In our last blog we discussed how a properly operating fire sprinkler system is an effective fire safety tool. But what if your fire sprinkler system does not work for two reasons–either because it was recently activated by a fire or accidentally, or ...

 

PSA Insurance and Financial Services - 5 new articles


Don’t be Left High and Dry with an Impaired Fire Sprinkler System

In our last blog we discussed how a properly operating fire sprinkler system is an effective fire safety tool. But what if your fire sprinkler system does not work for two reasons–either because it was recently activated by a fire or accidentally, or because it is currently shut down due to maintenance? If you don’t have a safety protocol in place for when your system is temporarily shut down (aka impaired), you could be facing serious consequences. First, you are at an increased risk of not being able to quickly put out a potential fire. Second, the insurance carrier might increase your premium. Third, your insurance claims could be denied in the event of a fire.

In this blog, we will discuss nine basic steps you should take to protect your employees and property as well as satisfy insurance company requirements anytime your sprinkler system is impaired.

Steps to take when your fire sprinkler system is impaired

Most insurance companies require you to have some form of fire safety impairment procedure. The steps below, provided by the National Fire Protection Association (NFPA 25–Standard for Inspection, Testing, and Maintenance of Water Based Fire Protection Systems), can serve as a solid foundation to start designing a custom program for your organization.

  1. Determine how much of the system is impaired. Inspect affected areas and document what type of increased fire hazards you might be facing depending on the severity of the impairment and where it is located in your building. This will also help estimate the length of period for which your system will likely be impaired.
  2. Present safety recommendations. You should discuss your findings and potential solutions (such as moving combustibles away from fire-prone areas to reduce fire hazards, pause any work that could generate heat or sparks, remove flammable liquids, etc.) with your building management or the person responsible for safety at your company.
  3. Mark the affected area. Hang a tag that indicates at least the following information:
    • The part that is impaired
    • Reason for impairment (recent fire, accidental discharge, maintenance…etc.)
    • Estimated date and time of impairment
    • Contact name and phone number of the person managing the impairment

Some state and local regulations may require specific wording and graphics–check with your insurance carrier to see what specific regulations apply to your situation.

  1. Reduce fire loss exposure. If the impairment will last for more than 10 consecutive hours, for instance due to a delay in receiving the damaged part for the system, you should implement one of the following options:
  • Evacuations – temporarily move your employees from the work space that has a non-functioning fire sprinkler system.
  • Fire watches – designate an employee or someone from your building maintenance crew to periodically walk the affected area to make sure a fire hasn’t started accidentally. Fire watches are required 24 hours a day while your system is being restored.
  • Establish a temporary water supply – while this might be a bit harder to accomplish, you may choose to rent tanks of water from a water delivery supplier or arrange for above line temporary piping from the water company. Temporary water supplies must be approved by the authority having jurisdiction – usually your local Fire Marshal.
  • Eliminate potential ignition sources and flammable materials – make sure to turn off or remove equipment from the affected area that might be causing sparks and remove any liquids or other materials that are combustible.
  1. Notify employees. Let supervisors and employees who work within the affected area know about the impairment. Encourage them to be vigilant given the increased potential fire risk.
  2. Notify all vendors and authorities. Also inform your insurance carrier, fire alarm company, property owner/manager, and the fire department. Be prepared to provide the following information:
  • Your name
  • Company name
  • Telephone number
  • The equipment impaired
  • Whether this is a partial or complete impairment
  • Estimated length of impairment, and
  • Any precautions you’ve taken to reduce fire risk while your sprinkler system is not working

Notifying your insurance carrier is critically important when it comes to your coverage. Most policies will contain some form of language stating that damage caused by fire is not covered if you didn’t notify the carrier of any impairment prior to the incident, or if the safety equipment wasn’t properly maintained.

Check with your insurance carrier about their specific notification requirements. The time within which you need to report the impairment can range between 2 to 48 hours. Also, some carriers will require notification over the phone, while others will ask you to use their online reporting system.

  1. Reduce delays in restoring your system. Ensure that all tools and materials are at the site to avoid unnecessary delays in reactivating your fire sprinkler system and minimize your exposures.
  2. Test and verify. Once all parts of the system are restored to normal working order and the alarm is reset, verify that your vendor or maintenance crew has inspected and tested the fire sprinkler system.
  3. Notify again. Don’t forget to once again inform all parties listed in step six that protection has been restored. You can now remove the impairment tag.

As mentioned above, you can use these steps to build your own impairment program tailored to your organization. If you need further resources, you may also want to ask your insurance company to provide you with their specific requirements of what should be included as well as a sample written program that can be customized to your operation.

Should you need any assistance with designing a fire protection system impairment procedure, contact me at spomponi@psafinancial.com.

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Not #YouToo —Measures Against Workplace Harassment

We’ve all seen the high volume of harassment claims in the news lately with accusations against many public figures including politicians and celebrities. If this many harassment claims are coming to light on a public scale, you can bet that these types of incidents are just as prevalent in everyday businesses. In fact, we’ve seen an increase in workplace harassment claims; in 2017, the EEOC reported an estimated $46,300,000 in monetary settled benefits regarding sexual harassment claims.

In light of these statistics, it is becoming increasingly critical to have sound best practices to protect your organization and employees. This includes having an employee handbook with a solid workplace harassment policy, insurance and the right procedures to handle a claim or a potential lawsuit. If you don’t have any of these, or you are not sure how well your best practices would protect you in court, keep reading.

To help you develop and implement strong workplace harassment prevention best practices, I reached out to Howard Kurman, a renowned employment attorney at one of our partners, Offit Kurman PA, to get his professional, legal perspective. With over 40 years of experience, Howard regularly counsels clients on all aspects of proactive employment and labor issues.

Check out below our 2-part interview series with him sharing best practices of how to proactively mitigate workplace harassment exposures. In this post, we’ll discuss how to prepare for and prevent a potential incident.

Q: With the proliferation of the “Me Too” movement, what are the most critical proactive measures that any company can take to mitigate the risks of liability for workplace harassment claims?

A: This question combines some legal and cultural actions that companies need to take.

First, companies should have a clearly communicated and disseminated policy on sexual AND workplace harassment. What people don’t always realize is that workplace harassment (based on religion, race, disability, etc.) encompasses much more than just sexual harassment. Therefore, any company needs a very comprehensive workplace harassment policy, which also includes protective language against any type of retaliatory action against either the person bringing the complaint or anyone participating in the investigation.

Second, I strongly recommend any company to purchase a well-structured comprehensive Employment Practices Liability Insurance (EPLI) policy to protect against potential lawsuits that may result from an employment-related claim. Be sure to select a policy that offers you the option to work with a law firm of your choice when you need legal representation. Most EPLI policies will also provide you with a certain number of free or discounted hours with an attorney.

Third, you need to have effective and comprehensive training for all employees. Simply showing videos to them or distributing outlines of training materials, as many companies often do, is not enough.

Q: Should a company use a template or work with an attorney when developing an employee handbook and workplace harassment policy?

A: I have never been in favor of a client simply taking a policy verbatim off of the internet for instance, because each company faces exposures specific to the nature of its business.

For example, if you’re a manufacturing company, your risks might be much different than those of a professional services company. So you need to assess the nature of your workforce and culture. It might make sense to work with your employment law attorney to draft a comprehensive policy that best suits your organizational needs and goals.

However, if you are using a template, just be sure to have it vetted by a legal counsel in order to avoid possible risks. I think it’s penny-wise and dollar-foolish to do it on your own, especially when drafting harassment policies can be done very affordably these days. In my experience, it is critical to have a comprehensive handbook or policy, which is one of the first documents a plaintiff’s attorneys will reference in the event of a claim or litigation.

Q: Firms are focused on improving culture as a strong way to retain and attract talented employees. This often means more company happy hours, employee appreciation, and other fun gatherings that may create opportunities of workplace harassment. Do you have any advice on how to prevent and handle this risk?

A: I’ve always believed that a company culture begins at the top. It’s imperative that leadership sets appropriate examples and clearly communicates expectations to all employees as well as provides guidance on what breaches of the company’s code of civility or professional conduct that may rise to the level of problematic workplace harassment.

All employees need to understand that, whether at an internal or external networking event, they are the representatives of the company, and their actions can have legal ramifications for the organization.

Stay tuned for the second part of this series, in which we’ll discuss steps you can take to effectively handle workplace harassment when it does happen to avoid potential costly claims and lawsuits.

In the meantime, don’t forget that combining a comprehensive workplace harassment management plan with a solid EPLI policy is the best defense to protect your company from a costly employment or workplace claim. I recommend teaming up with a trusted insurance advisor for your EPLI policy needs and a reputable law firm for your workplace harassment policy or employee handbook. Should you need any assistance with your employee policies, contact hkurman@offitkurman.com. Similarly, if you have any questions regarding how to structure your EPLI policy for your organization, fell free to reach out to me at cmorsberger@psafinancial.com.

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PSA Partners with Loyola University Maryland to Invest in its Future Leadership

PSA is excited to celebrate its inaugural class of Loyola’s Advanced Leadership Development Program. The program has been successful, with participants rating the program 91 out of 100. Roughly a quarter of PSA managers participated in the five-day program, which was spaced out over several months and focused on a wide range of leadership-related competencies.

“I was hoping for a program to help me develop leadership skills and give me tools to grow,” says Mike Volk, VP of Cybersecurity Insurance. “And I did—but I also learned so much more. I developed relationships with people at PSA who I don’t usually work with. The biggest benefit of the program, I believe, was strengthening my professional relationships and seeing the continued improvement to our company culture.”

As someone who both spearheaded and participated in the program, I can attest to the program’s value and positive impact on our culture and productivity. I learned about leadership philosophies and tools, which helped me raise my self-awareness and better understand my peers. I also gained insight into how I can lead and work with different types of personalities. Now I feel better equipped to deliver feedback, handle conflict, and motivate others.

Employee development continues beyond graduation. Our program participants are getting a real-world experience by practicing what they’ve learned in class through working on new initiatives. One of the organization-wide projects the teams are launching include identifying a variety of approaches to build deeper relationships with our clients and better understand their needs to improve our services. As part of another initiative, we are also assessing and exploring new ways to build skill, management, and leadership trainings to help develop future talent for PSA.

I’m encouraged not only by participants’ performance and personal growth so far, but also by how many PSA employees showed interest in developing professionally and personally—admission to this past class was highly competitive, with only 26 percent of applicants being selected. As a result, PSA will continue to bring more training and leadership development opportunities to facilitate professional growth, boost morale and improve our abilities to provide better service to our clients.

Interested in learning more about leadership and employee development? Please feel free to reach out to me at jnash@psafinancial.com.

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PSA in Good Health October Tips

Regular health exams and tests can help find problems before they start or in the early stages, when your chances for treatment and cure are better. By getting the right health services, screenings, and treatments, you are taking steps that help your chances for living a longer, healthier life.

For more information about preventive care and recommended screenings based on your age and gender, click on the buttons below to download the flyers in English and Spanish, or contact me at Dherndon@psafinancial.com

Download English   Download Spanish

 

 

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IRS Provides Guidance on Employer Tax Credit for Paid Family & Medical Leave (Benefit Minute)

The Internal Revenue Service has issued Notice 2018-71 which provides guidance on the employer tax credit for paid family and medical leave.  This new tax credit was established by the tax reform bill passed in December 2017 and applies to wages paid in the 2018 and 2019 tax years.

Eligible Employers

An employer need not be subject to the Family and Medical Leave Act (FMLA) to qualify for the credit.  Any employer with a written policy in place that provides for family and medical leave may qualify if certain requirements are met.  The employer’s written policy must provide all qualifying employees with at least two weeks of paid family and medical leave (pro-rated for part-time employees) at a rate of at least 50% of the employee’s normal wages.

If the employer is not subject to FMLA or has employees in locations that are not covered by FMLA, the written policy must include specific non-interference language.

An employer that wishes to claim the credit but does not have an appropriate written policy in place may adopt a policy retroactively as long as:

  • it is adopted on or before December 31, 2018, and
  • retroactive leave payments are made to bring the leave policy into compliance for the entire taxable year.

If an employer has an existing written leave policy that covers different types of leave, this may satisfy the written policy requirement.  However, only paid leave specifically designated for one or more FMLA purposes qualifies for the credit.

Qualifying Employees

The tax credit applies to qualifying employees, defined as any employee (whether full time, part time or other) who has been employed for one year or more and whose compensation for the preceding year is equal to or less than 60% of the qualified plan highly compensated employee definition ($120,000 in 2017 and 2018).  Therefore, in order for an employee to be a qualifying employee in 2018, the employee’s prior year compensation must be $72,000 or less.  Employees who do not satisfy the definition of a qualifying employee do not have to be provided paid family and medical leave.

Family and Medical Leave

An employer may claim the tax credit only if the leave is designated for one or more specific FMLA purposes and cannot be used for any other reason.  For example, a written policy that provides for 6 weeks of annual paid leave for the birth and care of a newborn which cannot be used for any other reason is paid family and medical leave that qualifies for the credit.

Conversely, a paid time off policy that allows leave to be used for FMLA purposes and for other reasons such as minor illnesses, vacation or other personal time does not qualify.

Any leave paid by a state or local government or required by state or local law does not qualify for the tax credit.  However, if an employer independently satisfies the minimum paid family and medical leave requirements over and above any amount provided through a program mandated by state or local law, then an employer can claim the tax credit for those amounts.

Paid leave provided under an employer’s short term disability program, whether self-insured or provided through an insurance policy, may be characterized as family and medical leave if the payments qualify as wages (i.e. taxable income to the employee) and otherwise meet the requirements.  All qualifying employees must be eligible for the short term disability program.  To the extent that an employer’s short term disability policy contains a pre-existing condition exclusion such that an employee who has been employed for one year or more will not be covered, the program will not qualify as paid family and medical leave unless a supplemental paid leave arrangement is available.

Calculating and Claiming the Credit

The tax credit is calculated as the “applicable percentage” of wages paid to qualifying employees during any period of family and medical leave.  The applicable percentage is 12.5% when the paid leave is 50% of wages normally paid and increases by .25% for each percentage point by which the rate of leave payment exceeds 50%.  The employer’s rate of payment or period of paid family leave does not have to be uniform with respect to all qualifying employees and for all FMLA purposes.  However, the minimum paid family and medical leave requirements must be satisfied for all qualifying employees.

For example, a qualifying employee who is normally paid $1,000 per week takes 4 weeks of paid family and medical leave at 75% of normal pay.  Payments for family and medical leave total $3,000 and the employer may claim a credit of $562.50 ($3,000*18.75%).   18.75% is calculated as the base credit rate of 12.5% plus 6.25% (25 percentage points above 50% multiplied by .25%).

For purposes of the tax credit, wages are defined as all remuneration for employment subject to the Federal Unemployment Tax Act (FUTA).   Overtime (other than regularly schedule overtime) and discretionary bonuses are excluded from wages regularly paid.

Tax-exempt employers who are not subject to FUTA but have unrelated business taxable income may not claim the credit.

An employer may claim the tax credit only for family and medical leave payments made on or after the date an employee became a qualifying employee.  The tax credit is available for a maximum of 12 weeks in any taxable year of the employer.

The tax credit will be claimed on IRS Form 8994, Employer Credit for Paid Family and Medical Leave and Form 3800, General Business Credit.  To the extent that an employer claims the tax credit for paid family and medical leave, any available tax deduction for those wages paid is reduced by an amount equal to the credit claimed.

Employee Notice

There is no requirement that an employer provide notice to employees regarding the written policy for paid family and medical leave.  However, if an employer chooses to provide notice, it must be communicated in a manner reasonably designed to reach each qualifying employee, such as through the use of email, internal websites, employee handbooks or posted displays in employee work areas.

Further Guidance

The Department of Treasury and the Internal Revenue Service have announced that they intend to publish proposed regulations regarding the tax credit for paid family and medical leave.

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