to those below the threshold.

There are 18 dual-wage classes, but not all of them are in line for changes. Opposite is the list of changes the Rating Bureau plans to recommend in its rate filing.