Tag Archives: employee

Epic Policy Failure on Contractors

“The rest, in swarms, will overrun the boat deck

They’ll lose all sense of right and wrong

It will be every man for himself, all right!

The weak thrown in with the strong!”

Titanic, A New Musical (1997)

On April 30, 2018, the California Supreme Court issued its opinion in Dynamex Operations West, Inc. v. Superior Court (2018), 4 Cal. 5th 903. The court filled a void, in its view, of how to determine whether someone was an employee subject to wage orders of the Industrial Accident Commission.

Even before the ink fully dried on this monumental opinion, the California legislature sprang into action. Assembly Bill 5 (Gonzalez) was introduced on Dec. 3, 2018, to codify this new rule of law and to expand its “ABC test” to unemployment and workers’ compensation. From that effort then sprang a comical – or tragic, depending on your point of view – effort by a multitude of businesses to gain a reprieve from the ABC test, which was adopted by the court without legislative blessing, or even at the urging of the parties in the litigation, in an effort to curb the abuses of misclassification of workers as independent contractors.

AB 5 granted various forms of absolution to a multitude of businesses. Some achieved an appropriate complete exemption from the now-codified ABC test. Others are now compelled to go through various requirements to achieve dispensation, some requirements either being hopelessly ambiguous or impossible (or meaningless) to comply with. Still others were left outside the cathedral doors (also known as the Capitol in Sacramento) in hopes that their petitions for relief would be heard.

The ABC test as codified and amplified by AB 5, now Labor Code § 2750.3, is a complicated set of outright exemptions, quasi-exemptions and – as was seen with the case of various freelance artists and writers – exemptions that were illusory in the face of the reality of such work. The freelancers began an aggressive campaign last fall to get the law changed in 2020. In some respects, their efforts are succeeding.  

When the legislature returned in 2020, there were dozens of bills introduced to delay, modify or outright repeal AB 5. Most were by Republican authors, and most were never heard in policy committees: the Assembly Labor and Employment Committee or the Senate Labor, Public Employment and Retirement Committee. Today, changes to AB 5 will have to come from two bills by the same author, Assemblymember Lorena Gonzalez (D- Dan Diego), who is also the author of AB 5. The first bill is Assembly Bill 1850 (Gonzalez), the second Assembly Bill 2257 (Gonzalez). Both bills are moving in the legislative process. AB 2257 specifically deals with the issues raised by freelancers. According to the analysis in the Assembly Labor and Employment Committee, California Freelance Writers United supports the measure, as do many others in the art, music and content-creation industries who use freelance workers. And, per the analysis by the Assembly Labor and Employment Committee, Assemblymember Gonzalez intends to add an urgency clause to AB 2257, meaning that it would become effective on signature by the governor and not upon Jan. 1, 2021. And so, freelancers achieved their objective.

AB 1850 includes the same language as AB 2257, at least for the moment. It also contains much more. This includes rewriting and reorganizing Labor Code § 2750.3 and adding still more exemptions from the ABC test. 

As proposed in AB 1850, there are nearly 50 occupations or business relationships that are not subject to the ABC test in Labor Code § 2750.3. Some of these exemptions are based on occupations, some on occupations provided that certain criteria are met and some on business-to-business or referral agency relationships. Many of these exemptions will require a careful analysis by a business if they are to be sure of passing muster with the labor commissioner, the Employment Development Department (EDD) and workers’ compensation insurance company premium auditors. The exemptions, in one form or another, maintain the venerable multi-factor test in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 or, in the case of occupations where the legislature augmented this standard, what is now called “Borello +.”  

See also: How to Lead and Collaborate in Claims  

The business-to-business exemption remains inscrutable and should particularly cause persons involved in a franchise relationship great concern even as the applicability of Dynamex to franchises remains the subject of significant litigation. The problem remains that, while the relationship between a worker and a business service provider is governed by the ABC test, the statutory language in Labor Code § 2750.3 refers to the degree of control of the contracting business over the business service provider and not the employees of the business service provider. This seemingly obvious distinction was not clarified by the Sept. 13, 2019, letter from Assemblymember Gonzalez to the Assembly clerk trying to explain on the one hand whether a business service provider was an employee of the contracting business while also stating that nothing in AB 5 was intended to change the laws relating to joint employment.

The claimed abuses of application-based drivers and service providers have frequently been cited as the raison d’être for AB 5. There is a battle in the California courts over the classification status of workers in the digital marketplace. Most recently, on May 5, 2020, in People of the State of California v. Uber Technologies, San Francisco County Superior Court No. CGC20584402, California Attorney General Javier Becerra and several city attorneys stated:

“But rather than own up to their legal responsibilities, Uber and Lyft have worked relentlessly to find a work-around. They lobbied for an exemption to A.B. 5, but the legislature declined. They utilize driver contracts with mandatory arbitration and class action waiver provisions to stymie private enforcement of drivers’ rights. And now, even amid a once-in-a-century pandemic, they have gone to extraordinary lengths to convince the public that their unlawful misclassification scheme is in the public interest. Both companies have launched an aggressive public relations campaign in the hopes of enshrining their ability to mistreat their workers, all while peddling the lie that driver flexibility and worker protections are somehow legally incompatible.”

This lengthy polemic is another way of saying Uber and Lyft (among others) have gone and filed an initiative to deal with the classification issue. Well, shame on them.

On May 22, 2020, the initiative, “Protect App-Based Drivers and Services Act,” became eligible for placement on the November 2020 ballot. If it is not withdrawn by June 25, the voters of California will decide whether app-based workers, such as those for Uber or Lyft, are employees or independent contractors. The issue, as you might assume, is clearly more complicated than that, given the various requirements in the initiative necessary to qualify for an exemption to the ABC test.

See also: 4 Key Changes to WC From COVID-19  

It is safe to assume that the initiative polls very well with the public. It also is likely to pass.

So, by next year, the ABC test, “… whose objective is to create a simpler, clearer test for determining whether the worker is an employee or an independent contractor,” (Dynamex, 4 Cal. 5th 951, fn. 20) will have dozens of exemptions acquiesced to by the legislature and, likely, an exception that nearly overwhelms the rule should the initiative pass on app-based drivers and service providers. 

Why are we doing this? It is an epic public policy failure to suggest the only distinction between an entrepreneurial worker and an exploited one is whether 21 senators, 41 Assembly members and one governor in Sacramento decide to issue a pass. It may be too late to reset the dialogue in California on this issue, between court challenges and, potentially, a successful ballot measure. It is not too late elsewhere, including in Congress.

3 Tips for Improving Healthcare Literacy

Today, innovative cost-containment solutions are helping employers “curb” the increasing cost of healthcare.  However, these solutions are only as good as the education tied to them.  A solution without effective education is useless and can even be costly.

Employee education has been a sticking point in the employee benefits world.  Many employers haven’t done a good job educating employees and have thus missed the boat on containing costs. According to a 2003 assessment (I know, old!) by the U.S. Department of Education, only 12% of U.S. adults have a proficient level of healthcare literacy. That is scary.

The days of educating the workforce about what they have, how much it costs and how to sign up are long gone. Stop repeating the same message year after year. The focus of your education has to be around improving the healthcare literacy of your workforce.

The good news is that there are consultants around the country creating some amazing messages. Folks like Jim Millaway, Gary Becker and Al Lewis are innovating the way benefit education is provided, helping employers reduce the cost of health insurance.

With that, let’s look at three employee education tips that can help you contain costs.

See Also: On Air Traffic Control and Health Costs

  1. Effective Education Is a Year-long Process

If your education strategy consists of nothing more than the annual open enrollment meeting, we need to talk and please keep reading! By the time your employees walk out of the meeting, they will forget 90% of what they heard; especially how to use a new cost-containment tool effectively. To ensure the new solution is a success, you have to keep the message in front of your employees all year long.

  1. Make Sure Your Message Helps You Accomplish Your Goal

Remember, your goal is to “curb” or even reduce the cost of your health insurance, so strategic education has to be a part of your long-term plan. Do not rely on the communication provided by carriers and vendors, as they are often too vague and provide information most of your employees already know (e.g. your smokers already know they should quit as their doctor has been telling them for years). To achieve your goal, you need to make sure your education aligns with the objective, improving health literacy. Focus on the kind of education that will help your employees help your medical plan save money. Strategic education is the wave of the future. Innovative solutions like Quizzify are giving employees the opportunity to become stewards of their own healthcare journey, helping both their checkbook and the bottom line of their employer.

  1. Your Message Has to Be Clear and To-the-Point

Trying to find the right avenue for educating the workforce is not easy. However, using newsletters and brochures to communicate your new cost-containment solution will not work because your employees will not read them. One way to get your message across effectively is through video. Videos only require employees to hit “play” and are short and to-the-point, and can be customized to convey the message you want.

Employees like the videos because little time and effort is wasted in watching and the employer is able to craft the message (with help) to best meet its objective. A video campaign can be a very effective way of improving the health literacy of your workforce through short, focused messages.

Crafting the right educational message is hard work and requires time and effort. But if it is done well, you will not only be happy about your new cost-containment solution, you will create a highly educated and empowered workforce that will have a positive impact on your bottom line.

How Advocates Can Reengage Workers

A historical challenge in workers’ compensation has been creating the best possible approach to communication: consistently reinforcing transparency, putting the injured employees’ needs first and reassuring them that their claims team is working in their best interests.

Employers today, more than ever before, are engaged in the workers’ compensation process and, in partnership with Sedgwick, have developed efficient healthcare and treatment solutions that provide the highest quality of care. They have also developed return-to-work programs that not only accommodate potential injury-related restrictions and ensure compliance with state and federal employment laws (e.g. Americans with Disabilities Act) but that also encourage employees to come back to work as quickly as possible. This approach ultimately results in an improved experience and outcome for all parties. The responsibilities of claims and managed care professionals encompass many activities that already assist with this process, but there is an emerging need to take employee care above and beyond the standard claims management efforts.

This expanded approach involves being an advocate for the employee by listening, communicating, providing information and proper medical care, explaining how this complicated process works—and being there to assist them at every turn. From the time an injury occurs to the moment the claim is closed, the examiners, the nurses and the colleagues who assist the employee all serve important roles that can have an impact on the outcome of the claim. It’s through their experiences that our industry can see the value of employee advocacy and the advantages it can bring for all parties involved.

Exploring the Shift in Philosophy 

There seems to be a change in the philosophy of employers as it relates to workers’ compensation injuries. Today, businesses are more interested in making sure their injured employees get everything they need to recover, and they are willing to spend the money and do all the right things as a part of their responsibilities as an employer. Instead of questioning claims, they are more focused on restoring the health of their employees. To do this successfully, employers must work closely with claims administrators to develop and implement a process around employee advocacy. This may include assigning a trained, knowledgeable member of the claims team to guide employees through the process or connecting them with a nurse who can assist with their medical concerns. There are different options based on the individual employer’s needs, but each one is designed around the same objective: improving injured employees’ health and well-being.

Surrounding the Employee With Support

The employee advocate typically performs an outreach to the employee after receipt of the first report of injury. The advocate is someone who asks how the employee is doing and offers a sympathetic ear. The advocate is also someone who has information on their claim and is connected to all of the resources available to assist the employee. This initial call can offer several advantages, including:

  • Reassuring the employee that the employer cares and that the employee is not going to lose his job for filing a workers’ compensation claim;
  • Providing guidance to the injured employee that could prevent a minor claim from becoming something major;
  • Answering initial questions to resolve possible issues that could lead to litigation—if the employee needs additional information, the advocate can get what she needs and call back; and
  • Keeping everyone calm at the outset of the injury and having a positive impact on the employee’s attitude.

In this role, the advocate becomes the employee’s key contact and will make sure the employee does not feel alone in this process. The topics for the advocate’s outbound calls may include explaining workers’ compensation; setting expectations related to claim investigation, medical bills, prescriptions, benefit payments and return to work; or explaining the roles of the adjuster or nurse case manager assigned to the employee’s claim.

Providing Specialized Clinical Advocacy

Clinical resources may be needed for an employee based on his injury. This type of advocacy includes a phone call from a registered nurse who will ask the employee how she is doing, answer her medical questions and direct her to the best provider for her injury. At this time, the nurse may also identify any psychosocial issues or other concerns that may affect the employee’s ability to recover or return to work, and the nurse may then direct the employee to behavioral health or return-to-work specialists.

Benefits and Proven Results

When employees are injured at work, this can be an unsettling time for them—filled with many questions. Providing upfront communication and a healthcare team focused on their well-being can make the process better for everyone. Employer benefits include reductions in litigation, medical costs and lost time. With the average cost of litigated workers’ compensation claims about 65% more expensive than non-litigated claims, reassuring employees and keeping them as happy as possible throughout the claims process can have immeasurable value.

We have experience working with several employers that have implemented successful advocacy programs. One is a retail company that has an advocate who contacts every employee on the first day of an injury to see how they are doing. This company’s goal was to reduce litigation, and it has accomplished that through this process. The company feels having someone reach out gives each employee a sense of security, as well as the reassurance that he won’t lose his job due to filing a claim and the feeling that he is part of a system that protects him.

Focusing on the Employee

Examiners, nurses, assigned advocates and other members of the claims and managed care teams all work together to ensure the injured employee has the best possible outcomes. Having a team to surround the employee with care and recovery solutions provides significant dividends related to the continuation of productivity and employee morale—and it can positively influence the overall view of their employer.

10 Reasons Why Healthcare Varies

Imagine your recommended medical treatment came with this warning label: “Your results may vary. Your results are not guaranteed. Outcomes can include preventable complications, up to (and including) hospital-acquired infections, hospital readmission and premature death.”

Caveat emptor or, “buyer beware,” has never been truer than in today’s healthcare system.

The use of evidence-based medicine) protocols delivers higher quality, lower prices and improved outcomes throughout the country for many different treatments. Scientific studies have proven the efficacy of following best-practice guidelines. Achievable results include reduced premature mortality, improved quality of life and better clinical outcomes, which means faster recovery.

See Also: Cutting Healthcare Costs Doesn’t Lower Quality

By no means is this a blanket assertion that the practice of all medicine can be reduced to a checklist, a differential diagnosis and a universal treatment regimen. The seven billion human beings on this planet each have trillions of cells and billions of possible variations. In addition, there are many social determinants of health, including social, economic and physical environmental factors.

The fact is, no treatment regimen works 100% of the time on 100% of the people.

However, there are proven, evidence-based strategies that effectively deliver higher quality and better outcomes with scale (which means lower costs). Therefore, it is incumbent upon healthcare providers and purchasers to live up to their fiduciary responsibility to act in the best interest of the consumer and the insured employee.

So, what happens in the practice of medicine that results in so much variability in treatment?

Today’s medicine is part science and part art. Unfortunately, for too many years, perverse reimbursement incentives have clouded and conflicted an industry that requires incredibly nuanced judgment on conditions with many variables and possible outcomes.

Outcomes are largely determined by the skill and experience of a physician or team of physicians. Parity may exist in professional sports, but that is not the case in the practice of medicine.

As a result, the practice of medicine is significantly influenced by individual providers and their practice patterns, beliefs, biases, needs and preferences, what we call “10 Reasons Why Medical Quality, Price and Outcomes May Vary.”

See Also: Healthcare Costs: We’ve Had Enough!

Depending on your location, your level of engagement and your particular treatment, the quality, price and outcome are likely to be affected by the actual provider of services. The following list includes 10 reasons why the practice of medicine is driven by the attitude, behavior and skill of the provider:

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The typical American healthcare consumer still believes he is a patient and acts accordingly to eliminate the illness, not always recognizing the role he plays in his outcomes. The irreversible change taking place is that individuals have to learn to become consumers of healthcare by becoming engaged and taking responsibility for both their life outside the medical system and the choices they make when accessing medical care. The risks are real.

Understanding the risk can empower recognition and awareness that acting like a consumer is in your best interest, and that might just save your life. For additional free assistance on avoiding wasteful, unnecessary or poor quality medical tests, treatments or procedures go to www.choosingwisely.org.

3 Things to Know on PPO Networks

Employers across the country are looking to provide employees with the largest and widest PPO networks as a means of giving employees choice.  Somehow the health insurance industry has determined that networks should be “all-inclusive.” The more medical professionals and facilities in your network, the better your network is. It is time to raise a red flag on this kind of thinking. Before your organization looks to increase employee access to doctors and hospitals, there are three things you must understand about PPO networks.

Larger Networks Can Lead to Larger Plan Costs

You hear it all the time. Insurance carriers battle over who has the largest network both locally and nationally. Now, having a network with a national presence can be appealing if you are an employer with facilities and a workforce scattered across the country. However, a larger network opens the door for greater access to poor-performing physicians and medical facilities. The bigger the network, the greater the odds your employees are accessing doctors and hospitals who are not on the right side of cost, quality and outcomes. As a result, your medical plan’s costs continue to rise year after year.

See Also: Untapped Opportunity in Healthcare

A Network “Discount” Can Be Misleading

In a typical medical plan, the majority of the member population will use the plan via day-to-day services such as preventive exams, sick children and the occasional medication. For these folks, a network discount does an adequate job reducing costs for both the member and the health plan. However, imaging, surgeries and hospital stays are driving plan costs today, and it is here where a network “discount” can be misleading. Yes, network discounts are still applied to these services and, yes, the discounts can be 50% or more. However, when facilities are allowed to charge 400%+ of the limit allowed by Medicare, you are not getting much of a deal at all. To put it into simple terms, if I told you my iPhone is worth $2,000 but agreed to sell it to you for a 50% discount, I would still be ripping you off.

Networks Often Block Creativity

Recently, I had an interesting conversation with a national insurance carrier about a mutual client. After a thorough review of the client’s claim activity, we uncovered several facilities that were providing imaging services (MRIs, CT scans, etc.) at a low cost, much lower than the same services provided at other facilities. Knowing this, the client wanted to give members incentives to choose the low-cost facilities when needing imaging services by agreeing to have the health plan pay 100% of the service, saving both the member and the health plan money. However, we were told “no” by the insurance carrier because it had a duty to “keep the rest of the network happy.” If we are going to create change in the health insurance market, employers need to implement creativity into health-plan design. Unfortunately, most PPO networks discourage this kind of thinking.

Remember, there is a place for PPO networks within the healthcare industry. However, if you are an employer looking for creative ways to give your employees access to high-quality, low-cost doctors and hospitals, do not count on PPO networks to pave the way.