Frustrated With Workers’ Compensation Audits? It Used To Be Much Easier!

Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

Great to see everyone at the CALSAGA Annual Conference, it was truly a great event my hat goes off to CALSAGA for coordinating all the speakers and evening activities! I believe the conference is particularly a good opportunity to network with other Members and vendors. 

Workers’ Compensation audits are becoming more confusing and frustrating to complete! Auditors are requesting more information than they ever have before, including financial statements. Prior to Covid, Workers Compensation audits were required to be in person, now most are remote by email and phone. The Information you have to provide must be submitted in to them in secured files that are difficult to use.  And, if you happen to be late, a Notice of Cancellation is sent out immediately to get your attention. What has changed? 

Here are a few possible explanations for what has changed:

  1. Experienced auditors have retired and the new underwriters are trying to understand the process without limited knowledge and experience.
  2. The new auditors are being trained to request as much information as possible.
  3. The passing of AB 5 (Recognizing Independent Contractors as employees under the new guidelines) has auditors searching for employers who are not following the AB 5 guidelines and charging them additional premium.

ISSUE: Employers have concerns with providing financials that they have not had to provide in the past. However, this is how the auditors find out if there are expenses paid to independent contractors under AB 5. Per each Workers’ Compensation insurance policy in CA, every employer must provide the following for a final premium audit:  

  1. Audit – You will let us examine and audit all your records that relate to this policy. These records include ledgers, journals, registers, vouchers, contracts, tax reports, payroll and disbursement records, and programs for storing and retrieving data. We may conduct the audits during regular business hours during the policy period and within three years after the policy ends. Information developed by audit will be used to determine final premium. Insurance rate service organizations have the same rights we have under this provision. (The rate service organization they are referencing is the Workers’ Compensation Insurance Rating Bureau (WCIRB) that may request an inspection to confirm the employees are classified correctly under the WCIRB rating guidelines).

From the WCIRB, when determining the basis of premium, the following are included as payroll:

  • Gross wages
  • Salaries
  • Commissions
  • All bonuses
  • Most profit sharing
  • Vacation, holiday and sick pay
  • Overtime (“straight time” portion only)
  • The market value of gifts
  • Automobile allowances (less reimbursement for documented expenses)

The following items are excluded from payroll when determining the rating basis:

  • Meals or lodging (unless the classification phraseology specifically includes them or they are provided in lieu of wages)
  • Tips
  • Overtime excess pay (the increase above the regular hourly wage)
  • Severance pay (except for accrued vacation, sick pay, commissions and bonuses)
  • Employer contributions to qualified insurance, stock or retirement plans
  • Stock options
  • The value of an automobile furnished to an employee

In addition, the following are not included as payroll for premium computation:

  • Employee discounts for merchandise
  • Residual payments for commercials
  • A uniform allowance

Note:

Payroll for Workers’ Compensation insurance purposes is not the same as the Internal Revenue Service definition of payroll.

If you have any questions, please do not hesitate to contact me.

Take care

Shaun Kelly joined Tolman & Wiker Insurance Services in 2005.  He specializes in all lines of property and casualty insurance for industries including contract security firms, agriculture, construction, oil and gas. Shaun received a BS in Business Administration with a major in Finance from California State University in Fresno, California. He is an active member of several industry associations, including the Association CALSAGA, the Kern County Builders Exchange and the Independent Insurance Agents of Kern County. Shaun can be reached at 661-616-4700 or skelly@tolmanandwiker.com.

Navigating the Increasingly Difficult Waters of California Compliance

Jordan Wallach, Belfry Software, Associate Member

The recent Annual Conference was an eye-opener on how shifting California regulations are reshaping the compliance scene for guard services firms. It’s clear: the back office is now in the hot seat, juggling more than ever – from sick time tracking and overtime calculations to break compliance. This could mean less time for those strategic moves that set your business apart from the crowd.

The updated California regulations necessitate meticulous tracking of sick time accruals and carryovers, with the recent law increasing annual sick days from three to five and enhancing carryover provisions. Weighted overtime calculations demand a methodical approach to identify overtime hours and decide on the applicable overtime rate, adhering to California’s specific rules. Break compliance is equally crucial, mandating meal breaks and rest breaks, with non-compliance resulting in significant fines.

Here’s where Belfry strides in as the industry’s purpose-built Payroll & HR platform, integrated with all the other components you need to run a guard services firm. Its end-to-end solution smartly handles time-off tracking, automates those overtime calculations based on California’s rules, and has got break compliance covered too. Belfry isn’t about adding another tool to your stack; it’s about easing compliance to free up your back office. With Belfry, compliance becomes a breeze, letting you focus on what truly matters – delivering exceptional service and carving a distinctive niche in the security sector.

Jordan Wallach is the Co-Founder and CEO of Belfry, the modern operating system for security guard services companies and a CALSAGA Member. Prior to founding Belfry, Jordan was a consultant at McKinsey & Company and a Product Manager at Microsoft, building software used by millions of people worldwide. He has a bachelor’s degree in Data Science from Stanford University.

Lead Your People Well Everyday: Tips for Effective Leadership

Anne Laguzza, CEO – The Works Consulting, Network Partner

Laws change. External factors impact the industry. Clients’ needs shift. There are many outside influences that impact how your operations function and the responsibilities of your team. However, what doesn’t change is the principles of effective leadership.

Follow these three tips to effectively lead your employees everyday – no matter the external factors. 

1. Communicate Daily

Communication is a critical component of actively managing your officers. Regular communication solves issues, often before they arise, and instills confidence in your workforce.

Effective communication is made up of 10% words + 35-45% tone + 45-55% body language. Go beyond text messages, instead have a voice or video conversation. Taking that extra step to make a voice or video call is critical to effectively communicating important assignments and avoiding miscommunications that happen when only using text. This is especially helpful for officers who work solo without seeing anyone in management for weeks or months and can get disconnected quickly.

Regular, effective communication builds trust with your team and boosts employee morale.

2. Convey Appreciation

 Conveying your appreciation for your people is another critical principle of effective leadership. You can do so much to make your officers feel valued and important with very little effort or cost and see an incredible return on your investment.

When I worked internally in the industry, my job was to turn around morale and reduce employee complaints among the 600 employees. I was able to do both, just by recognizing the “human” in these officers and treating them with respect with every interaction. The leadership of our company was very good at getting out in the field and communicating with officers and shaking hands. These interactions made our employees feel valued and important.

A simple phone call or other personalized communication to individual officers from the leader of your company to say thank you will go a long way in ensuring your officers feel valued.

3. Set and Communicate Clear Expectations

When you set expectations and communicate them on a regular basis, you provide your team with a clear path for success.

When your employees face a new or unexpected situation, they – on their own – will be able to reason through the problem and find a solution that aligns with your expectations and represents your company appropriately because you were so clear on communicating those expectations.

Another benefit of regularly communicating expectations regularly is that critical performance conversations will be easier to have with your employees because you have set expectations and can clearly point to where performance has not aligned without any confusion.

As we close out another year and look ahead to changes that every new year can bring, it’s important to  stay focused on what never changes – effective leadership because effective leadership builds high performing teams. 

Anne Laguzza is the CEO of The Works Consulting. As a seasoned business executive with human resources management, leadership development, and performance coaching experience, Anne works with clients from a variety of industries to develop better systems, maximize employee productivity, and enable management to focus on business growth.

Prior to founding The Works Consulting in 2001, Anne served as the Regional Human Resources Director for a Fortune 500 distribution company where she led a merger transition team and was responsible for strategic planning, implementing new policies and procedures, workforce restructuring, compensation structures, and integrating the work cultures for over 600 employees.

In addition, Anne was formerly the Human Resources and Training Director for a start-up entertainment company where she organized and implemented a company-wide change management program that involved new company direction and strategic planning. Prior to her work in the entertainment industry, Anne served as the Regional Training Manager for a nationwide retailer where she developed and launched a multi-state training program for human resources managers as part of a corporate expansion project.

Anne earned her Master of Arts degree in Organizational Management from Antioch University, and holds a Bachelor of Arts degree in Psychology from the University of California, Riverside. She is an active member of the Society of Human Resources Management, and is a board member for Harbor Interfaith Services and an advisory board member for Arthritis National Research Foundation. Anne has taught human resources and management courses at Long Beach City College and California State University, Dominguez Hills, and volunteers at non-profit organizations teaching interviewing skills to adults seeking re-entry into the workforce.

Social Media Links:

Instagram – https://www.instagram.com/annelaguzza/

Facebook – https://www.facebook.com/TheWorksHR/

LinkedIn – https://www.linkedin.com/in/annelaguzza/

How to Effectively Navigate Non-Exempt Employee Meal Break Compliance

Tavon Parris, Trackforce Valiant + TrackTik, CALSAGA Network Partner

It’s no secret that many states have strict laws related to employee meal breaks. In California, for example, employers must provide employees with an uninterrupted 30-minute meal break for every five hours worked.

But for employers looking to provide unpaid meal breaks to their non-exempt employees, compliance can be complicated. Subsequently, failure to comply can be costly. Why? Because merely scheduling an employee for a 30-minute meal break, without more, is simply not enough to ensure compliance.

It’s why employers must take proactive steps to ensure employees:

  • Take their full meal breaks
  • Are relieved of all duties
  • Are not impeded or discouraged from taking their full, uninterrupted meal breaks

But taking these steps is just the start. Additionally, employers should also collect and keep data they can use to prove compliance in case of a legal claim. And with technology transforming compliance opportunities for employers, a variety of tools can now be used to avoid being swept away in the wave of litigation involving meal break violations.

Dive deeper by getting your copy of Trackforce Valiant + TrackTik’s latest white paper. You’ll learn more about:

  • What employers can do to help ensure compliance
    • Appointing a meal break for at least 30 minutes for non-exempt employees
    • Adopting a down-to-the-minute timekeeping system
    • Ensuring no duties are performed during the meal period
    • And more!
  • What’s next for the future of break management
    • Remote workforce tracking
    • Harnessing data
    • Looking for data trends
    • And more!
  • How technology can be used to nail compliance in the years to come
    • What that means for your business
  • How to future-proof your business beyond meal break compliance

This content was written with the help of experts at Littler Mendelson, the largest labor and employment law firm in the United States.

Grab your copy today

Trackforce Valiant + TrackTik combines over 45 years of total experience with the brightest and most influential minds to provide its customers with the industry’s most comprehensive security workforce management solution. Our cloud-based solutions help corporations and security guard service providers handle every aspect of security workforce management.

Tavon Parris
706-960-8158

REGULATION CORNER

David Chandler, CALSAGA President 

As stated in section 7582.12 of the California Business and Professions Code, your license shall at all times be posted in a conspicuous place in the principal place of business of the licensee.

What constitutes a “conspicuous place?” The BSIS believes a conspicuous place to be a location that can be seen by the public when entering through the front door. This means that a license hanging in the hallway or posted in a lunch or break room is not compliant. If you are in violation, make sure that you rectify the situation as soon as possible! Each violation may carry a $250 fine.

 

This content originally appeared in the Q2 2019 edition of The Californian: The Quarterly Newsletter of CALSAGA. Read past editions of The Californian: The Quarterly Newsletter of CALSAGA.

REGULATION CORNER

David Chandler, CALSAGA President 

The California Code of Regulations is very specific concerning certificates for security officer training modules.

Division 7 of Title 16 Section 7583 of the California Code of Regulations: The certificate shall identify the course(s) taken, the number of hours of training provided, identification of the issuing entity, name of the individual and instructor and a date, and state that the course(s) comply with the Department of Consumer Affairs’ Skills Training Course for Security Guards. The certificate shall be serially numbered for tracking.

Please make sure that all certificates that you are accepting from employees and that you are issuing to officers comply with all requirements. Included as a benefit of membership, CALSAGA members have access to the CALSAGA Training Database. The database allows trainers to track officer’s training and to generate compliant certificates. Click here to learn more about the database and how you can get started using it today!

This content originally appeared in the Q2 2018 edition of The Californian: The Quarterly Newsletter of CALSAGA. Read past editions of The Californian: The Quarterly Newsletter of CALSAGA.

REGULATION CORNER

David Chandler, CALSAGA President 

  •  If you are currently operating your PPO as a Corporation, remember that you MUST notify the Bureau of a change of your corporate officers within 30 days. 7582.19 (a)
  • All new corporate officers, or new partners in a partnership, must submit a Personal Identification Form as well as a Live Scan (to CA DOJ) prior to any involvement in any operation related to security. The Bureau must approve before you can begin working with the corporation or partnership.  19 (b)
  •  In a General Partnership, if one of the partners leaves (disassociation for any reason) a NEW application must be submitted (due to the change in the general partnership). A new PPO number will be issued pending approval by the Bureau. 7582.23 ©
  • Please periodically check with the Secretary of State to confirm the information for your organization is the same as the Bureau has on file, including the address of record. Corporations must submit the names of the CEO, CFO and Secretary as well as any other corporate officer who will be active in the business to be licensed. 7582.7 (i)

This content originally appeared in the Q1 2018 edition of The Californian: The Quarterly Newsletter of CALSAGA. Read past editions of The Californian: The Quarterly Newsletter of CALSAGA.

Profitability in a New Year

Brandy Tomasek, TEAM Software, CALSAGA Network Partner

One of the most straight-forward ways to increase job profitability is to decrease job-related spending. As much of the world faces the possibility of a recession, decreasing spending is top of mind across industries. 

Still, it can seem impossible to cut back on necessary expenditures. Our industry-specific labor market analysis suggests ongoing competitiveness. Labor and overhead – already a significant portion of a security company’s expenses – will likely remain high. 

That’s why it is more important than ever to maintain a clear and accurate picture of your profitability. Job costing should be the driving data force behind every decision you make. 

Job costing: explained

Job costing is an accounting term that enables a business to track costs by individual jobs. The more granular detail you can gather, the more opportunity you have to protect your profit margins. That’s why getting accurate numbers and recording each one down to the job level is so important in protecting profitability – and helping support a data-backed strategy to help you operate better in the future.  

Typically, companies have some kind of process in place that is capturing a 1,000 foot view of profitability. Opportunities are often missed by neglecting to calculate true cost overhead expenses into job-level data. This can include anything from payroll taxes and workers comp, to general liability insurance, supplies, fuel and more. When you don’t account for a portion of these expenses as a cost per job, you really aren’t getting an accurate picture of what it took from your expense budget to service that contract. As labor and supply shortages continue, continuing to take on unprofitable contracts can be dangerous to your resources, time and bottom-line. 

Here’s how job costing should work as a part of your back-office system: 

Process every financial transaction with an associated job number. That includes everything from payroll, to accounts receivable and payable, to adjusting journal entries. At TEAM Software, we’ve built our software solution to include even more features that allow for payroll taxes and miscellaneous insurance costs to be taken down to the job level, based on payroll dollars at that specific job. 

After recording all associated activity to the job level, the rendered data can be used to review accurate accounting practices, compare the data to budgets and (of course) make sure you’re profiting. This information can and should be heavily relied upon for contract renegotiation and bidding future work that might be similar to an existing job.

This kind of feature, when built as a part of an integrated software solution that connects operations, accounting and finance, and the back-office, really sets up security companies to scale, even when times are tough. Remember, your clients are likely seeking to conserve costs as much as you are. Reliable and accurate data gathered through activities like job costing give you the tools to provide clear reporting on the services – and value – you’re delivering on each job. Having this data gathered in one integrated software solution also helps preserve knowledge in the case of turnover at the back-office level, too. 

Now’s the time to fine-tune processes

In an age where manpower is harder to come by, improving back-end systems and software solutions can create efficiencies to reduce your dependency on added overhead. Not only does it shed light onto how much money your company has brought in for a particular job, it provides clear data on how much money your company actually made per job. Once you have this knowledge, you can better allocate resources, adjust SLAs and billing, and fine-tune operations so that you are curbing costs and maximizing profit as much as possible in a tightened economy. 

If you’re new to job costing, remember the industry experts at TEAM Software are always available to help support your goal of reducing costs, maximizing opportunities and supporting profitability. 

Brandy Tomasek joined TEAM Software by WorkWave in 2016. She’s a part of the Client Experience team, working as a Sr. Implementation Lead and Business Consultant. Prior to joining TEAM Software, Brandy earned a Bachelor’s degree in Management and Marketing, as well as her MBA in Organizational Leadership. Brandy’s professional experience spans a range of disciplines from back office accounting to management and leadership in various industries.

CALIFORNIA TIPS THE SCALES: EMPLOYERS’ NEW OBLIGATIONS TO COMPLY WITH PAY TRANSPARENCY AND PAY DATA REPORTING REQUIREMENTS

Saba Zafar, Esq. and Jaimee K. Wellerstein, Esq., Bradley, Gmelich + Wellerstein, CALSAGA Legal Advisor

On September 27, 2022, Governor Gavin Newsom signed Senate Bill 1162 (“SB 1162”), an expansive pay transparency and pay data reporting bill requiring employers to include pay ranges in all job advertisements effective January 1, 2023.  SB 1162 also makes significant changes to California’s existing pay data reporting requirements. 

What Do California Employers Need To Know About SB 1162?

SB 1162 has two components that will be codified under Labor Code section 432.3 and Government Code section 12999. The first relates to pay transparency and the second to the pay data report that is submitted to the Civil Rights Department (“CRD” – formerly the Department of Fair Employment and Housing).

1. Pay Transparency (Labor Code section 432.3) – Employers must comply with certain pay scale transparency requirements:

a. Employers with 15 or more employees must include the pay scale for a position in any job posting. This applies even if the employer engages the services of a third party to announce, post, publish or otherwise make a job posting known.

b. All employers must, upon reasonable request, provide the pay scale for a position to an applicant applying for a job (this was already a law but is a good reminder).

c. All employers must, upon request, provide an employee with the pay scale for the current job for which they are employed. 

d. Employers must also maintain records of a job title and the wage rate history for that job for the each employee for the length of the employee’s employment and then for three years after the employee’s separation of employment. The Labor Commissioner can audit these records. 

As to what constitutes a pay scale, it simply means “the salary or hourly wage range that the employer reasonably expects to pay for the position.” If the employer pays a set salary or hourly wage, then the employer should include that amount in the job posting. 

As a reminder, employers may not inquire about an applicant’s salary history. What can employers still do? Employers can still inquire about an applicant’s salary expectations.

2. Pay Data Reporting (Government Code section 129999) – Employers with 100 or more employees (“Covered Employers”) were already required to report pay data to the CRD and could previously have submitted the same EE0-1 report that they submitted to the Equal Employment Opportunity Commission (“EEOC”). Under amended Government Code section 12999, Covered Employers will have to meet some additional requirements. Below are some of the pertinent (but not all) changes:

a. Covered Employers must submit the pay data report by the second Wednesday of May of each year, rather than in March as previously required;

b. The report must include the number of employees by race, ethnicity, and sex for 10 job categories listed in the Code.

c. The report must also include the mean and median hourly rate for each job category for each combination of race, ethnicity, and sex. 

d. Covered Employers who contract with labor contractors must provide a separate report to the CRD. 

e. Employers can pick any pay period between October 1 and December 31 of the reporting year. 

What’s The Penalty for Non-Compliance?

It is incredibly important for employers to comply with these requirements, not just because it is the law, but also because non-compliance comes with penalties. 

For violations of Labor Code section 432.3, an aggrieved person may file a written complaint with the Labor Commissioner within one year after the person learns of the violation. Upon finding of a violation, the Labor Commissioner may assess penalties between $100 and $10,000 per violation!

For violations of Government Code section 12999, the CRD may assess penalties for a failure to file a report up to $100 per employee for the first violation and up to $200 per employee for each subsequent violation (for an employer with 100 employees, that is $10,000 for the first violation and $20,000 for each subsequent violation).

Employer Takeaway: Comply! Comply! Comply! If you do not already have data regarding pay scale for various positions, you should start compiling it now so that you are ready when an employee or applicant inquires about the pay scale for a position or when you need to include the pay scale on a job posting. For the pay data report to the CRD, since the data need only be for one pay period, employers should start compiling this information now so you are prepared to report it in May. As always, the attorneys at Bradley, Gmelich & Wellerstein, LLP are here to answer any questions you may have about this new law or its impact on your business. 

 Saba Zafar is Special Counsel in Bradley, Gmelich & Wellerstein LLP’s Employment Law Department. Ms. Zafar has over a decade of experience as an attorney, primarily in employment law. Ms. Zafar focuses her practice of providing strategic advice and counsel in all aspects of employment law and workplace matters, including drafting and implementation of HR policies and procedures, Employment Handbooks, providing advice to clients on personnel issues as well as general business matters.

 

 

Jaimee K. Wellerstein, Esq. is a Partner at Bradley, Gmelich & Wellerstein LLP, and the Head of the firm’s Employment Department. Jaimee concentrates her practice in representing employers in all aspects of employment law, including defense of wage and hour class actions, PAGA claims, discrimination, retaliation, harassment, wrongful discharge, misclassification, and other employment related lawsuits. She also provides employment counseling and training in all of these areas.

Jaimee routinely represents employers in federal and state courts and in arbitration proceedings throughout the state, as well as at administrative proceedings before the Equal Employment Opportunity Commission, the California Department of Labor Standards Enforcement, the United States Department of Labor, and other federal and state agencies.

Jaimee assists as a Legal Advisor to CALSAGA, and is a member of ASIS International. She is rated AV-Preeminent by Martindale-Hubbell, the highest peer rating availablejwellerstein@bgwlawyers.com

About Bradley, Gmelich & Wellerstein LLP

Founded in 2000, Bradley, Gmelich & Wellerstein, LLP is dedicated to providing sound advice and exceptional results for our clients. Our twenty-five plus skilled, dedicated and diverse attorneys represent individuals and businesses of all sizes in a wide variety of business, employment law and litigation matters.  www.bgwlawyers.com.

ADDING VALUE TO YOUR BIDS AND PROPOSALS

Debbie Trecek Volkens, TEAM Software, CALSAGA Network Partner

Lowest bid technically acceptable is a painful part of the industry we work in. It’s why, sometimes, strategic initiatives to become more efficient fall to the back burner: initial investments in time and resources can seem like an unnecessary burden when you’re struggling to fill shifts and keep operating expenses within budget. 

The catch twenty-two about a back-burner approach, though, is that you cannot lower your costs and grow your profit without taking that first step towards efficiency. One tactic you can use to kickstart the process is to look at your business proposals and highlight where an efficiency-driving solution can bring direct value to your clients. Look at these five key areas of need your prospective clients are asking for and add information to your bids to strengthen your proposals. 

Qualified Guards On Site. 

Your clients are ensuring guards with the right qualifications are filling the needs of their contracts in order to create the safest and most secure environment possible. Demonstrate how you record and track certifications of officers, and send notifications when certifications are due to be updated. 

Reduced Liability And Risk. 

Incidents and risk open your clients up to liability and lawsuits. Demonstrate how you help shoulder that responsibility of welfare by monitoring where and when an officer is onsite (and how you have evidence via location tracking technology, checkpoint documentation or rich media like photos and video to back up your claims). Be prepared to offer daily shift reports to provide visibility and quality assurance, and showcase your safety procedures and automated communication flows so you can keep your clients aware of an unfolding incident and resolution status. 

Communication, Response Times And Customer Service. 

If there is an incident on site, your client needs it to be resolved appropriately and quickly. You should be able to send quick messages (like texts, emails or phone calls) securely to individual officers, or to larger patrol teams. Emergency communication automations can be leveraged to support your resolution practices and bring examples of reporting materials (like activity logs, incident reports and inspections). Ask questions about what your prospective client’s current procedure looks like and show them how reporting tools can be configured to their specifications. 

Reputation And Proof Of Service. 

You know software can’t complete physical security tasks for you, but it can improve the quality and consistency of the work you already provide. It can eliminate fraudulent timekeeping practices (like buddy punching) and ensure billable work is transparent and accurate. It can record your scope of work and identify areas of improvement. It can improve scheduling and reduce overtime (billable and non-billable). And, it proves it’s delivering in all of these areas through reporting and analytics tools as an asset to support your company’s reputation. 

Cost-Effective Services. 

It’s likely your clients don’t care what tools you’re using to get the job done. But, showcasing the value software brings to these areas can strengthen the value your company brings to your bidding proposal. Your data working together in one system helps drive efficiencies to your bottom line, meaning you can more competitively bid contracts. Then, you can pass that on to your customers, who win by gaining the best quality of service at the best price. 

When it’s clear the value outweighs the costs, you’ll have strengthened your competitive position and achieved an advantage.

 

Debbie joined TEAM in 2020 and works as a content marketing specialist. Her goal is to connect the dots between industry needs and product solutions through engaging, educational and valuable content. Debbie holds a bachelor’s degree in marketing and management from Peru State College, where she graduated summa cum laude.