THREE TIPS TO REDUCE OVERTIME, NOW. 

Plus: Things to keep in mind when dealing with overtime during a labor shortage.

Gail Tutt, TEAM Software by WorkWave

We’ve said it before and we’ll say it again: the best way to reduce overtime is to stop it before it starts. It’s a little cliché, especially when overtime (and, unfortunately, non-billable overtime) is an inherent part of the security industry. Still, there are several tactics you can use to get a handle on overtime and manage labor costs. 

1. Know your service-level agreements. This doesn’t just mean at the executive level. Because SLAs dictate the service standards and pricing obligations you’re required to deliver to your customers, it’s imperative that any employee who is involved in managing your company’s scheduling is well versed in bill and pay rates by contract. By ensuring understanding in all scheduling roles, you can prevent costly mistakes (like wage creep, which can occur in a variety of scenarios, but especially when officers are scheduled for overtime shifts outside of the scope of what’s budgeted per job.) 

By knowing your SLAs inside and out, your company is also setting up the foundation for best practices in job costing. With industry-specific software solutions to assist in the heavy lifting of tracking and analyzing job performance, you can see at a glance which jobs are lending themselves to your profit margins, and which are under performing.

2. Don’t forget about compliance. In some cases, there’s no way around scheduling overtime without compromising your compliance with state and federal labor law regulations and overtime rules. In our industry, there are compliance risks posed from misclassification, recordkeeping and other hour and wage-related activities that can turn your timekeeping and overtime tracking into a headache. Earlier this year, even, this entity reported a wage settlement (with waiting time penalties) due to an upheld ruling alleging an employer failed to include meal period premiums on wage statements. A different case in 2021 found the California Supreme Court upholding that employers are required to pay meal and rest break violation premiums at the same rate as when paying overtime. Translation: these costs add up quickly.

While many integrated workforce management solutions don’t track compliance for you, they do provide tools to more easily prove compliance. Look for feature sets which include things like time and attendance (including punch times), scheduling, regulation monitoring and reporting to gain well-rounded visibility into your compliance.  

3. Become friends with your data. This point is straightforward: dig into your data early on in your scheduling process. In available TEAM solutions, we recommend including criteria like parameter searches for available guards that fit within the bill rate specified per job. That way, your schedulers will only be able to assign officers to shifts whose rate fits the given budget (see our first point).

Often, we find companies can implement at least one of these tips to help prevent and improve overtime. But we also recognize that the current labor market throws a new wrench into the mix. When it’s hard to find officers to fill shifts in general, of course it becomes more likely for regular shifts to turn into overtime to stay on top of SLAs. While there’s no easy answer, it’s possible resolving this particular overtime challenge can be addressed by refocusing on retention.

Start by taking a few steps back to analyze what your voluntary separations look like. Are officers leaving for higher hourly rates or benefits? Or are they leaving for more flexibility in their schedules? Maybe they’re pivoting careers into adjacent industries or taking even bigger leaps into entirely new verticals. The common theme of all these scenarios is that it is likely not a separation on bad terms. This could be an opportunity to think outside the box in the form of a self-scheduling program. This way, employees stay in your employee management system (as part-time or ad hoc employees) and can pick up shifts based on when they want to work (even if they are employed elsewhere). While it may not work for everyone, it is an interesting tactic to reduce overtime needs while increasing employee retention.

It’s hard to theorize if there will ever be a world without overtime in some capacity. But, there are steps you can take to improve this metric now. See how at teamsoftware.com

Gail has spent over 35 years in the private sector as a senior level finance and operations manager across multiple industry. Most recently CFO of a regional security company in San Jose, CA, Gail now works providing invaluable insight and expertise as a business consultant with TEAM Software.  Her hobbies include breeding and showing standard wirehair dachshunds, hiking and spending time with her family.

PREPARING FOR YOUR BSIS RECORDS AUDIT

Barry A. Bradley, Esq., Managing Partner, Bradley, Gmelich + Wellerstein, CALSAGA Legal Advisor

So, you received a letter from the Bureau of Security and Investigative Services advising that they will be conducting “a routine inspection” of your documents.  It should take no more than two hours (on the average) and the meeting should include the owner(s), executive principals and/or possibly administrative staff “to assess and discuss key aspects of your daily operations” as a PPO.

ALARMS should be going off for you!  There is nothing routine about this. Compliance audits are increasing and you should expect one this year.  In every instance where our clients have contacted us, they have been out of compliance – some just a little, others a lot.  This, despite their best intentions.  

The opportunity to fix your records before you are audited could mean the difference between no citation at all, versus an administrative fine, a cease and desist order, and potential suspension or revocation of your PPO license.  This all becomes very public, too. Make no mistake about it: BSIS is here to regulate, not to collaborate.

Areas Of Concern

As a PPO licensee, you have obligations that will require you to address various areas.  What follows are some of the broad categories that will be inspected.

PPO Records, Vehicles and Uniforms:

  • Are your PPO license and all branch licenses properly displayed.
  • Are your records kept at your principle place of business – as recorded with the Bureau?
  • Are your current badges and patches in conformity with the original BSIS approval?
  • Are your current badges, patches and insignias in compliance with the Private Security Services Act?
  • Are your Certificates of Insurance for both workers compensation and for General Liability in compliance with Business & Professions Code 7583.39 as well as the California Code of Regulations?  
  • Do your advertisements display your PPO number? This might include websites, social media, vehicles, business cards and brochures.
  • Is your business structure in compliance with statutes?
  • Do your business records match the Secretary of State records, as well as BSIS records?
  • Are your patrol vehicles in compliance with the Vehicle Code and the B&P Code regarding their light bars and decals?
  • Are your uniforms in compliance with Business & Professions Code section 7582.26?

Employee Records:

  • Do you maintain the name, address, commencing date of employment, position, and date of termination of each employee in compliance with the Code?
  • Do you maintain current guard card and firearm qualification permit information?
  • Personnel Files: do they contain guard card information, training, and required certifications? (This may include pepper spray and baton permits, as well.)
  • Do you have proper credentials for your off-duty Peace Officers, including a letter from their agency?

Weapons:

  • Do you maintain the required log for all deadly weapons used on duty, including firearms and batons, in compliance with the Code of Regulations? 

Training Certificates and Records :

  • Do you have Certificates of Completion for each course or series of courses for each and every security guard?
  • Do your Certificates contain the required language and information?
  • Do you maintain proof of completion for the Powers to Arrest training for all security guards.
  • Do you have a certificate of proficiency from a licensed training facility for all of your armed officers?
  • Do you maintain proof of completion of the 32 hours of security guard skills training for all guards. (16 in 30 days / 16 in 6 months) and continuing annual training (8 hours)?

RECOMMENDATION: This list is by no means exhaustive.  We recommend a quick legal review well before your audit date.  There will always be blind spots – some significant and some minor.  Our goal, and yours, should be to become compliant (and hopefully before your “routine inspection” by the Bureau).

 

Barry A. Bradley is the Managing Partner of Bradley, Gmelich & Wellerstein LLP located in Glendale, California, where he oversees the Employment and Business Teams at the firm.  A former Deputy District Attorney, Barry’s practice concentrates on representing business owners in employment, business and licensing issues, as well as defending litigated cases involving negligent security, employment and business related issues.  The firm acts as general counsel for many security companies in California.  Barry is a volunteer Legal Advisor to the California Association of Licensed Agencies, Guards, & Associates (CALSAGA), and multiple other non-profits.  

He has been conferred an AV-Preeminent Peer Rating by Martindale Hubbell, the highest rating attainable, and has been named a Southern California Super Lawyer for the past 16 consecutive years in the area of Business Litigation. Barry can be reached at bbradley@bgwlawyers.com / 818-243-5200.

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.

WORKERS COMPENSATION AUDITS – BE PREPARED!

Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

Hope everyone is doing well and getting out to enjoy more activities outdoors!

Over the past 6 to 12 months, we have been receiving more calls from employers (PPOs) than ever before regarding Workers Compensation Audits. Their concern is that some auditors are requesting more information than they have in previous years. The reasoning behind the auditor’s request for additional information is the result of Assembly Bill 5 (AB-5). This is the radical change in the definition of Independent Contractor status in California. And, as a result, Workers Compensation auditors are requesting additional information to obtain verification that employers are classifying their workers correctly and collecting the appropriate premiums.

AB-5 implemented the ABC Test and put the responsibility on the employers to determine the status of their workers. In order to hire and classify a worker as an independent contractor, the employer must demonstrate that all 3 of the independent contractor requirements are satisfied. These 3 requirements include the following:

  1. The worker is free from control and direction in the performance of services; and
  2. The worker is performing work outside of the usual course of the business of the hiring company; and
  3. The worker is customarily engaged in an independently established trade, occupation, or business.

Even before the implementation of AB-5, a Guard carded security worker is not allowed to work as an independent contractor.

Workers Compensation auditors are now requesting financials in conjunction with the usual 941 quarterly payroll reports and other documents to determine if payments have been made to independent contractors. Per the terms and conditions of the Workers Compensation policy, audits are mandatory and in Part 5 G-Audits; auditors are able to request the following: “You (policyholder) will let us examine and audit 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 business regular business hours during the policy period and within three years after the policy period 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.” 

Since AB-5 was signed into law in 2019, Workers Compensation policies expiring in 2021 and going forward are being affected by the new legislation.

Please be prepared to address the request from the auditors and provide the following documents:

  • Workers Compensation reports and/or Payroll Journals and/or Payroll Summaries
  • Federal (941) and State (SUI) quarterly tax returns that correspond with your policy period
  • List of Executive Officers, Owners or Partners (Ownership %, Amount Paid, Job Duties and Titles)
  • List of employees that have been reported in Clerical (8810) and/or Outside Sales (8742)
  • Access to General Ledger and Cash Disbursements Records
  • For any subcontract, please have certificates of insurance available for review along with the amount paid and their job duties*

*It is very important to request insurance certificates from all subcontractors that you hire, or the cost of the subcontractors you hire will be included in your final premium calculation.

Auditors are being required to request this information. Hopefully now you will have a better understanding of why it is being requested.

Thanks and 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.

 

GENERAL LIABILITY INSURANCE – ARE YOU COVERED?

Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

Happy New Year and hope everyone is doing well!

Over time, insurance carriers experience losses or events that make them reconsider providing coverage for certain types of exposures under the Commercial General Liability policy. It is important to note that as each insurance carrier evaluates these exposures, they develop their own underwriting guidelines and can or will modify the terms and conditions in their own policies to minimize risk. It is likely that most of you have not read through your entire policy to understand the coverage terms and conditions, unless you have insomnia and have nothing better to do. To assist you in understanding the Commercial General Liability coverage for contract security services, here is the short version of what to look for, “Exclusions”. 

Commercial General Liability (CGL) policies are intended to provide coverage to the Named Insured for their negligence (resulting from the services provided) for bodily injury, property damage, personal & advertising injury to a 3rd party. Most insurance carriers use a standard ISO CGL form and attach endorsements and exclusions to add, remove or limit coverage. We are not going to go through the entire CGL policy, however we are going to discuss some of the exclusions that may be on your CGL policy that you need to be aware of. 

The following “Exclusions” may be part of your CGL policy (Some exclusions may be added back with underwriting approval and additional premium):

  • Terrorism
  • Pollution
  • Communicable Disease
  • Personal and Confidential Information Disclosure (Cyber liability)
  • Employment Practices Liability
  • Employers Liability (Part of Workers Compensation policy)
  • Abuse and Molestation
  • Firearms
  • Unmanned Aircraft
  • Animal exclusion
  • Mobile Equipment (ie. Golf carts, scooters, segways…any vehicle licensed for the public road should be on an auto policy)
  • Cannabis Operations
  • Public/Low Income Housing
  • Airports
  • Crowd Control/Concert Facilities/Sporting Events
  • Liquor Establishments: bars, hotel bars, nightclubs, lounges…
  • Bodyguards: High Profile Individuals/Entertainers/Athletes…
  • Baggage checking
  • Inside Retail/Loss Prevention
  • Convenience Stores
  • Fast Food Restaurants
  • Schools

 

These “Exclusions” may not apply to all policies and your policy may have other exclusions not listed above. If you are providing security services that involves any of the above, please review your policy.

At the end of the day, including all of your operations (client exposures) in your application for Commercial General Liability coverage is critical to obtaining the proper coverage. Policies can be modified to include some of the high risk exposures and remove exclusions, with approval from the insurance carrier. In regards to some of the extremely high risk exposures (for example, Crowd Control/Concerts/Sporting Events, Low Income Housing, Liquor Establishments, Inside Retail/Loss Prevention, High Profile Individuals/Entertainers/Athletes…) that the standard insurance carriers will not accept, specialty insurance carriers are available.

Take care and be safe.

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.