Kate

THE CALIFORNIAN 2018 Q3 – FEELING THAT CANNABIS HIGH

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FEELING THAT CANNABIS HIGH

by Stephan P. Hyun, Esq.

 

Starting on January 1, 2018, cannabis-related business activity became legalized in California, resulting in a lot of questions about the opportunities that have now become presented.  We as legal counsel often get asked:  Should I do business with a cannabis company?  What should I look out for?  How do I protect myself?  After all, this legalization affects both the licensed cannabis businesses themselves as well as the businesses who do business with them.

Here are important issues that we frequently deal with in protecting our clients who want to start doing business with a cannabis company.

1) Typically in contracts, there are provisions that say how the agreement will be governed and interpreted, as well as where any claims can be brought.  Having these provisions properly drafted can be ‘life-savers’ because while cannabis is legal in California, it is not legal federal-wide.  Also since California has enacted additional protections to ensure that the contract can be enforced under California law, adding certain clauses and language in your contract can allow California courts to determine that your contract is valid and enforceable.  This will help you in instances when the cannabis business your dealing with is not upholding their end of the bargain.

2) We advise our clients to put into the agreement ways in which you can terminate or suspend your services immediately without any notice.  When advising our clients and drafting their contracts, we take into account the possibility of the federal government investigating or prosecuting cannabis activity even in states where it’s ‘legal’.

3) Our firm has negotiated key provisions to be incorporated into cannabis security service contracts.  One of the provisions that we insist be carved out is about when the cannabis business will defend you and cover your losses if the federal government comes after you for being seen as facilitating/assisting a cannabis business.

4) In the agreements we have worked on, we want to ensure our clients are protected by eliminating consequential damages.  Consequential damages are damages that go beyond the contract itself and flow from some type of failure in adhering to the contract.  Consequential damages in a cannabis-related situation would be the loss of the cannabis product that may have been stolen, or the cannabis company’s lost profits as a result of the security officer failing to show up at the dispensary on time.  For our clients, we advise them to limit their exposure, and draft contracts to meet that end.

5) Because many banks do not want to deal with cannabis businesses, cannabis businesses frequently pay in cash.  We counsel our clients to be wary of the temptation to be paid in cash.  By accepting cash, you could be accused of money laundering by the federal government.  Further, federal prosecutors may be suspicious that you are not simply a security services provider, but rather a pawn in the cannabis company’s scheme to hide where the money is truly coming from.  Certainly, this is unwanted attention for your business.

Recommendation:  We recommend that you get ahead of the ball and be proactive in preparing separate cannabis security service agreements, different from your standard contracts.  That way you lead in the negotiations for your services versus the other way around.  By understanding the intricacies and interplay between federal and state cannabis law, you will be able to fully capture this new opportunity and better protect yourself from this emerging cannabis high.

 

Stephan P. Hyun is an associate attorney at Bradley & Gmelich LLP, where he represents clients in a variety of business litigation and general liability matters, with a focus on providing legal counsel in business transactions and contracts, as well as business formation/development.  His practice also extends to handling licensing and compliance issues for both private security and cannabis industries.  He recently presented on the topic of Cannabis in California at the CALSAGA conference.  shyun@bglawyers.com  /  818-243-5200.

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Kate

The Californian 2018 Q4 – PREPARING FOR YOUR BSIS AUDIT

Bradley & Gmelich LLP’s Legal Corner

            In this issue, we address a couple of hot topics for Private Patrol Operators (PPOs).  Both come from our firm’s Private Security Business and Licensing Team.  The first is how to lawfully take advantage of the legalization of cannabis in California in providing security services.  The second addresses getting ready for routine audits of records from BSIS (which they affectionately call “inspections.”)  Our goal is to assist you in figuring out the maze of rules, statutes, regulations and case law that can keep you out of trouble and in lawful compliance.  Both are areas that our clients are frequently calling us about, and we want to share some best quick assistance.

Preparing For Your BSIS Audit

by Barry Bradley, Esq.

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.  In every instance where our clients have contacted us, they have been out of compliance.  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:

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 7582.39 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 weapons used on duty, including firearms and batons?

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 armed
  • 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).

 

CONTINUE READING THIS EDITION OF THE CALIFORNIAN

Barry A. Bradley is the Managing Partner of Bradley & Gmelich LLP located in Glendale, California, where he heads up the firm’s Private Security Team and 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 the Legal Advisor to CALSAGA.

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 14 consecutive years in the area of Business Litigation.  Barry is also the recipient of CALSAGA’s Security Professional Lifetime Achievement Award. bbradley@bglawyers.com  818-243-5200.

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Kate

THE CALIFORNIAN 2018 Q3 – 5 SMART KPIs FOR YOUR SECURITY OPERATIONS

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5 SMART KPIs FOR YOUR SECURITY OPERATIONS

Mark Folmer, CPP,  TrackTik

This is a no-brainer: Why does a client prefer to work with a security services provider that can measure their own performance?

Because those numbers give your client the peace of mind that comes with knowing their business has been secured in the way agreed to.

So naturally, as an owner or manager of a professional security service solutions provider, you want to have key performance indicators (KPIs) for your business in order to measure performance and efficiency.

 

Choose your KPIs with care

checklistNow KPIs come in a slew of varieties. Today, let’s  focus on those related to your field service operation. So let us assume that the fact-finding questions you ask about your client’s needs, assets, risk profile, etc., lead you to this conclusion: Onsite guards and mobile guard patrols are part of a cost-effective solution to the client’s situation.

Being slightly obsessed (your business or life partner uses other words) with efficiency, you understand the value of adopting a Computer Assisted Dispatch (CAD) solution: It ensures your field security patrols and responses are coordinated as efficiently as possible.

If you are forward thinking, you have linked your CAD solution to a security workforce management platform (that also includes a security guard tour system). Having this software allows you to fully automate your KPIs and also drive up field service business by offering data-supported Service Level Agreements (SLA) to your client.

Since you have taken the time to invest in the best training and equipment for your mobile teams, now you want to know how well they are doing. Consider these five smart KPIs for your field operations:

 

1. Completion Rate

Having spent time with your client analyzing security requirements, your ultimate goal is to achieve 100% of the site visits promised.
That number means that the client is receiving what they want and you can invoice all that has been agreed to.

2. Response Time

Measuring response time is the ultimate efficiency measure. So you want to respond as quickly as possible. It goes without saying that responding within the agreed-to response time is critical.

3. Overtime

You set your staffing levels based on the anticipated volume of calls and service delivery. That said, you want to minimize the unbillable overtime incurred by shared service units in order to be profitable and get a precise view of your productivity.

4. First-Time Fix Rate

By equipping mobile staff with all the information they need to properly access and respond to a site, you are driving first-time fix rates. Limiting the need to send additional or multiple units means you are more efficient.
Providing all the information your staff needs means that they are more accurate, can take appropriate action while onsite and can provide the client with a detailed incident or activity report.

5. Client Satisfaction

Have you ever had a client ask the operations center, “When will the response unit be onsite?” If your system is properly automated, you will be able to answer that question very easily, and support your client’s peace of mind.
Other items that can propel client satisfaction include: accurate invoices, incident reports sent to the right people and reports that accurately and richly provide details of any incident.

 

Stick to SMART KPIs

clockIf you wish to identify other KPIs specific to your business, ensure that the objectives are SMART (Specific, Measurable, Attainable, Relevant and Time-sensitive). Keep in mind that less is more. Having too many KPIs can be difficult to manage and lead to more confusion.

The items in the list above have focused on client and business owner satisfaction. It is worth mentioning that fair and clear KPIs can also motivate staff. In fact, using KPIs to align staff performance with business success is an alternate way for driving team performance and engagement.

Building your business based on clear and measurable performance indicators will drive client satisfaction, employee performance and build up your business’ reputation.

Mark Folmer, CPP, MsyI
Vice President, Security Industry
mark@tracktik.com
Twitter: @markfolmer

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Kate

THE CALIFORNIAN 2018 Q3 – CHANGE IS HERE

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CHANGE IS HERE

Steve Reinharz, President, Robotic Assistance Devices, Inc.

‘Change’ is one of the most overused words and concepts in most every industry. It gets people’s attention; it clicks and is therefore a powerful word for promoters to use. People generally are fearful of change because it challenges the stability that so many seek.

Change is opportunity and risk. Opportunity of being part of the ‘next big thing’ and risk that if you miss out it could be catastrophic. And although it’s an overused word I’m going to use it here: Our guarding industry is finally being changed by emerging technologies.

Historically we haven’t had much ‘real’ change in guarding because of the nature of guarding itself. Since the ‘sell’ of guarding is a human at a location(s) there has been little ability to innovate. Instead, much of the industry has been trading a similar commodity service and there’s been few opportunities to do anything other than compete on price in a race to the bottom. Naturally there are many exceptions; I’m simply talking about the part of the market with these characteristics.

But finally, for better or for worse, real change is here and we are going to have separation between adopters and resistors. And as always the adopters will prevail. Adopters can be characterized as more forward-thinking, risk-taking and engaged than resistors.

A parallel example is what happened in security integration industry in the late 90s. DVRs and IP based solutions started to emerge. Adopters thrived and resistors struggled. Same thing for many industries that had significant technologies introduced.

For guarding the revolutionizing technology is called ‘robots’. I write it like that because until the technology is perfected and given a real name we’ll call them ‘robots’. Someone once told me that ‘a robot is a robot until it’s called a washing machine’ which illustrates the point that immature technology gets a unique name and industry once it proves itself. But it will get better and it will get better faster.

Today’s rolling robotic solutions are far from perfect and in many cases have questionable usefulness but let this be notice that the technology is rapidly improving and the change is here today. Stationary artificial intelligence solutions are here today and proving themselves incredibly useful. In five years I expect this industry’s service offerings to be considerably more complex, lower cost, higher profit and better performing.

Change will bring opportunity and risk. Early adopters are noticing, learning more and experimenting with these new technologies. They’ll be the winners from this period of significant change that has started.

 

Steve Reinharz is the founder and President of Robotic Assistance Devices (RAD). A proven, seasoned leader in the physical security industry with 20+ years of experience holding various roles in multiple disciplines, Mr. Reinharz has led RAD to create and launch a successful line of artificial intelligence powered solutions specific for the guarding and concierge industries.

Mr. Reinharz’s experience is multi-faceted in that he’s been an end user, created and managed his own security integration firm and held various other industry roles. Mr. Reinharz speaks and works panels at ISC East and West and ASIS.

‘Force-multiplication’ has been the hallmark of Mr. Reinharz’ career. Specifically using technology to improve client security. Mr. Reinharz credits almost two years of work performed with the LAPD as the basis for many of the technological innovations he has launched.

Mr. Reinharz has called Orange County, California home since 1995 but grew up in Montreal and Toronto. He earned a dual-BS  in Political Science and Commercial Studies and currently resides in San Juan Capistrano, CA with his wife and children.

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Kate

THE CALIFORNIAN 2018 Q3 – GOING TO WORK FOR THE BUYER OF YOUR SECURITY COMPANY

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GOING TO WORK FOR THE BUYER OF YOUR SECURITY COMPANY

Harold A. Laufer, Esq., Bradley & Gmelich, CALSAGA Network Partner

Congratulations! You have an offer to sell your security company to a much larger operation. Due to your success, they want you to come and work for them, maybe to even continue to run your business or to manage an even larger security entity. They are also talking about giving you equity in the big company with potential bonuses.

Hmmm.  What should you be thinking of when evaluating how good a deal this really is, and whether you should stay on with the new company, or just take your money and head to the golf course?

For purposes of this article, we’re not going to talk about how to structure the deal – whether it should be a stock sale or an asset transaction. And we’re not going to discuss your tax issues. These are all really important, but instead we are focusing on the potential issues involved when you not only sell your business but go to work for the buyer of your security company.  Ask yourself how you will answer all of the questions below.

Who’s The Boss?

Let’s start with your employment contract. You’re used to running the show. Now you have a boss. The first question is “are you OK with that”? – or even if you’re not sure – are you receiving enough money to make it alright? Who are you reporting to? What do you know about the man or woman you’ll be reporting to? Do they seem reasonable? Under what circumstances can you be terminated? Because if the job isn’t all that secure, and you’re counting on the paycheck to get the deal worth what you’d like to make, you may be better off negotiating the sale price harder now rather than hoping things will work out later.

How much control will you have? Can you run things as you see fit, or if you don’t have a completely free hand, is it clear what the limits to your authority will be? Are you OK with the answer to that question? If part of your deal involves performance bonuses or an earn-out, are the targets realistic and achievable? And even if they are, is it confirmed the buyer will provide you with a sufficient budget and with enough operating discretion to actually hit your targets, or are the bonuses really illusory? It may sound great but in the real world will it actually happen?

How Much Longer Can I Take This? 

The next question is how long do you want to work as an employee, even if you’re an officer of the company making a lot of money? Does the amount of time you are required to stay on match how long you actually want to remain? Is it too long or not long enough to be worthwhile? We’ll talk more about this in a little while, but if you’re being offered equity, does your employment term align with how long it takes for your stock to fully vest?   (Full vesting means you can’t forfeit or lose the stock…it’s yours.) There’s a major risk if your employment can be terminated before your stock is fully vested and earned.

Am I Getting What They Say I’m Getting?

Let’s look at the equity side. How much of the buyer’s stock is on the table? Is it enough to be meaningful? Is it fair? Is it stock in the overall company or are you getting equity in a small little segregated piece of the business? Is it being given to you as part of the sale? Or is it extra in exchange for your staying with the business? If you have to earn it, what does that mean? Is it dependent on hitting certain targets? Is it dependent on your remaining with the company for a certain period of time? If you exceed your targets, can you get more stock?  (This is important because if you miss the targets you may lose stock or at least not earn some of it.) Are you getting stock options, which mean you have to buy the stock, albeit at a discount to fair market value, at the time you purchase your shares? Is your deal part of what we call a “roll-up.” This means your buyer is purchasing other companies like yours and wants to get a lot bigger. If it’s a roll-up, you should find out that your deal is equivalent to what other sellers are getting and is everyone getting a similar amount of stock?  (You might be receiving 10,000 shares, but if other similar sized companies are receiving 90,000 shares, this is not equitable for you.)  Is everyone receiving a similar compensation package. When a roll-up is in process it gives you an opportunity to talk to other owners and to get a better feel for what a good deal looks like.

If you earn or otherwise obtain all of your stock, who can you sell it to? What are your options for monetizing it? Unless you figure an even bigger buyer is coming along in the foreseeable future, you should consider making the buyer obligated to buy you out when you leave the company or at least at some mutually agreeable time. If the goal is to cash the stock in, you have to come up with a method of determining what the stock is worth. You should do that when you negotiate your employment deal and not leave it for later. Without a way to sell the stock, your stock certificates are just pieces of paper.

What About My Company’s Assets?

Does your security company have real estate, vehicles and/or equipment? Are they part of the sale or will you retain some or all of it? Is the buyer willing to lease these assets from you? This can be another revenue source for you and goes into figuring the total value of your deal.

Putting It All Together

When you decide to stay with the buyer of your security company there are complicated and interwoven issues about your compensation, your equity, your potential upside and possible side deals for assets that aren’t part of the overall package. Because these affect each other, making a mistake in any one of them can substantially change what your deal is worth. And most importantly, you have to think about why you want to stay on? Is it worth it financially? Is it secure? What is the realistic upside?  Are you going to be happy working – and working for someone else after years of doing things your way and being you own boss? It’s different, to say the least.

Bring your attorneys into the picture at the conceptual stage, not just to look over a final contract before you sign.  As you know, Bradley & Gmelich LLP works with sellers (and buyers) of security companies every day. We can help you understand the pros and cons of working for the buyer of your security company.

 

Harold A. Laufer is a highly experienced corporate transactional lawyer, and has been Of Counsel with Bradley & Gmelich LLP for over two years. He spent much of his career practicing corporate law as an equity partner at a major Midwest law firm, where he headed the Mergers and Acquisitions Practice Group. He has represented companies of all sizes, from start-ups to Fortune 500 companies, along with their owners and managers, as a Trusted Advisor. Mr. Laufer has handled a wide variety of transactions for corporate clients, with experience in all aspects of a business’ life cycle, starting with deal structuring and entity formation, and continuing through Founder’s documentation, initial HR, IP, rights and licensing issues, financing, growth, corporate governance and eventually ending in liquidity events and exits.

Mr. Laufer has published and lectured on mergers and acquisitions, negotiation strategies and skills, and corporate governance. He has taught graduate level business courses on family offices, contract drafting and enforcement, and entrepreneurship. He is affiliated with UCLA’s Anderson’s MBA and entrepreneurial programs.  hlaufer@bglawyers.com 818-243-5200.

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Kate

THE CALIFORNIAN 2018 Q3 – WHEN DOES  A “TALL” BECOME A “VENTE?”

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Bradley & Gmelich LLP’s Legal Corner

In this issue, we have two articles.  From our Employment Team, we address a new California Supreme Court case requiring payment of wages for trivial work that may be performed after an employee clocks out, even if it only takes two minutes.  We also present, from our Business Team, an article to those PPOs who are thinking of selling to another company – some questions to help you look for potential blind spots.

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From Our Employment Team:

WHEN DOES  A “TALL” BECOME A “VENTE?”

(OR, WHEN DOES SOMETHING MINIMAL BECOME BIG?)

Barry A. Bradley, Esq., Bradley & Gmelich, CALSAGA Network Partner

On July 26, 2018, the California Supreme Court dealt another blow to employers, as it departs from applying federal law to our wage and hour issues.  In Troester vs. Starbucks Corporation, plaintiff brought a class action on behalf of himself and all non-managerial hourly employees who had to perform store closing tasks.

Essentially, Troester said he was required to clock out at closing, and then transmit data from the computer regarding daily sales, profit and loss, and store inventory data to Starbuck’s corporate headquarters. Troester would then activate the alarm, exit the store, and lock the front door.  Occasionally he would escort other employees to their cars, pursuant to Starbucks policy. These tasks typically took anywhere from 4 to 10 minutes to complete, but averaged less than 5 minutes.

He sued Starbucks arguing that he (and all non-managerial employees who closed the stores at night) should have been compensated for this minimal time.  (Over a 17-month period, it added up to $102.67.)  Starbuck’s argued that the time was de minimus, or so trivial that it doesn’t deserve to be counted.  Federal labor laws have long recognized that such minimal work need not be compensated, under the so-called de minimus doctrine.

Although the district trial court threw out the case, the California Supreme Court unanimously disagreed with Starbucks and the district trial court. In holding that the de minimus doctrine does not apply to California wage and hour laws, it opened the door for class action lawsuits on these new grounds.  The Court held that even though the employee’s tasks only took a few minutes, the fact that employees were required to regularly work for nontrivial periods of time without providing compensation was tantamount to requiring off-the-clock work.  Besides, to Troester, the Court reasoned that $102.67 may not have been so trivial – it could have paid for a monthly gas bill, or perhaps a nice dinner.

Thus, the Troester plaintiffs can now pursue their class action lawsuit against Starbucks alleging unpaid wages, as well as the “coat-tail” claims of inaccurate wage statements, failure to pay all final wages in a timely manner, and unfair competition.

[Note:  the Court expressly did not decide the question of whether an employee who, on rare occasion needs to spend a few minutes doing something after they clock out, would constitute a violation. The Court limited its decision to the specific facts presented, and left open the fight of whether occasional work need be compensated for another day.]

RECOMMENDATION:  Do not require your employees to regularly perform tasks after they clock out.  This could include writing in a pass-down log, conducting verbal shift-change information, calling-in to their supervisors to give updates, or just cleaning out a patrol vehicle to lock up the items.  If this is part of their job duties and it is required to be performed after they clock out, you are in violation of the wage laws. This could result in a serious class action or a Private Attorneys General Act (PAGA) lawsuit.

 

Barry A. Bradley is the Managing Partner of Bradley & Gmelich LLP located in Glendale, California, where he heads up the firm’s Private Security Team and 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 the Legal Advisor to CALSAGA.

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 14 consecutive years in the area of Business Litigation.  Barry is also the recipient of CALSAGA’s Security Professional Lifetime Achievement Award. bbradley@bglawyers.com  818-243-5200.

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Kate

THE CALIFORNIAN 2018 Q2 – PERFECTING THE PRE-HIRE PROCESS

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PERFECTING THE PRE-HIRE PROCESS

Kwantek Team

For 15 years, Kwantek has served the recruiting needs of thousands of companies across the nation. Most of our clients have a need to fill low-paying, hourly jobs. They use our applicant tracking software to post these jobs en masse across multiple job boards and take advantage of our seamless onboarding process once hired.

A natural byproduct of these types of these jobs is poor employee retention. After monitoring the pre and post-hire process for over 1,000,000 security and building services jobs, we’ve been able to identify three critical pieces of data for these industries that directly correlate retention back to the interview process:

1) 50% of scheduled interviews will ever show up for the interview.

2) Over 90% of interviewees are offered jobs in the interview process.

3) Over 40% of new hires make it past 30 days of employment.

In this five-part blog series, we will discuss the critical stages of the pre-hire process and how you can make simple adjustments that will help you reduce your retention rate.

Blog #1: Who’s Interviewing Who? A Counter-Intuitive Approach to the Hiring Process

Blog #2: The Most Important Person in the Interview Process

Blog #3: The True Goal of the Phone Screen

Blog #4: How to Modify Your Job Application to Increase Applicant Volume

Blog #5: Mastering Messaging in Your Recruiting Process

Perfecting the Pre-Hire Process Webinar

If you’ve found this series helpful, we invite you to watch a replay of our webinar where we went even more in-depth on each phase of the pre-hire process. Join our CEO, Collie King, as he dissects each stage of the applicant funnel to help you identify which parts of the process you need to improve.

In the webinar, you’ll learn:

  1. How to leverage your pre-hire process as a key strategy in scaling your business.
  2. Which numbers to track in your pre-hire process and why.
  3. How to build trust with applicants and make them want to work for you.
  4. How to generate more applicants, more interviews, and more accepted offers.
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Kate

THE CALIFORNIAN 2018 Q3 – CALIFORNIA SUPREME COURT DECISION REDEFINES THE GUIDELINES OF INDEPENDENT CONTRACTORS

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CALIFORNIA SUPREME COURT DECISION REDEFINES THE GUIDELINES OF INDEPENDENT CONTRACTORS

Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

On April 30, 2018, The California Supreme Court issued a ruling in Dynamex Operations West. Inc. v. Superior Court, making it much more difficult to classify an individual as an independent contractor (rather than employee). The previous standard for classifying individuals as employees or independent contractors had been in place since the 1980’s and was based on a multi-factor test that considered, among other factors, the individual’s abilities, the method of payment, and the extent of control exercised over individual. In the Dynamex ruling, the Supreme Court adopted a new three-part “ABC Test” that is intended to reduce the use of independent contractors in the California workforce.

The new standard adopted by the California Supreme Court requires the hirer to establish three factors in order to properly classify a worker as an independent contractor – and in the process greatly expands the definition of “employee” under California law. Here is the information to classify an individual as an Independent Contractor:

Is free from the control and direction of the hirer in connection with the performance of the work, both under contract for the performance of such work and in fact; and

Performs work that is outside the usual course of the hiring entity’s business; and

Is customarily engaged in an independent established trade, occupation or business.

All three are required in order to fulfill the test.

Even though the “ABC Test” is written to simplify the definition of independent contractor, the application of the three part test is not going to be that simple. It will be the hirer’s responsibility to satisfy the “ABC Test” in order to lawfully classify an individual as an independent contractor. Please keep in mind, this decision was made under the Wage Orders of the Industrial Welfare Commission. As we all know, there will more than likely be subsequent cases, actions and rulings that will be restricting or expanding the Court’s decision to other state department (i.e. Workers’ Compensation).

So, if you are hiring independent contractors or being hired as an independent contractor, now is the time to review the following regarding the new “ABC Test”:

-Identify your independent contractor relationships

-Description of duties of those relationships to the “ABC Test”

-Review contracts involving independent contractors

-Prepare a file for each relationship to include name, description of duties, FEIN#, insurance certificates…

-And any additional information to support the independent contractor relationship (Remember, independent contractors must have the ability to work for multiple clients and they provide their own tools and materials to complete the job free from control of the hirer)

 

Thank you for taking the time to read the article.

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.

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Kate

THE CALIFORNIAN 2018 Q3 – SECURE BEHIND THE WHEEL: DECIDING TO PREVENT DISTRACTED DRIVING

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SECURE BEHIND THE WHEEL: DECIDING TO PREVENT DISTRACTED DRIVING

Tory Brownyard, President, Brownyard Group

 

From public health officials to your insurance agent to the local police department, everyone wants to talk about distracted driving these days. We all know the basic facts: Distracted driving is common—and some experts (such as the National Safety Council) believe distracted driving is underreported as a cause of accidents.

 

Getting distracted from the task of driving leads to crashes, injuries and worse. According to the National Highway Safety Administration, 3,450 people died nationwide in 2016 as a result of distracted driving. Plus, distracted driving is often against the law—in California, thanks to AB 1785, it is illegal to drive with a cell phone in your hand.

 

Preventing unsafe driving of all kinds comes down to decisions: whom security firms decide to hire, the decisions that security officers make on the road and how the company decides to respond to accidents. If you are responsible for hiring or managing security officers with driving responsibilities, you can put in place systems to support better driving decisions.

 

  1. Understand what falls under the umbrella of distracted driving

The term “distracted driving” is often using to mean driving while using a cell phone. Yet “distracted driving” refers to any type of driving during which the driver is not attending to the road. Eating and smoking are distractions, as are GPS devices and radios. Texting while driving is particularly dangerous, because it takes our hands, eyes and minds off the wheel.

 

  1. Develop enforceable and clear driving policies

Most companies have some version of a cell phone ban for employees who drive. But a distracted or safe driving policy needs to outline clear, distinct and enforceable policies for employees.

 

Questions a policy can answer include:

  • What should employees do instead of using their cell phones when driving?
  • What are the consequences for dangerous driving behaviors?
  • Are there systems for monitoring employees’ driving behavior, such as dashcams and telematics?
  • What happens after an employee gets in an accident?

 

These policies can be supported by regular road tests and ride-alongs that help detect signs of trouble among drivers while giving managers an opportunity to review policies in context. In order to ensure a policy is enforceable, it should be developed in conjunction with human resources and legal counsel.

 

  1. Make informed hiring decisions

Some businesses “hire the problem”—that is, they hire unsafe drivers for positions that require driving. Checking motor vehicle records (MVRs) is as important as a criminal background check for officers who drive; those responsible for hiring should review a candidate’s MVRs for every state in which he or she has had a driver’s license. MVR red flags include frequent violations like speeding or citations for driving under the influence (DUI). Past violations may indicate future behavior.

 

It also may help to consider the candidate’s skill and experience driving, such as training in defensive driving. Alternately, consider whether or not he or she has a health condition that does not permit operating a vehicle for long periods of time.

 

Finally, it may help to ask yourself whom you would hire if you did not have insurance. That is, who has the sort of driver profile that would make you feel safe enough to put them behind the wheel with little safety net? The public expects businesses to carefully screen employees like security officers. Hiring an unsafe driver could not only result in an accident and insurance claim, but damage your reputation.

 

  1. Use technology to your advantage

Modern technology is not always the villain on modern roadways. It can be used to reduce distractions on the road, too. Telematics devices are more and more common and can be used, in conjunction with GPS technology, to monitor behaviors like braking, speeding and seatbelt use as well as the location of a company vehicle. Plus, products like Cell Control allow employers to block the use of cell phones in company vehicles.

 

Of all the challenges and risks a security officer can face on a daily basis, driving may seem minor. After all, many of us drive several hours a week just to run routine errands. But just because driving—and, sadly, distracted driving—is commonplace does not mean it is safe. Making the decision to commit to safe driving protects officers and the communities that trust them.

 

Distracted driving has been such a frequent topic of conversation that we developed a risk management brief on the issue. If you would like more information on the consequences of unsafe driving and how employers can prevent it, visit this link to download “Driving on the Edge: Why We Must Act Now to End Dangerous and Distracted Driving”: http://brownyard.com/distracted-driving/

 

Tory Brownyard, CPCU, is president of Brownyard Group (www.brownyard.com), an insurance program administrator with specialty programs for select industry groups. In addition to his responsibilities as President, he currently spearheads the Brownguard security guard insurance program. For more information, contact him at TBrownyard@brownyard.com.

 

 

 

 

[Sources:

https://www.nhtsa.gov/risky-driving/distracted-driving

https://www.nsc.org/road-safety/safety-topics/distracted-driving

https://www.ots.ca.gov/Media_and_Research/Campaigns/Distracted_Driving/default.asp ]

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Kate

THE CALIFORNIAN 2018 Q2 – INDEMNITY – ARE YOU AN INSURANCE COMPANY?

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INDEMNITY – ARE YOU AN INSURANCE COMPANY?

Nick Langer, Senior Risk Advisor – Turner Surety & Insurance Brokerage, Inc.

 

Everyday your private security company performs service for its clients. As owners, executives and managers we have expectations of our employees… appearance, behavior, dependability, etc. Your clients, naturally, have expectations of your security company as well. Frequently there are misunderstandings between your clients’ perceived expectations of your company’s services and the actual services provided by your company. Most successful security providers invest much time and resources into meeting or, better yet, exceeding their clients’ expectations. While client satisfaction is important in the success of your company, your contractual obligations to your client as defined in your contract or service agreement are paramount in the protection and longevity of your security company. Fully understanding your contractual obligations and duties and what type of risk your company is assuming under the contract should be thoroughly analyzed before executing any contract or service agreement.

 

I must preface the remainder of this brief by making it clear that implementing or executing your security company’s own contract or service agreement with its clients can create the most favorable contractual relationship for your company…. assuming an attorney has helped draft it. With that being said, it is very common for most clients to require you, the security provider, to sign their contract. In analyzing a typical contract you’ll come across various elements establishing duties, responsibilities, etc. Clearly all of these obligations are important in understanding the intentions of the contract or most specifically the requirements of the contracting parties (your company and your client). All elements of a contract are relevant, however the Indemnity/Indemnification/Hold Harmless contract language should be examined in great detail.

 

Before diving into the Indemnity language of the contract, it is important to understand “why” this contract between you and your client is being implemented in the first place. The short answer is “risk transfer.” YES, your client has transferred their risk onto your security company the moment your company begins, or agrees to begin, providing security services to them. To what degree your security company has assumed risk associated with the location and/or post orders is ultimately determined by the language contained within the four corners of your executed contract or service agreement. Remember, your client has hired your security company to protect them from, or prevent, various types of risks, e.g., bodily injury, property damage or financial loss from occurring.  In almost every situation, the locations your company is securing are under your care, custody & control. With this care, custody & control of the location comes much risk…. Which is “why” your client has hired your security company in the first place. Your security company is a risk transfer tool.

 

Risk transfer is a very common practice in risk management strategy. In fact, every time we purchase insurance we have engaged in a risk transfer agreement with the insurance carrier; that is, we pay insurance premiums to the insurance carrier and in return the insurance carrier promises to defend us or protect us and/or our property from certain risks or perils identified in the insurance policy. It is incredible how remarkably similar an insurance transaction is to the relationship between a security company and its client, i.e., the client pays the security company and in return the security company promises to provide services to protect the client or prevent certain risks from occurring. This begs the question, “Are you an insurance company?” In theory, the answer is “NO” however you must pay close attention to the obligations created contractually between you and your client to ensure that the expectation is not created for your security company to act as an insurer.

 

In taking a deeper look into the critical elements of your contract, the Indemnity language will be most important as respects managing your company’s risk. Indemnification clauses are also referred to as a “hold harmless” agreement. These types of agreements establish that the Indemnitor will agree to protect and indemnify the Indemnitee from damages such as bodily injury or property damage that occur from the negligence or negligent acts or omissions (intentional or unintentional) by certain parties. Once you agree to indemnify your client you have agreed to not only reimburse your client for certain losses or occurrences which arise at their location, you are also going to be required to defend them. There is frequently a misperception of this concept. Unfortunately many people take the approach of managing their company’s contractual risk by merely accepting the terms of a contract under an assumption that the company’s insurance programs are the catchall solution to any adverse situations which arise. That assumption is dangerous. There are many risks and occurrences to which insurance simply will not respond. Even the most robust insurance policies cannot be relied upon as the resolute solution in risk management. Insurance is one of many risk management tools that can be used to transfer some of your company’s risk onto an insurance carrier, however you must identify and manage those risks that insurance will not respond to. When analyzing the Indemnity language in your contract it is important to remember that the indemnification and defense of your client remains enforceable regardless of the existence of any insurance policies maintained by your company.

 

There are three levels of indemnification to familiarize yourself with– broad, intermediate & limited.

 

Broad Form Indemnity: Broad Form Indemnity requires one party (the Indemnitor) to assume the obligation to indemnify and hold harmless another party (the Indemnitee) even if that other party is solely at fault or negligent. The phrase “caused in whole or in part” used in the indemnification clause is a key indicator of a Broad Form indemnity agreement. This type of Indemnity poses the most risk to your company and in many states may not be enforceable.

 

 

Intermediate Form Indemnity: Intermediate Form Indemnity indemnifies a party (the Indemnitee) for its own negligence, except if that party is solely at fault or negligent for the occurrence. With an Intermediate Form Indemnity the Indemnitor agrees to indemnify and hold harmless the Indemnitee if a claim, demand or suit is brought against them for an occurrence caused in whole or in part by the Indemnitor’s negligence, including the contributory negligence of the Indemnitee. The phrase “caused in part” in the indemnification clause is a key element in establishing an Intermediate Form indemnity agreement.

 

Limited: Limited Form Indemnity is really a concept that follows common law principal in that a party is responsible for their own negligence. With a Limited Form Indemnity the Indemnitor agrees to indemnify and hold harmless the Indemnitee in the event a claim, demand, or suit is brought against them as a result of the Indemnitor’s direct negligent acts. A key phrase to look for in a Limited Form Indemnity is “only to the extent.”

 

Once you have determined the type of Indemnity imposed by your client’s contract it is critical to reference your insurance policies to ensure that coverage will respond, before you execute the contract or begin performing services. Frequently we see contracts which contain Indemnification language which is broader than the coverage afforded under an insurance policy. The Indemnity language is one of many parts of your client contract that should be negotiated whenever possible. We have all encountered situations in which your client presents the “take it, or leave it” contract. In every other situation you should at minimum ask if the client is willing to negotiate the indemnity language. Negotiating a reasonable Indemnity agreement can mean the difference of having a claim covered under your insurance policy or not. Carefully review all contracts with your attorney and insurance broker prior to execution so that you can enter into the relationship with your client knowing and understanding all of the risks involved. While your security company can make many promises as respects its ability to deter losses from occurring, it is impossible for your company to guarantee there will never actually be a loss. Know the risks and don’t let your security company become an insurance company for your client.

 

 

Nick Langer is a Senior Risk Advisor at TSIB with more than 15 years of property & casualty broker experience. He specializes in the Construction, Energy and Security Industries. Nick enjoys the challenge of finding solutions to his client’s unique needs and is committed to learning the intricacies of each client’s business operations.

Prior to joining TSIB Nick had his own insurance agency that specialized in both personal and commercial lines of insurance. After 7 successful years of growing his property and casualty agency he joined Tolman & Wiker Insurance Services, LLC.

Nick regularly presents at trade associations on risk management topics including: Workers’ Compensation, Claims Management, Risk Management, Contractual Risk Transfer and Employment Practices Liability.

Nick is committed to improving the lives and success of his clients for the benefit of the community through his various roles and leadership positions. He has served as the Insurance Advisor to the Board of Directors of The California Association of Licensed Security Agencies, Guards and Associates (CALSAGA). He is President of The Bakersfield Young Professionals in Energy (YPE), a member of the Associated Builders & Contractors (ABC), and the former Government Affairs Committee Chair for the Central California chapter. Nick is a member of the Associated General Contractors (AGC) and the American Society of Safety Engineers (ASSE).

Nick has Bachelor of Science in Business Economics from University of California, Santa Barbara. Nick and his wife have three children and three rescue dogs. In his spare time, Nick is an avid fisherman and enjoys golfing, hiking and fitness training.

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