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5 Workers Who May Be Exempt From WC

If you are hurt while working or have an illness caused by conditions at work, you may be entitled to workers’ compensation benefits. Workers’ compensation is a state-run insurance system created to compensate workers for injuries received in the workplace. Employers’ participation is mandatory under state law, and they are protected by the workers’ compensation program from being sued further by the injured employee.

To qualify for workers’ compensation benefits, you must meet the definition of “employee.” Let’s take a look at what that means.

Am I an Employee for Workers’ Compensation Purposes?

Any employee is entitled to receive workers’ compensation benefits. It doesn’t matter how long you have been employed or whether you are working part-time or seasonally. Regardless of these criteria, if you are an employee and injured on the job you will be eligible to receive workers’ compensation benefits.

There can be uncertainty, however, as to what it means to be an employee. By definition, an employee is a person hired for wages or a salary. An employee’s duties are typically dictated or controlled by the employer, and the employee receives any job training needed by the employer.

Independent contractors, freelance workers and consultants, on the other hand, operate more independently and are just required to deliver a job. The manner in which it is completed is not controlled by the company. These workers are not eligible for benefits under workers’ compensation laws.

Special Rules for Certain Workers

In some states, there are some special groups of workers who, although they may meet the definition of an employee, are not required to be covered under an employer’s workers’ compensation insurance. The criteria will vary by state, so it is best to consult with an experienced workers’ compensation attorney if you have doubts. Some of the groups that may be exempt from workers’ compensation coverage are:

Casual Labor – Casual labor is usually defined as work that is not in the usual course of business for the employer. For example, a company may hire someone to do some landscaping or carpentry, which does not directly promote the company’s main business.

Domestic Workers – Domestic workers are paid to help with domestic tasks such as cleaning.

Agricultural and Farm Workers – Agricultural workers perform physical labor and operate machinery on farms, ranches and other agricultural sites under the supervision of farm or ranch managers.

Undocumented Workers – Undocumented workers generally work for cash and are not asked to provide identification or evidence of legal status to the employer.

Leased or Temporary Workers – Leased or temporary workers are employed by a professional employer organization (PEO) and not the company they are working for. They usually work under a contract between the company that needs work and the PEO.

Workers’ compensation insurance is a helpful program to ensure that employees are suitably and promptly compensated for losses incurred when they are injured in the workplace. A person must, however, meet the legal definition of employee in the applicable state. If you have any questions whether you meet that criterion, consult with a workers’ compensation attorney to find out your rights.

Key Misunderstanding on Oklahoma Option

Most critics and supporters of the Oklahoma option (OKO) have one thing in common: a misunderstanding about the applicability of the Employee Retirement Income Security Act (ERISA). In part, this misunderstanding is widespread because it hasn’t yet garnered the attention of tax authorities and attorneys, and those of us who aren’t tax attorneys are reluctant to engage this subject because we fear we will be misinterpreted as giving tax advice.

Let me be absolutely clear—nothing in this article should be construed as tax advice, as I am not qualified to offer such advice.

But the ProPublica and NPR journalists who assume ERISA must govern the taxation of OKO benefits simply because it governs the taxation of Texas nonsubscription (TXNS) benefits[1] aren’t qualified, either.

Put simply, ERISA’s governance of OKO workplace injury claims has yet to be demonstrated in any way, and it was certainly not confirmed by rulings in 2015 by two federal judges for the Western District of Oklahoma who considered the jurisdiction of federal courts over OKO-based claims and appeals processes..

There was never any intent in the Oklahoma legislation to have ERISA govern the OKO, and the term “ERISA” never appears—not once!—in the language of the Oklahoma law. Even more importantly, two-and-a-half years after passage, there is zero case law to support any claim that ERISA applies to OKO.

These revelations may be counterintuitive for industry insiders and regulators, but what should be intuitive is that state and federal court systems are in charge of ruling on state and federal laws. Consultants, employers, employees, investigative journalists, insurance carriers, brokers, attorneys, ivory tower experts, doctors and conference debaters don’t get to make such calls. The only ones whose opinions matter are the judges in a position to make these determinations, and the only two judges known to have had the opportunity to consider any issue concerning the relationship between the OKO and ERISA concluded that the judges did not have jurisdiction over cases where the employer sought to have ERISA govern employee appeals of decisions regarding occupational OKO claims.

In April 2015, Judge Joe Heaton of the U.S. District Court for the Western District of Oklahoma issued an order regarding ERISA’s applicability to the occupational accident components of OKO plans in the case of Cavazos v. Harrah Nursing Center (aka Marsh Pointe) that, in part, reads:

“Marsh Pointe alleges … that, pursuant to the Oklahoma [Employee] Injury Benefit Act, it has elected to be exempt from the Administrative Workers’ Compensation Act and become a ‘qualified employer’ by meeting certain requirements including the adoption of a written benefit plan. That well may be. Nonetheless, the case [filed by the plaintiff] arose ‘under the workmen’s compensation laws’ of the State of Oklahoma. As such, it may not be removed to any district court of the United States.”

Judge Heaton’s ruling was a narrow one, aimed only at determining whether the federal court could exercise jurisdiction over the case before it. That case had been removed by the employer to federal court from the Oklahoma Workers’ Compensation Commission (OWCC), based on the assertion that ERISA ought to govern the employee’s pursuit of a claim against her employer’s OKO plan. The court held that, regardless of whether ERISA applied to certain aspects of the OKO plan, the employee’s claim arose under Oklahoma’s WC laws and, therefore, a specific federal jurisdictional statute (28 USC §1445(c)) prevented removal of the case to federal court. Judge Heaton sent the matter back to the OWCC, and his order made it crystal clear that such cases cannot be removed to the federal court system.[2] In other words, ERISA (a federal law) does not give federal courts jurisdiction over the occupational accident claims of employees whose injury benefit plans are governed by the OKO (a state law)—no matter how frequently ERISA is referred to in an employer’s benefit plan and regardless of whether ERISA applies to other aspects of that benefit plan.

The Cavazos case was the first real opportunity we had to see whether removal of such claims to the federal courts was possible. Then, in September, Judge Stephen Friot (from the same Western District Court of Oklahoma) followed Heaton’s logic in Vasquez v. Dillards, our second opportunity to see whether federal court involvement in the OKO claims process was available. The decision read:

“The court concludes that the [Oklahoma Employee Injury Benefit Act] is part of Oklahoma’s statutory scheme governing occupational injuries and workplace liability; in other words, the OEIBA is part of Oklahoma’s statutory scheme governing workmen’s compensation.”

The case before Judge Friot was a bit different procedurally, but it came to the same result. In the Vasquez case, the employee received an adverse decision from her employer regarding her claim for benefits under the employer’s OKO plan. She then sought review by the OWCC as provided for in the Oklahoma statute. The employer removed the case to federal court, contending that the company’s plan was governed by ERISA and, therefore, that ERISA pre-empted state law on the issue and that the federal court had exclusive jurisdiction. The employee moved to remand the case to the OWCC. Judge Friot sided with the employee and remanded the case, which was to be expected post-Cavazos. The ruling in Vasquez (which features a more detailed discussion than the one provided by Judge Heaton in Cavazos) concludes that 28 USC §1445(c) (the same jurisdictional statute relied upon by Judge Heaton) barred removal of the case to the federal court, even if, as Judge Friot specifically presumed for purposes of his ruling, the “plan under which [the employee files] claims may be … an ERISA plan.”

The explicit—and antiquated—language from the 1974 ERISA law indicates that ERISA doesn’t apply to “workmen’s compensation.” ERISA’s authors recognized a long tradition of federal deference to individual states on workers’ compensation issues. While the OKO is different from traditional workers’ compensation, in the only cases known to address the issue thus far, the federal court system has concluded that it cannot exercise jurisdiction over the on-the-job injury claims of OKO employees.

Die-hard ERISA champions, as it turns out, can cling just as stubbornly to obsolete ideas as can workers’ compensation stakeholders. But OKO supporters don’t need to win such folks over; the law is already on the side of progress. The OKO clearly seeks to stand on its own, and it doesn’t want ERISA as a crutch. Being free from ERISA has advantages beyond tax implications. The OKO clearly sits much closer to traditional workers’ compensation than does TXNS—and, as such, OKO may be regularly accepted as a replacement in the state’s important oil and gas industry. In both Texas and Oklahoma, the larger energy companies almost always require traditional workers’ comp to be held by contracted companies. That won’t change in Texas, but it very well could in Oklahoma. Moreover, these federal court orders should provide solace to the Sooner State because they suggest the oversight and development of this new creation will be the responsibility of Oklahomans.[3]

[1] See “Inside Corporate America’s Campaign to Ditch Workers’ Comp,” an installment in the Insult to Injury series.

[2] The court remanded the case just two days after it was removed without seeking briefs from either party.

[3] To date, all three branches of the Oklahoma state government have actively or tacitly supported the OKO. At worst, the state has adopted a wait-and-see approach to this new alternative. At best, Oklahomans—sans attorneys—are eager to discover whether the incredibly promising early gains made possible through the OKO are sustainable over the long term.

At WorkersCompensationOptions.com, we’re convinced the gains are sustainable. There’s nothing theoretical about our promise of delivering superior care to employees at reduced costs to employers. We’re already doing it in Oklahoma, and we at WCO are proud to be part of this long overdue transformation.

Are Softer Skills for Analysts Neglected?

Are you neglecting the development of softer skills in your analysts? Based on conversations with customer insight leaders, including at the very pleasant DataIQ Talent Awards, it would seem you are. When I shared the experience of Laughlin Consultancy, that training for analysts in softer skills is our most popular service, these leaders were not surprised. But if there is such widespread support for the idea, why haven’t businesses invested in this training sooner?

People have suggested a number of theories:

  • Underinvestment in these teams or in training during lean times
  • Softer skills not valued by some geekier analysts or leaders
  • Skepticism from line managers (especially CMOs) as to what value such training would deliver
  • Just too busy!

All these are understandable challenges or excuses, and more than one resonates with me from my time creating and leading large customer insight teams. Perhaps there is another reason, as well. In my new line of work, I get to speak at industry conferences, read data/analytics/research publications and scan the plethora of blogs or social media comments on this topic. What becomes clear when consuming these is that the “buzz” or fashion is to focus on the technical. Ever since Google made “data scientist” the sexy job title for the decade, both suppliers and users have obsessed over technology and technical skills.

Following the comforting old maxim, “it’s what you do with it that counts,” I worry about this fetish with all things techie. As an Apple addict, I can empathize with the attraction of new shiny technology and beautiful design. However, I’m sure we’d all agree that commercial leaders should be focused on outcomes, not tools.

This recent fascination with “big data” or “predictive analytics” or “data scientists” is also worryingly reminiscent of what happened during the customer relationship management (CRM) bubble. When that term was in vogue, businesses were falling over each other to “do CRM,” which a number of large technology suppliers made sure equated with buying a CRM system. Not surprisingly, with hindsight, most of these CRM projects failed, and systems did not repay that hefty price tag.

Given that most of us are keen to avoid repeating mistakes, it’s a pleasure to report that more and more switched-on businesses are realizing that they can’t just hire technically competent graduates and get the insight their business needs.

So, what do I mean by softer skills? Maybe not precisely what you might come up with, but I hope the list below is familiar. Laughlin Consultancy’s most popular service in the first half of 2015 was the delivery of a “consultancy skills for analysts” training course that includes theses elements:

Have you invested in training like that for your analysts? What results have you seen?

Another way to think about this issue is, what distinguishes your top talent from those analysts who prove to be just so-so? My experience is that it’s capability in these softer skills. Over the years, I’ve met or employed hundreds of analysts, and while many may be a whiz at coding or have mastered model building in SAS, few are great communicators who really get what the business needs. Those who did master the skills I’ve outlined above went on to not just be effective consultants within their business; many are now leaders themselves.

Is that your experience, or would you identify other training needs for your team?

Strategy: Now Is Not a Good Time…

  • The founder and CEO of an early-stage company that has just closed a solid seed round tells me that what has benefited his business most in the past year, and allowed him to pivot toward a promising future, can be expressed in one word: focus.
  • The CEO of a late-stage startup who spent more than 100 days closing a recent round with an important new investor tells me how he was thoroughly “beaten up” during due diligence because of what was perceived to be a lack of clarity in the company’s market positioning. This added weeks to the process, diverting resources away from sales and daily operations.
  • The CEO of a B2B content start-up tells me that he and his team are doing too many things and essentially careening from one new idea to the next, acknowledges the need to prioritize but indicates he has to get through his short-term list first.

Each of these conversations is recent and real – they all occurred in the past two weeks. And while they happen to be about young, relatively small companies, each of these situations scales to big, mature companies, as well. If the issue isn’t about closing a round of funding, it’s about getting funding in the annual budget. If it’s not about investor feedback, it’s about reacting to the latest round of input from the CFO or the board. And who among us hasn’t bemoaned the quarter-to-quarter focus of publicly held companies of every size and sector?

Each of these stories points to the need every business has for strategy. And even if you think you don’t have one, or can coast along without one, guess again – you just have strategy by default.

What is strategy? Better yet, what isn’t it?

Strategy is NOT:

  • The domain of high-priced (or any price) consultants who create fancy documents – although some outside perspective or facilitation can be a big help
  • The catch-all for anything your team comes up with that survives the budget review process even though it cannot be precisely quantified (I have witnessed respected members of the finance function inside a Fortune 100 company be fully comfortable with this characterization)
  • The department in which geeky, analytic introverts perceived as unable to execute (hence they create more of those strategy documents) build their careers
  • Optional, something to be dealt with later, maybe when you have more time (tell me when, honestly, that will be?)
  • A list of strategic initiatives…or a set of PowerPoint slides full of cool visuals

So, then, what is strategy?

  • Strategy, quite frankly, is what leaders do to identify and allocate resources to help them get their businesses where they want them to go.
  • Strategy is mostly about execution.
  • Strategy is less about what you must do, than what you should not be doing.

Or, my favorite definition:

  • Strategy is about knowing (1) where are you? — (2) where do you want to be? — (3) how are you going to get there?

There are both direct and opportunity costs of deferring answers to these three questions, and ultimately taking the actions that ensure every employee and partner can buy into and play their roles in ways that reflect the answers.

Where to start:

  • Write down what you envision at your “point of arrival.” What is it going to look like and feel like? What will respected colleagues and members of the sector be saying about your company when you reach your destination? What will your products, customer or client experience and customer service be like? What will your brand represent?
  • Then write the story of where you are today, answering these same sorts of questions in the present.
  • Spend most of your effort breaking apart the answer to “how” into three to five headlines.
  • Now here is the toughest part: The temptation will be to build laundry lists of activities under each headline, or even just rearrange (and add to!) what you are already doing today. The successful outcome of this thought process is to surface things you would like to do (including things that are already underway) that you have to admit play at best a limited role in getting you where you want to be. And to cross them off the list and actually stop doing them.

What I am suggesting is not a one-and-done exercise. It’s not a solo activity. And while it may begin at an offsite or work session, it’s not a meeting. This is a process to reflect in your daily leadership, management and the culture of your company. This is how strategy becomes meaningful to creating sustainable and persistent growth.

This article also appears in Amy Radin’s column in Huffington Post and her LinkedIn blog.

My Risk Manager Is an Avatar

In the world of commercial insurance, there exists the very curious role of risk manager. I mean curious in the sense that successful risk managers appear to have superpowers. They are charged with taking the actions necessary to avoid or reduce the consequence of risk across an entire enterprise. Their knowledge must extend deeply into a variety of subjects such as engineering, safety, the subtleties of the business of their employer, insurance (of course), physics, employee motivation and corporate politics and leadership. Their impact can be wide-ranging, from financial (e.g., dollar savings from risk avoidance/mitigation) to personal (the priceless value of the avoidance of employee death or injury).

Sadly, the tyranny of economics restricts the access that businesses have to continuous, high-quality risk management. Full-time risk managers are prevalent in huge, complex, global companies. These firms often self-insure, or purchase loss-sensitive accounts, and the financial value of a risk management position (or department) is clear. The larger mid-market firms can afford to selectively purchase safety consultant services; their insurance broker might perform some of these tasks (especially at renewal), and their insurers may have loss control professionals working some of these accounts. However, for the majority of small businesses, risk management at the professional level is not affordable.

I have toyed with different ideas about how to automate this function to bring the value of a risk manager to the small commercial business segment. My attempts were always unsatisfying. However at a Front End of Innovation conference in Boston, a presentation by Dr. Rafael J. Grossmann (@ZGJR) crystallized the vision. I can now clearly see how existing technology can be combined to create a risk manager avatar.

Dr. Grossmann is a trauma surgeon who practices in Maine. In addition to the normal challenges of his profession, he is one of only four trauma surgeons servicing a very wide area. Although the area is sparsely populated, the challenge of distance and time complicates the delivery of medical services. Dr. Grossmann presented his vision of a medical avatar, a combination of technologies that will perform 80% or more of the routine medical cases in a consistent, timely and cost-effective manner. Combining the technologies of mobile, voice recognition, virtual reality, artificial intelligence, machine learning and augmented reality forms a new silicon entity – a medical doctor avatar. He also introduced a company, sense.ly, that is working to deliver similar services (video here: http://www.sense.ly/index.php/applications/).

If such systems can deliver medical services, then why not risk management? For example, given permission, a system would monitor the purchases of a small company and identify when the historical pattern changes, e.g., when the company begins to buy new types of materials. Using predictive algorithms, the pattern can be compared against others to evaluate if there is likelihood that the company is now performing new business operations. The avatar could then contact the small business, or could signal human intervention by an underwriter to evaluate the necessity for an endorsement to a policy to cover the new business operation. Eventually, some of these interventions would also be handled through machine-to-machine communication and would allow the endorsement to take place automatically.

Someone will build a risk management avatar. The question is, who will do it first?