Tag Archives: workplace

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.

Wearable Tech Raises Privacy Concerns

Workers’ comp insurers are applauding wearable tech initiatives as a potential way to monitor and reduce workplace accidents and injuries. But some observers are asking at what cost to privacy.

AIG recently announced its strategic investment in tech startup Human Condition Safety (HCS). The start-up, a spin-out of Human Condition Labs, develops wearable technology that incorporates artificial intelligence, building information modeling and cloud computing to try to prevent workplace injuries. The company is targeting industries that hold the highest risk for workers, including heavy manufacturing, energy, warehousing and distribution, mining, transportation and construction.

Because state laws require businesses to provide medical coverage, rehabilitation services and lost wages to injured employees through workers’ compensation programs, coverage in this area is one of the insurance industry’s largest product lines. By decreasing employee injuries and deaths through wearables, the industry believes it may be able to lower costs and increase profits for itself and its clients. Employers have many incentives to test these products in their work environments.

But before concussion-detecting sensors in hard hats or fatigue-monitoring wristbands become widespread for workers, the tipping point may be that issue of privacy. Experts in workers’ comp say companies must first investigate employment legalities and may need to negotiate with labor unions.

As a result, insurance defense law firms that defend workers’ comp claims will want to pay close attention to emerging technology trends such as wearable tech and other similar innovations for the following reasons:

  • Any safety initiatives that may reduce the number and severity of claims will reduce the number of claims that need to be litigated.
  • There will be privacy implications for both employees and employers. When it comes to granting access to individuals’ behavior and health information, law firms need to familiarize themselves with the type and purpose of data being collected, as well as the protection of that data.
  • Insurance carriers will continue to evaluate how new technologies might eliminate claims and reduce claims costs.

Wearable tech is still in its infancy because employees need to be convinced that the information collected for the safety of the greater good is worth it. Pilot programs underway may take a year or more before they are actually put into practice in workers’ compensation insurance programs, but insurance defense law firms will want to demonstrate an understanding of these technology trends to better serve the needs of insurers and their insureds.

Read more news about the insurance defense market at www.insurancedefensemarketing.com.

Triathlete’s View on Workplace Wellness

We frequently get complaints from “average” employees about wellness, and our most popular article on the Huffington Post was about the fat-shaming aspects of wellness programs that obsess with BMIs.  (Weight discrimination under the guise of weight control is one of the hallmarks of wellness, of course.)

But what about triathletes? What about people for whom those wellness incentives are a complete windfall? They can collect money for what they do anyway, sort of like when you buy something at a store and don’t learn it was on sale until you check out.  Obviously, as the beneficiaries of these programs’ largesse (at the expense of other employees indirectly, of course), fitness buffs should embrace wellness, like –to quote wellness apologist Larry Chapman — “a beloved pet.”

Sure, if that pet is the Hound of the Baskervilles.

tasmanian devil

(Note to the literal-minded.  This isn’t actually the Hound of the Baskervilles, who declined to sit for a photo session. This isn’t even a dog, as far as we know.)

I’d encourage you to read this critique of Virgin Pulse’s program in its entirety.  You’ll have to scroll down through the blog post (not too fast – you’ll miss the review of Quizzify) to Comment No. 3, but it’s worth a full read to capture the essence beyond these excerpts.

First, Virgin Pulse — here’s a shocker — can’t do math.  Because of its innumeracy (also one of the hallmarks of wellness), Virgin is accomplishing exactly the opposite of what wellness is supposed to do:

When I ran 5 miles in 50 minutes, at a 10-min/mile pace, I got more points for having >45 min of active minutes, but when I actually ran it faster, say, 8-min/mile pace which gave me a 40 min time, I only got >30 min activity, and fewer points, despite performing a much harder task. Nothing like being punished for being successful.

And Virgin Pulse apparently can’t do wellness either (yet another hallmark of the wellness industry):

Those of us who lift weights and do things that do not have “steps” but require greater physical acumen are greatly disadvantaged. Sadly, most government programs place a higher priority on “aerobic” activity rather than strength training. This “cardio = fitness” mentality is about 30 years behind the times.

The author, of course, is completely correct about this on multiple dimensions. Virgin Pulse’s information is way out of date, outdated information being — you guessed it — yet another hallmark of the wellness industry.  Among other things, giving “points” for cardio but not strength will increase back pain and other musculoskeletal problems, which account for a vastly higher share of employer health spending than the 1-in-800 incidence of heart attacks – in two different ways:

  1. Strength exercises are now shown to be the best way to prevent and control back pain.
  2. Obsessing with “steps” increases the likelihood of falls, sprains and repetitive motion injuries.

At the risk of “burying the lead,” here is another thing Virgin managed to do:

It can also be annoying to be reminded constantly to get my mammogram. I am a breast cancer survivor and have had a double mastectomy. No mammograms for me. How insensitive of you!

After several paragraphs of other observations about the intrusiveness (still another hallmark of the wellness industry, in this case including monitoring employee sleep), she concludes:

The entire program is childish and silly. Another “social media” forum for people to get imaginary medals or stupid stuff while [Virgin] surreptitiously inserts little “healthy” reminders that may or may not be considered current health information. [Editor’s note: The majority of Virgin’s “1,440 habit-building interactions per member per year” are self-evident and cliched, outdated, wrong, unrelated to wellness or controversial.]

I’m sure there are better ways to promote corporate fitness that are not insulting to the intelligence of adults. As a personal trainer and health coach, I’d be happy to give you a few ideas.

Here’s one idea: Require wellness vendors to know the first thing about wellness.

The CIO’s 4 Priorities for 2016

If you had the luxury of focusing on one thing in 2016, what would it be? We polled nearly 1,000 Twitter users regarding their perception of the No. 1 resolution that chief information officers (CIOs) should have in 2016. Here’s a list of four areas where respondents feel CIOs should channel their resources in 2016 to meet growth expectations:

  1. Mobile apps
    40% of respondents said mobile apps should top the CIO’s agenda. Only a select few enterprises have strategically employed mobile to drive business transformation and facilitate dynamic customer experiences. Given that there are now more mobile devices than people, mobile demands a place in every corporate strategy. So, it’s not surprising that poll respondents say CIOs should push mobile to the prime spot on their to-do lists. As they do, here are three things they should keep in mind:

    • Design and execute a strategy that considers customer needs and digital experiences spanning existing and new business models, agnostic of platform or device.
    • Do more than make the same content available on a smaller screen. Instead, focus on mobile’s fundamental distinctions (always accessible, convenient, high personalization), enabling increased engagement and delivery of a new and better customer experience.
    • Treat mobile as an enterprise-wide initiative and bring change to the entire organization (people, process and technology). This requires commitment and consistent messaging from leadership and cross-functional collaboration.
  2. Data-driven insights
    25% of respondents to our poll said data-driven insights should be priority No. 1. CIOs who want to take the guesswork out of their decisions should explore the Internet of Things. CIOs can add sensors to people, places, processes and products across the value chain to capture and analyze information to advance the goals of the organization. By mapping different sensor outputs to enterprise events, companies can take “business activity fingerprints.” These data-driven, digital impressions can enable companies to match actual sensor outputs with pre-tested business scenarios to prioritize and direct resources, improve workplace safety, reduce wasted effort, streamline product and people flows, strengthen relationships with customers and increase revenue.
  3. Work more with the CMO
    21% of respondents want the CIO to work more with the chief marketing officer (CMO), which is encouraging. The CMO is a critical part of the new digital world, yet our Digital IQ survey shows that the CIO-CMO relationship is the weakest and has been over the last three years. Collaboration is key to bringing all of the distributed investment together – and it appears we haven’t figured it out yet. Maybe 2016 is the year that CIOs and CMOs will work together productively to usher in digital transformation. Without a CIO-CMO partnership, digital deployments are shallow, instead of deep, and fail to live up to their revenue-generating potential.
  4. Emerging tech evaluation
    14% of those who answered the poll say CIOs should spend more time on emerging technology evaluation. As they do, they should consider overhauling their process for filtering and prioritizing emerging technology. I often see three different types of approaches with varying degrees of success: 1) vendor-driven, 2) technology-driven and 3) business-driven. In the first approach, vendors are in the driver’s seat, and businesses can end up with cookie-cutter solutions late in the game. The second option, a technology-driven approach, can lead to deploying technology for technology’s sake rather than to advance the enterprise’s business goals. The last approach is ideal and driven by the unique needs of the business.

French writer and aviator Antoine de Saint-Exupery said a goal without a plan is just a wish. Thinking about CIOs engaging in goal setting reminds me of the late Steven Covey’s Time Management Matrix. CIOs tend to focus on what is urgent, while neglecting what is important. Resolutions are always at risk of getting sidelined as CIOs focus on putting out fires rather than sowing seeds. CIOs need one additional resolution: to make what’s important as much of a priority as what’s urgent.

Please share your No. 1 resolution in the comments section.

How On-Demand Economy Can Prosper

Even some of the most successful innovators in history would tell you, “Don’t quit your day job.” George Eastman worked full-time while tinkering in his mother’s kitchen on the inventions that let him found Eastman Kodak in the late 1880s. A century later, Steve Wozniak worked at Atari while developing the computer that he and Steve Jobs would turn into Apple. The fact is: No matter how great the idea, or how great a worker’s skill, it’s hard to mesh with an existing enterprise or any other group.

The reason is explained by Nobel laureate economist Ronald Coase in his influential 1937 essay, “The Nature of the Firm.” He theorized that people choose to organize themselves in companies and corporations rather than contracting their services out directly because of transaction costs. He cited: search and information costs; bargaining and decision costs; and policing and enforcement costs. “Within a firm, these market transactions are eliminated, and in place of the complicated market structure with exchange transactions is substituted the entrepreneur coordinator, who directs production,” he wrote.

Essentially, marketing, selling, pricing, negotiating and getting paid as a self-employed person isn’t all rainbows and unicorns – the work critical to running a business can be enormously complicated, time-consuming and costly.

Thanks to technology, much has changed since 1937. Mobile connections, broadband and ubiquitous data have reduced transactional search and information costs considerably. It is much easier, faster and economical for a small business to effectively compete with larger firms.

There has been a major shift in our buying behavior, too – consider how profoundly Amazon or iTunes has altered the way we discover, compare and purchase goods. Companies like Uber have used technology to reduce our search and information costs, as well as our bargaining and decision costs and policing and enforcement costs. If reducing one transactional cost shifts the economy, then reducing all three transforms it….

We are now officially unlocking the potential of the on-demand economy – one that will revolutionize the 21st century workplace and workforce. It’s so new, we haven’t decided on a name for it yet; it goes by various monikers like Uberization, the gig economy, the on-demand economy, the access economy and the peer-to-peer economy.

This on-demand economy offers the exchange of goods and services between individuals instead of from business to consumer. The people providing goods and services aren’t necessarily employed by the company connecting them with the customer, either. Many are independent contractors or freelancers.

Technology acts as the intermediary automating the handling of pricing and payments, vetting providers through a user-rating system and matching providers with consumers’ needs. This intermediary speedily brings together supply and demand via a platform that can be controlled by an app on any mobile device. The platform makes information available and accessible in the manner most efficient for the business, ensuring that transactions that are started are more likely to be concluded. The platform often obviates bargaining, directly polices its members, enables community-driven self-policing and enforces the terms of interaction. The costs of this coordination is added to each peer-to-peer transaction.

The new economic model is a highly efficient, productive and cost-effective marketplace. Platforms like Luxe, Lyft and Uber offer transportation services; Caviar, Doordash and Munchery deliver food from local restaurants; Instacart will shop for and deliver grocery orders; AirBnB, HomeAway and Onefinestay connect renters and homeowners offering available space with people seeking accommodations; Handy, Taskrabbit and Thumbtack will help a household find an available plumber, drywaller, cleaner or furniture assembler; and delivery services like Postmates and Shyp will pick up, pack up and send packages.

There appears to be no lack of supply or demand in this rapidly evolving phenomenon. Almost 53 million Americans currently serve as providers to on-demand platforms, at least part-time. Having goods and services on demand satisfies our need for “instant gratification” and allows consumers to find a broad array of competitively priced services 24/7 – they can get what they want, when they want with the touch of a few buttons.

The advantages for providers are many, too. No longer saddled with the time-consuming chores of the self-employed, like marketing and promoting services, negotiating transactions or chasing down payments, the on-demand economy provides freelancers with a turnkey, hassle-free method of accessing a large market of ready-and-willing customers whenever they want to work. It’s freelance freedom and flexibility with almost no barriers to entry.

You don’t need to be an economist to envision how the on-demand economy business model can benefit the marketplace as a whole: The Ma & Pa local restaurant that can easily deliver through a fleet without incurring staffing costs can substantially expand its market and service underserved markets. People can now use their cars to transport passengers and generate income rather than leave vehicles parked in driveways, resulting in a very good use of underutilized resources;. And, when a student can help an eBay seller package and deliver parcels on the fly, a job and professional support network are created that had not previously existed.

The new economy is here. It’s poised to democratize the marketplace and its workforce by maximizing underused assets, creating jobs, expanding markets and meeting the needs of underserved markets, all while creating a faster, easier way for us to get what we want, when we want it.

But this new business model comes with new world challenges as the distinction between personal and commercial activities becomes blurry. To thrive, policymakers, regulators, insurers and the companies enabling the new economy will have to work together to design a platform that protects consumers when they are operating as businesses.