What's in a number? Increases in I-9 enforcement and penalties

What’s in a number?  If we are talking about the increase in I-9 enforcement & penalties over the last 2 years, we are talking about a lot.

Picture this:  The Department of Homeland Security (DHS) walks into your office and orders you to comply with an unannounced audit of your I-9 documentation. Would they find your I-9s in order and how much of a fine can you afford?

With the national spotlight focused squarely on the immigration debate, the federal government has decided to deal with the controversial subject in a way that seems to make sense to most Americans – increased enforcement of rules that fine or otherwise penalize employers for hiring employees who are not authorized to work in the United States.  And the primary process and documentation for employers to prove authorization is through the I-9 documentation.

The issue at hand is that an estimated 35-55% of I-9s contain incorrect or missing information - resulting in the potential tens of thousand dollars in fines (or more) to employers.  Fines range from $110 to $1,100 per violation, and criminal prosecution may include forfeiture of assets, civil fines of up to $50,000, and prison terms.  Obviously it makes sense to get your ducks-in-a-row before the Department of Homeland Security (DHS) shows up on unannounced at your doorstep and orders you to comply with an audit within 72 hours.

According to the Bureau of National Affairs (BNA), reports of penalties from worksite enforcement inspections increased five-fold in Fiscal Year 2010 (which runs from October 1, 2009 to September 30, 2010).

ICE Activity	FY2008	FY2009	FY2010
Form I-9 Inspections	503	1,444	2,000
Criminal Arrests	135	114	170
Final Orders	18	52	214
Penalties	$675,209	$1,033,291	$5,300,000

So, how do you know if you might be a target for such an audit?  Short of having a crystal ball, the best method of determining targets is to look at your industry.  Are you in an industry that typically is known to hire illegal aliens?  Examples of these types of industries include construction, agriculture, and housekeeping.  If so, you can assure yourself that you are in ICE’s crosshairs.  Don’t think that since you are a small employer they won’t look at you – ICE looks more at the industry than the size.  Also, ICE works on credible tips.  If you hire illegal aliens, you may find that a disgruntled former employee (disgruntled due to low pay, working conditions, or fired/laid-off) might have turned you in.  Sometimes it is accidental – an employee is laid-off.  They go to file for unemployment or other social service.  During the interview process, a trained state or federal employee finds that they were not legally employed, which now opens the investigation process.

Now the big question: what do I do about it?

Actually, that is pretty simple – follow the rules (they really are pretty simple).  Whenever someone is hired, they are required to complete an I-9 form within 3 days of their hire date.  They must produce documents that are consistent with the instructions to provide proof of their legal ability to work in the United States.  If they don’t provide you with the documentation (or it looks phony, like “Social Security Administration” is misspelled), send them home until they can come back with legitimate documentation.  Note that you aren’t required to be an investigator, but it is often easy to spot the fakes.  I once had a client company that had 4 people with the same Social Security number!  There is an alternative called e-verify.  E-verify is very structured, very easy to use, and provides a great benefit – it is a Federal Government program.  That means, that if the feds give you the ok to hire a person, they can’t fine you for later finding out the documents used were false.  For legitimate companies, the biggest issue is not completing an I-9 on all employees (like someone forgets their verification documents and you forget to follow up).

To assure that you will not have any issues, it is highly recommended that you audit your own I-9 process and existing I-9 documents for any discrepancies.  Waiting until someone driving a government car pulls into the parking lot is not the best time to determine if you are compliant.

OSHA top 10 list - 2009

OSHA’s top 10 sited violations for 2009

Everyone feels they run a safe enough operation.  But is it safe enough for the Federal Government?  According to industry reports, the number of OSHA inspections was about the same from 2008 to 09 at roughly 27,000 with the number of reported violations also being roughly the same at around 100,000.  However, there was a substantial increase in the actual penalties levied against companies.  2008 had a total penalty draw of $94 million.  2009 saw a draw of over $104 million in penalties. 

So, what are the top 10 for this year?

10) Training Requirements – Fall Protection.

OSHA has specific and straightforward requirements on fall protection – and the first if this is to have a written plan and train your employees in the plan.  As in so many other instances, it doesn’t matter if your employees know the information, it matters on whether you prove it.  This requires documenting the training as well as any subsequent refreshers.  This category led to 2,335 violations and over $1.5 million in penalties

9) Electrical – General

This category covers a lot of space – literally.  The biggest issues in this category dealt with space.  Not enough space around electrical panels, too little space in electrical work ways, and allowing people to get too close to live exposed circuits.  This category led to more than 2400 violations and over $1.5 million in penalties.

8) Powered Industrial Trucks

Can you envision doing your job without forklifts and other similar types of tools?  OSHA requires more than just instructing your employees to back down an incline when they have a load.  Problems here included not inspecting the trucks, trucks missing data plates, modifications, and employee certification.  This category led to almost 3000 violations and just shy of $3 million in penalties.

7)  Wiring methods - components, and equipment for general use

Open junction boxes, failure to use strain reliefs, and incorrectly repaired wiring brought this category almost 3000 violations and over $1.7 million in fines.

6) Lock-out/Tag-out

Failure to control hazardous energy – whether electrical, hydraulic, or even gravity – is a constant visitor to the top 10.  Many companies don’t even have a written plan, which is the heart of the program.  Employee training and establishing procedures lead to a plan that will keep your employee safe and keep OSHA out of your hair.  This category had more than 3100 violations and almost $4 million in penalties.

5) Ladders

Ladders on the top 10 list?  Although it isn’t as costly in violations as LO/TO, ladder violations had more action than any of the previous issues.  Ladder violations are extremely common and are often overlooked by your site supervisors.  Issues include using ladders for other than intended purposes (like a scaffold), not removing defective ladders from service, using the top step of the ladder as a step (note: it is not step), and failing to have ladders extend 3 feet beyond the top step-off level (or securing the top from movement).  Did you know that you aren’t allowed to paint a ladder?  This category had 3252 violations and over $2.1 million in penalties.

4) Respirator Protection

If you need respirators in your job, OSHA requires more than just digging a respirator out of your tool box and tossing it to the next guy in line.  If you need respirators, then you are working with hazardous chemicals and that becomes serious.  OSHA requires a written Respirator Protection program, employee training, fit testing, pulmonary function testing, and more.  This category had more than 3600 violations and almost $1.3 million in fines.

3) Hazard Communication Program

This is one that continues to surprise everyone.  A Hazard Communication Program is not difficult to create & maintain, yet continues to be one of the most common violations every year.  What are the chemicals that you use? Get MSDS sheets and teach your employees how to read them.  This is incomplete and a gross oversimplification, but failure to maintain Right-To-Know information is both the most common violations and the easiest to maintain part of this program.  This category had more than 6000 violations and over $1.5 million in penalties.

2) Fall Protection

OSHA requires fall protection systems – whether guardrails, netting, or harnesses – anytime an employee is working at heights above 6 feet.  In addition to the common edges of buildings (like roofs), you must also protect from falls when there are floor or wall openings.  This category had more than 7000 violations and a whopping $9.3 million in penalties.

1)  Scaffolding

Scaffolding has been around since the times of the ancient Egyptians; however we are still working in the dark ages when it comes to safety.  Top concerns with scaffolds includes improper access, improper construction materials used, improperly preparing for the ground conditions, not installing fall protection (like guard rails), and much more.  This category had more than 9000 violations and almost $8.5 million in penalties.

Having a safe workplace is not as time consuming or as costly as you may envision.  Written programs and employee training are the hearts of these programs.  And if the penalties that these top 10 violations could impact upon your business don’t convince you, then think of the other costs associated – the lives of your employees.  Across the board in the construction industry – encompassing Independent Contractors, General Contractors, and Residential Builders –  slips, trips & falls are the top causes for injuries averaging more than $13,000 per accident claim.  And your actual cost can be substantially higher than that with increased insurance premiums, job delays, training (or hiring) someone else to do an injured employees job, and the loss of potential jobs due to a tarnished safety record.

Have you considered a Temp Agency to help you with employment issues?

Have you considered using a Staffing Firm to help you with employee recruitment, hiring, and retention?  Most employers are uncertain with the future may hold.  Will your product or service grow over the next year or two, or will the economy cause you to cut back on your ambitious plans.  A Staffing Company can offer several solutions to help you manage these shifts.

Contingency employment – Would you love to be able to ramp up or ramp down employee levels quickly as needed?  This includes warehousing, production, administrative, artistic talent, and all other positions in the company.  As your needs increase, you can rapidly add more employees to the project without long-term commitment to employee cost.  Conversely, if the need for your current level of employees drops off, you can reduce your workforce without taking hits to your unemployment rating (and public appearance).  A contingent workforce – whether 1 employee or 100 employees – can help you maintain consistent bottom line costs by relieving the costs associated with having idle employees.

Temp-to-hire – Hiring someone new is expensive.  Hiring the wrong person is more expensive.  How would you like to have a 90-day working interview before you bring a new person into the fold?  A temp-to-hire program will get you past the “honeymoon phase” and allow you to see what you are really getting.  In the first 30-45 days, you are typically happy to have a position filled and your new employee is happy to have a job.  After 60 days (the end of the honeymoon phase) you will see what you are really getting.  Is this person starting to show up late each day?  Is there extensive cell phone or internet use while at work?  This type of try-it-before-you-buy-it is virtually risk free as the employee is typically on the Staffing Companies Workers’ Comp insurance and Unemployment Insurance.  Further, they will have had required background checks, immigration verification (such as e-verify), and any education or certification confirmations, assuring you that you are getting exactly what you are looking for.  Of course, if during the temp phase of any temp employee’s tenure with you, you decide that this person is the perfect fit for your company, you may hire them as a direct employee.  If they aren’t the right person for the position, you typically have no requirement to keep them on staff for any length of time – meaning that there is no risk past the time that you decide they aren’t right for your position.

Direct Recruitment – Most Staffing Agencies will actively recruit for your positions.  If looking for an employee for your contingent workforce, a temp-to-hire position, or a direct hire position, discuss what you are looking for in detail.  Your staffing company will run the ads, select appropriate candidates from the pool of applicants, interview to make sure that they have the skills (both tangible and intangible) for the position, run the requisite background and education checks, and present only the best candidates of the group.  This extensive service – a HUGE time and money saver to you – is often included in the cost of service.

If you haven’t looked into how a Staffing Service can be an integral asset to your growth or are not sure of all of the services a staffing company can provide, talk to someone in the industry today.  Chances are you haven’t discovered the full range of benefits available for both you and your employees.

Focus1 is a full service HR outsourcing company offering Temporary Staffing, Direct Recruitment, Payroll Processing, HR Management, Benefits Administration, and Workers’ Comp & Safety services.

If it isn’t written down, it didn’t happen –part 3 (Employee Training).

Quick question – why do you have to carry proof of insurance in your car?  Right!  It is to PROVE that you actually have insurance on your vehicle.  The cops aren’t going to take your word for it – they want to see a piece of paper.

Now apply that concept to employment.  Written documentation of employee training is required for a number of reasons:

1)      It helps reinforce to the employee that training is important.  If they know that their results (or even that they attended) will be documented, they may be less inclined to blow-off the meeting or ignore the teachings of the trainer.

2)      If you are approached by an interested party/client who requires training for your employees, this is documentation that will fulfill that purpose.  Documentation may be required by construction foremen who want to be sure your employees have had fall protection training OR clinic leasing agents who want to make sure that their tenants are trained in required evacuation procedure.

3)      Documentation of specific training may be required by an industry watchdog organization like OSHA, USDA, FDA, DADS, or a host of other acronyms.  Failure to produce proof of training for these organizations can result in fines, work-stoppages, or double costs (paying for the training and then paying again when you can’t prove the employees are trained).

4)      If an employee doesn’t follow the rules that they have been taught to follow (e.g. they drive a forklift forward down an incline instead of backwards down an incline) and is injured, documenting that you trained them properly can be aid in the defense that you were not negligent.

5)      How do you know if an employee has had their annual refresher training and is current in your Blood Borne Pathogens program unless you document the training?

So, how tough is this going to be?  Really it is pretty simple and there is often no “specific” process.  If you are using a third party service to provide training, they will typically provide this documentation for you as well as helping you keep up with what training you need and how often.  If you are doing it yourself, I recommend doing the following:

·         Keep a “master copy” of required training to act as both a reminder and a check list to make sure you provided the training.  Put the dates of refreshers on a calendar.  Remember that some training must be given to employees as initial training, and some must be refreshed either annually or periodically and all must be refreshed when there are changes to the original plan or methodology involved.

·         Use a sign-in sheet, but don’t leave it blank.  Use a print-out of the employee roster for the company OR the department affected.  This will give you a quick review of those who were not at the training (whether absent that day or simply unable to attend the training at that time).  This will also help you pinpoint that single employee that “always” seems to miss the training meetings.

·         Place a completion document (along with a copy of the outline of the training or results of any tests given) in the employees personal training folder stating that they successfully completed training X on this date and have them sign it.

Documenting training isn’t that difficult or time consuming.  But being able to provide proof that you did provide training can mean a safer worksite as well as one that runs into fewer bumps along the road of our heavily regulated and litigious society.

If it isn’t written down, it didn’t happen –part 2 (Written Programs)

Are you a safe company?  Do you teach your employees what to do in the event of an emergency or how to act properly in a work environment (like in, sexual harassment)?  According to the government, if you didn’t write it down, it didn’t happen.

Regardless of the number of employees you have, there are some programs that are required be written down with employees having access to them.  People have short memories and if you DO have a legal claim against you, how will you ever be able to prove that you provided this information?  Some of these programs are required by OSHA, the Government (both federal and state), and others may be required by industry standards.

This may not be as scary as it sounds.  Many of these written programs may actually be included as part of your employee handbook – although for various reasons, I suggest that some of the more extensive and detailed programs be external from that document.  Examples of required written programs include:

·         Blood Borne Pathogens – This is not strictly for healthcare but required for anyone who may reasonably come in contact with potentially infectious materials (blood, bodily fluids, etc).  

·         Emergency Action Plan – Where do your people meet if you have to evacuate in the event of a fire?  Where do you go in the building if there is a tornado?  How do you make sure that you get all employees and non-employees (clients, shoppers, etc) out of the building?

·         Hazard Communications – What chemicals are found in your building and do your employees know how to properly handle them?

·         Lockout-Tagout – How do you safely control hazardous energy ranging from electricity to gravity (what if you have to work underneath an elevator?)

·         Personal Protective Equipment (PPE) – This ranges from safety boots for construction workers to face shields for hospital lab personnel.

·         Toxic hazards – Does your company work with formaldehyde, lead, or cotton dust (all considered hazardous by OSHA and the EPA)?  If so, you need to have a written program detailing processes and procedures including required PPE’s.

·         Interestingly, a written “safety program” isn’t required to be in writing except by individual industry mandate.  However, providing a safety program can help you outline that horseplay and other “accidents waiting to happen” will not be tolerated.  Other strongly suggested written programs include new employee orientation plans, job safety analysis programs, and a written return-to-work program.

Now the big question – is the government going around checking to see if I have my written programs and fining me big bucks if I don’t?  In most cases they are not.  Unless you are in an industry that is targeted for spot-checking by OSHA or some other agency, it will never be known that you don’t have your required written programs.  But just like driving without a license (or insurance), you will do ok until you get stopped for a minor traffic infraction (or worse – a major accident that you caused) and then you will be under the magnifying glass.  Spending a few hours and a few dollars up front can be the difference between an incident being classified as an accident and being classified as willful negligence.

Focus1 provides outsourced services in the areas of Human Resources (HR), Benefits Administration, Payroll, Workers’ Compensation (WC) and Safety.   We focus your employee needs so you can focus on your business.

If it isn’t written down, it didn’t happen –part 1 (Handbooks)

We used to live in a society where workers needed protection from unscrupulous bosses.  This gave rise to the unions and to Federal, State, and local governments enacting laws and acts to protect the rights of the employee.  Now the pendulum has swung far the other way and employers must guard themselves against the employee who feels that they have been wronged, whether there is just cause or not.  This “wrong” can take the place of wrongful termination, harassment, discrimination, or unequal pay or advancement. 

To protect yourself and your company I want you to remember one little phrase – If it isn’t written down, it didn’t happen.  Let’s start at the beginning. 

Do you have an employee handbook?  If you answered yes, good for you.  If you answered no, go sit in the corner and think about what you have done.  An employee handbook is more than just a collection of rules about your company.  It is written documentation of your rules (no ambiguity) and assuming you have employees sign a form that states that they received and read the handbook, it is documentation that your employee knows and agrees to follow the rules.  This is your first line in defense in the event of an employee lawsuit.  Common reasons for a lawsuit include sexual harassment and feelings that you were passed over for a promotion (usually due to discrimination).   Most scenarios that could lead to a lawsuit can and should be spelled out in your handbook so there is no question regarding what the employee is required to do, who they are supposed to report problems to, and what the company will do to try and resolve the issue.  I have lots of people say that they don’t have a handbook because they don’t want to be tied down to a set of rules and be inflexible.  If this is your attitude, you are giving up a lot of legal protection for some ambiguous flexibility.  Handbooks are written to allow to inform employees and reduce misunderstandings revolving around common concerns yet with the flexibility to change as times and needs change.  The only catch is that what is in the handbook must be applied equally to all employees to retain the legal protection that a handbook provides.  Some of the components that a typical handbook should contain include:

·         A company statement

·         A disclaimer (that this handbook is not a recognition of employment NOR the sole repository of employment information for the company)

·         A statement of company rules (safety, disciplinary action, computer policy, etc)

·         Benefits (insurance, holidays, PTO/vacation/sick time, etc)

·         Wage & hour (schedules, salary vs. hourly, promotions/pay increase policies, etc)

·         Sexual harassment & discrimination policies & how to report violations

·         Government notices (FLSA, FMLA, Right to work, COBRA, etc)

Once you have created your employee handbook, have it looked over by an attorney who specializes in employment (NOT your cousin Vinny who is a divorce attorney) for items that are either illegal or would restrict your rights as an employer.  Be sure and have your employee sign that they have received and read the handbook.  It is also advisable to have certain excerpts from the book as additional documents to sign that they have been read and understood.

Focus1 provides outsourced services in the areas of Human Resources (HR), Benefits Administration, Payroll, Workers’ Compensation (WC) and Safety.   We focus your employee needs so you can focus on your business.

Outsourcing vs. Offshoring

Outsourcing vs. Offshoring.




Lately there have been a lot of individuals denouncing outsourcing – stating that they want to keep jobs from going overseas. That is a good position to take in my opinion. However, it got me thinking about semantics and how people view the business of outsourcing.



To start, what people are talking about is Offshoring. Offshoring is the tactic of having services provided by someone in another location typically done for financial reasons. Why have a room full of tech-support people in America where you have to pay industry driven wages plus overtime plus benefits when you can get someone in India to provide the same (well, close to the same) service for less than half the price. This is good and bad – the good is that it helps companies create, sell, and support products at the low price that we consumers demand. The bad is that it moves jobs away from America – jobs that Americans need.



Outsourcing is the process of having another company or other people do part of your work for you. This is more common than people think and EVERYBODY does it. In the construction industry, you outsource jobs to sub-contractors because you don’t have the manpower, the time, or don’t have the expertise/certification in a particular field (for example, asbestos abatement). Other examples include having your CPA calculate your payroll taxes for you or taking your vehicle to an oil change service to have them change the oil (both are items that you can do, but typically outsource). The top reasons people outsource is because of cost, time, and compliance necessity. For example, a payroll service which handles hundreds of clients can typically process your payroll for less than you can do it yourself. This gives your payroll person more time to work on revenue producing/saving tasks such as sales revenue forecasting or P&L ledger work. Lastly, a payroll service will always be up-to-date with the most current tax tables and IRS rules.



Bottom line is that people outsource for good, sound business reasons. Think about how many different services that you could potentially do yourself, but allow another to do it – and why you went that route.

Texas unemployment 101 - how the system works

In case you’ve been on vacation in Tahiti for the last year, the employment situation in Texas (and the entire US) has been somewhat on the rocks. To understand a little bit about how this affects your payroll taxes and why you are affected by this increase – even if you have had a good unemployment history – let’s do a little bit of Unemployment 101.




In the state of Texas, unemployment insurance (UI) is paid for by a tax on payroll dollars. This tax is paid exclusively by the employer. It is a common misconception by employees that “I’ve paid into unemployment for X years…”. Wrong – it is entirely paid by the employer. The tax rate that the employer pays is based on your individual company’s unemployment history. New companies or those with no record at all pay 2.7% payroll for the 1st 6 quarters. After that, it can either go up or down depending on your UI losses. In 2009, the lowest tax rate available – assuming that you had a completely stellar previous 3 years regarding unemployment – was .26% of payroll. In 2010, the rate jumped to .72%. This is an increase of 176% (or .46% of payroll). The biggest concern to most businesses is the maximum tax. In 2009, the maximum was 6.26%. In 2010, the maximum is 8.6% of payroll. Although this is a smaller increase by percentage (37% increase) it represents a potential increase of 2.34% of payroll. According to Commissioner Tom Paukins Office, the average tax rate in 2009 was .99%. In 2010 it is 1.83% of payroll and is expected to climb for 2011. It is important to note that the tax is levied on the first $9,000  of annual payroll for each employee. That means that if you have a lot of turnover, hire frequently, or have a majority of lower wage employees, you will have a higher effective tax rate than average.



The reason for the across the board increase is because the unemployment fund is out of money. Employees who lose their jobs through no fault of their own are eligible for benefits. Further, the Texas Workforce Commission (TWC) – contrary to the sentiments of the unemployed – is decidedly pro-employee and not pro-employer. TWC claims are overseen by 3 commissioners with 1 representing employers and 2 representing employees. Benefits are paid directly out of the general fund. These benefits are calculated and “charged back” to the former employer(s) of the employee. There is no political will to reign in the abuses to the system. In fact, there has been continual pushes to increase the time that individuals can collect unemployment (equaling more $’s pulled out of the fund and an increase in UI taxes to your company). This fund was never intended to be a welfare fund, and with many UI claims now being paid out for over a year it is unclear as to how or when the fund will stabilize again.



As you can see, the deck is stacked against the employer when it comes to unemployment conditions and tax rates. And as a business owner or manager you are the one to feel the brunt of the increases. However there are simple ways to reduce your exposure and ultimate tax liability – all which affect your financial bottom line and profitability as a company. I’ll follow up in my next post or you can contact me directly at kevin.cobb@focus1hr.com (512-257-0999). All of this advice is offered freely and can be corroborated with a phone call to your business CPA or an internet search.

Want a get-out-of-jail-free card?

Remember playing Monopoly when you were young (or maybe you still play)? One of the best cards you could get off of the board was the get out of jail free card. Save it until you get sent to jail and viola – all you got was a free ride across the board with no penalties.


Now apply that concept to your business. Subscriber Workers’ Compensation Insurance gives you something that is as close to get-out-of-jail-free as you can get – the protection of Exclusive Remedy.


Texas is a unique state in more ways than one. Texas is the only state where you have the ability to “opt out” of the Subscriber Workers’ Compensation system. Pretty cool when you think about the business options this gives you. However, when you opt out, you give up the protection of Exclusive Remedy. Exclusive Remedy means that the WC subscriber system is the exclusive system that the employee has in order to be taken care of in the event of a workplace accident. Medical care for their injury and recovery of lost or future wages is what is covered. That means they cannot sue you for the injury (well, not exactly true – there are very limited circumstances that are still open for litigation, but that is for another discussion).


On the flip-side, an Occupational Accident policy may be more cost effective up front. However, this type of policy doesn’t provide the rights of exclusive remedy. Meaning that an injured employee can sue you for their injury and you give up your right to common defense. Plus, most OccAcc policies have limits that can be quickly reached and surpassed in the event of a catastrophic injury or multiple injuries over the course of the policy, meaning that you will have to personally foot the bill for the rest. If the employer doesn’t pay those expenses OR doesn’t do it in a way that the employee feels is in their best interest, the employee may sue for the difference plus attorney fees.


Now here comes the tricky part – which type of insurance do you have? Many insurance agents sell an OccAcc policy that they refer to as “Workers’ Comp” or they imply that they have a cheaper insurance that does the same as WC. However, they often don’t tell you the differences and benefits of WC over an OccAcc policy. I am a firm believer of not purely taking anyone at their word – including me. Check with your attorney or do a simple internet search regarding the differences in Texas between subscriber and non-subscriber workers’ compensation insurance. I know you will find some information that would affect your decision making process regarding work injury insurance.


The final option is one that NO ONE recommends – going bare. If you decide to operate with NO workers’ comp coverage at all (your General Liability insurance will not cover employees injuries), then you risk everything. An injured employee can take your business, your home, and your children’s college fund to cover the cost of injury and lost wages. Plus, most people who go bare don’t realize that there is a requirement from the Texas Department of Insurance to report to them – annually – of your decision to opt-out of the system. Additionally you are required to report to the TDI, any work related injuries.

Do you have the right type of business insurance?

Most businesses are savvy enough to know they need to carry insurance, but what kind? Unfortunately, it is far too common for business owners to think they are covered against most common types of loss only to find out – too late – that they are not properly protected. If you live along the Texas coast, you understand that you can't just buy homeowners insurance.  You have to either buy separate wind and flood policies to augment your homeowners insurance OR buy a comprehensive policy to assure that your assets are covered.  Just like hurricane protection for your home, you may need to have several different types of insurance to protect your assets – and often this protection is available for a lot less than you think.




Here is a snapshot of the most common types of business insurance –

• General Liability (GL): Typically provides protection against claims of bodily injury or property damage for which your business may be liable. Note that there are some common exclusions that may need to be covered under other types of policies. GL will NOT cover injuries to your employees.  All businesses should carry GL coverage, and in many cases it is required by your landlord, vendors, and clients.

• Professional Liability/Errors & Omissions: Professional Liability or Errors & Omissions (also called E&O) is necessary if you perform a professional service, like a nurse or a CPA. Your GL policy typically will NOT cover you against loss in the event that you or one of your employees makes a mistake that causes someone physical or financial damage – for example, a nurse administering the wrong medicine or a CPA making a costly mistake on a company’s financial statement.

• Commercial property insurance: Your GL policy may not cover all damages to your property (both the building and the contents) in the event of some events – such as a tornado, fire or vandalism.

• Workers’ Compensation (WC): If your employees are injured in the line of work, your GL will not cover the expenses for care or loss of wages. This can either be a true “subscribers policy” or a simple Occupational Accident policy – both of which have benefits and drawbacks, so choose this one wisely and not only on the basis of initial cost.

• Umbrella: Most policies have certain “reasonable” limits or caps to how much they will pay out. An umbrella policy is one that only activates in the event of a catastrophic nature and damages exceed the amount of your policy.

• Commercial auto insurance: Many companies require their employees to utilize their own vehicles for work, yet often don’t check to see if they have the correct automobile insurance coverage. Commercial auto may be required, whether paid for by the company or by the employee.



All of these types of insurance should be discussed with a trusted insurance advisor to determine the level of coverage that you need. Don’t just accept whatever coverage is handed to you, ask questions such as:

• If my employees are injured on the job, how is their medical care paid for? Is there a limit on coverage and if so, what if the care exceeds that cost? What about lost wages – who is responsible?

• If one of my employees makes a mistake and a customer is physically or financially harmed, am I covered?

• If confidential information is stolen or lost from my company, what protections do I have?

• If one of my employees is using their personal vehicle for business use, will I/they be covered in the event of an accident? If so, to what extent (Repair their vehicle? Repair a 3rd party vehicle? Medical coverage? Replace damaged business related equipment or merchandise?)



Your business is often your largest investment in both time and money. Make sure you protect it and yourself with a level of insurance that is both of the proper type and at a coverage level that is appropriate for your industry and size.



Kevin Cobb

Sr. VP – Risk Management

Why I'm here

A long time ago, a wise person stated that if you stop learning, you might as well be dead. If you are an employer and stop learning (about employee related issues) your company might end up dead.


I used to know a lot. In fact, I used to know pretty much everything that needed to be known about what I was working on or with. I was an employer and knew the rules and regulations pertaining to employment. As part of my job, I was in charge of safety and knew everything I needed to keep my plant safe and avoid OSHA involvement (after all, we had virtually no injuries and none that could be contributed directly to the working environment).

Then I joined with a group of individuals who truly were experts in their fields and started Focus1. At that point I realized that I actually knew…. Nothing. Worse than nothing, I knew enough to steer the companies that I worked for in a direction that could have had disastrous consequences. I call this knowledge “Monopoly knowledge” after the board game. If you played Monopoly as a kid, you knew that the rules stated that when you land on Free Parking, you get the money in the middle of the board. Why did you know this? Because it was how you were taught and how all of your friends played it (well, at least that is what we did in Texas). Then you run across that one kid who actually reads the rules. Guess what? The rules actually state that you don’t get the money. In fact, Free Parking is just that – the single spot on the board where there are no consequences. And the guy who actually read the instructions grows up to be the IRS agent. Or the OSHA inspector, or the Workers’ Comp insurance investigator, or the EEO compliance officer looking over your hiring practices, or….. You get the picture.
So, why am I producing this blog? Several reasons:


1) I am a firm supporter of the entrepreneurial spirit. If I can impart information that will help you protect your company or make a better informed decision about an employee related issue, then I have helped a small business grow. And according to the Small Business Administration, over 50% of all non-government jobs in America are provided by small businesses.

2) I believe in sharing knowledge. Especially knowledge that can help save a life (workplace safety), save a job, or save a small company. Giving away free advice sounds counter-productive; however the information that I have the time and the effort to produce in this blog is only the tip of the iceberg in regards to employment matters.

3) This is my business and I want people to know that there are companies like mine that can help them. Companies are already aware that there are CPA’s that can structure a program to help reduce financial losses and keep them legally compliant, but few know that there are companies that service smaller businesses do the same with Payroll, HR, Workers’ Comp, Safety, and Benefits Administration.

So, keep in touch and I’ll do my best to keep this interesting and worth your time.
Sincerely,

Kevin