Terry's Restaurant Insurance Blog
For most people, including restaurant owners, the word audit carries some pretty negative connotations. But with your restaurant workers compensation insurance policy as well as your restaurant general liability insurance policy, an audit is the way that you settle up with your insurance company at the end of the policy term. And while the audit process will undoubtedly take up some of you time, understanding it in advance could save you a lot of time, money and frustration.
Why does your insurance policy need to be audited by the insurance company? Well, this happens when the rate basis is something that cannot be determined accurately before the policy has expired. Your workers compensation policy is based on the dollar amount of payroll that you pay to each employee over the policy term. And your restaurant general liability insurance may well be based on your gross sales for the policy period. All you can do in the beginning is to make an estimate of these numbers. Once the policy term has passed, an audit is necessary to find the actual payroll or sales numbers and to calculate the final premium for that policy. At that time you will either owe a little more money or be due some back, depending on whether your estimate was too low or too high.
To keep your audit process as painless as possible, start by carefully reading and reviewing the pre-audit letter that you receive from your auditor. This letter will tell you just what you need to have ready when the auditor calls or visits. Take the time, right then if possible, to gather your documentation and go over it for yourself to make sure that it is accurate.
Next put your payroll records into order with totals and details available by the following criteria:
- Policy Period – from inception to expiration date
- Job Classification – have your payroll separated between the different classifications from cooks to managers to wait staff and clerical people.
- Overtime versus regular pay – Be sure to have the overtime amounts documented clearly as the workers compensation rates do not apply to the extra bonus paid for overtime work. This step will help lower your costs if you have paid out significant overtime over the year.
Make sure that you are clear on the meaning of the term Gross Payroll. The audit will be based on the gross payroll numbers. This is the amount of payroll before deductions that reduce the employees’ taxable income like 401k plans or cafeteria-style plans.
Keep the lines of communication open. If you are able to meet your auditor with all the information that he or she needs, the chances that the audit will go awry or waste your precious time are much reduced. The more research work that the auditor must do when visiting your restaurant, the greater the chances of the process getting tangled up, resulting in errors that will take your time to correct.
Once the auditor has finished the audit and submitted it back to the insurance company, you will receive a final audit statement. Take a moment to review the numbers to be sure that they are correct. If you see any errors, contact your agent for help in resolving them.
Clinard Insurance Group insures hundreds of restaurants all across North Carolina, South Carolina, Georgia and Tennessee. We work hard to help our restaurant owners to have a smooth and trouble free audit process each and every year. If you would like help with your restaurant insurance, please call our office, toll free, at 877-687-7557. We look forward to helping you.
Restaurant owners in North Carolina have plenty on their plates. With so many employees and the rules associated with their responsibilities to these employees, restaurant owners have a lot to keep up with these days. Now add in a new wrinkle – liability exposure for damages sustained by an employee’s fetus in utero. What is your exposure? How are you covered?
Pregnant mothers of course are protected by your workers compensation policy for injuries sustained while on the job in your restaurant. But what about the injuries that a fetus may sustain as a result of your workplace? Case law is pretty thin on this issue right now but more and more people are beginning to challenge employers for these kinds of injuries. A California case, Snyder vs Michael’s Stores, Inc. addressed the question of whether or not the workers compensation policy will respond to injuries to the unborn child. In this case the court ruled that coverage applies if the child’s claim is deemed collateral to or derivative from an employee’s injuries. The court went further to say that this derivative injury rule applies only if the child were seeking damages for the mother’s work related injuries, or if the claim necessarily depended on the mother’s injuries.
This case then, leaves out of workers compensation coverage the situations where the mother’s health is not put at risk but the fetus’ health is. When this happens, workers compensation is not seen as the exclusive remedy and the child is allowed to sue the employer as a third party injured through the employer’s negligence.
To further confuse the situation, consider the U.S. District of Columbia case, Lockhart vs. Coastal International Security Inc. In this case the courts ruled that workers compensation law expressly limits the the liability of an employer to an employee and to that employee’s dependents. This case then makes the workers compensation system the exclusive remedy for these types of claims. This is in direct contrast to the California decision.
If the California rules are followed, then you, as a restaurant owner have an even larger exposure. Will your general liability policy step in here and offer you protection from the coming third party lawsuit? While the general liability insurance policy does have an exclusion for injuries to employees (as that is best handled by the workers compensation policy), this exclusion would not apply to the child as that child is not an employee of your restaurant.
While there is some uncertainty regarding who may sue you and where you may find insurance protection, it is appalling to me that so many NC restaurants have no workers compensation insurance coverage in place. Going bare is extremely risky, and if you have 3 or more employees, also illegal in North Carolina. Still, nearly 50% of the restaurants in our state do not buy workers compensation insurance protection. The best plan of action for you is to review your workers compensation insurance and your general liability policies to make sure that both have high limits of coverage and are in force and ready to protect you. After that, there is no substitute for careful risk management for all employees. And bear in mind that with a pregnant employee you may have a non-employee third party in your restaurant that may hold the right to sue you for injuries.
At Clinard Insurance Group, we want to help you with your restaurant insurance needs. We can save you money while helping you make sure that you have the restaurant insurance protection that you want and need. Give us a call; toll free, at 877-687-7557.
Age discrimination claims by older workers against their employers are expected to grow dramatically over the next few years. Many older workers have not prepared well for retirement and thus will need to remain in the workplace longer. At the same time, your restaurant may find itself under pressure from younger workers who want to move up in responsibilities and seniority. The bottleneck of employment in your restaurant, coupled with the simple fact that today’s seniors are far more litigious than any previous generation, means that you need to understand this issue in order to avoid becoming a victim to it.
If your restaurant is considering reducing your number of employees, or if you are considering replacing an older worker with a younger one, then it would behoove you to make yourself familiar with the Age Discrimination Act and the Older Workers Benefit Protection Act. What most restaurant owners don’t understand clearly is that everyone over 40 is protected by these acts. To establish a claim for age discrimination, all the older, terminated worker must do is prove that they were employed, that they were over 40 and that they were the target of an adverse employment action and that they were replaced by someone who was either not in a protected class or whose age difference is large enough to give an inference of age discrimination.
To help you better protect yourself from this kind of action, here is a list of some of the issues that you might want to consider.
- Don’t assume that workers over age 65 should retire. Don’t suggest that they do so or ask them if they are looking forward to retirement.
- If you must terminate an older employee, make sure that your reasons for doing so don’t relate to age and that you have these reasons well documented.
- Don’t make the mistake of assuming or implementing a program that assumes that older workers are incapable of learning new things.
- Give any older workers that may be terminated in a reduction in work force, the opportunity to apply for a position elsewhere in your restaurant should one be open.
- When laying off older workers, be sure that all paperwork is order, including release of liability forms that you associate with a severance package.
- Offer generous severance packages in return for release of liability forms signed by the employee.
- Avoid making any age-related comments about the employee, either during employment or at termination. Should you mess this up, then immediately retract any negative comments that relate to age that you may have made.
- If you have to perform a multi-employee layoff, be sure to study the demographic data to be sure that you can’t be accused of cleaning out your older employees.
- Make sure that you keep Employment Practices Liability Insurance in force at all times in case you do make a mistake and need insurance protection, particularly for defense costs should you be sued.
At Clinard Insurance Group, we insure hundreds of restaurants all across North Carolina, South Carolina and Georgia. If you would like help with your restaurant insurance needs, please call us, toll free, at 877-687-7557, we look forward to helping you and answering your questions.
One of the most expensive components of your restaurant workers compensation policy is the cost of disability payments for injured workers. And since your workers compensation insurance premiums are directly related to the amount paid out on your behalf for claims, managing this component is an important step in keeping your workers compensation costs low. The best tool in this process is your return to work program. Getting your workers back in your restaurant and productively contributing to the ongoing needs of the business will improve morale, and productivity for all employees, not just the injured person. But there are a few pitfalls to the back to work process that a restaurant owner should keep in mind.
One of the most overlooked and yet most dangerous traps in a back to work program is that while the programs are generally set up by workers compensation insurance companies to help with your workers compensation insurance claims process, you must be careful not to ignore governmental organizations and their rules in this area. If you have 15 or more employees, then you will fall under the Americans With Disabilities Act and its rules. In addition you must be careful not to run afoul of the Equal Opportunity Employment Commission, or EEOC. Each of these governmental organizations will have rules about how you must modify your workplace to accommodate a disable worker, whether or not that worker was disabled on the job. If you look at the return to work issues only through the lens of your workers compensation insurance then you might place yourself in jeopardy with one of these organizations. That can be a costly mistake if your employee decides to hire a skillful and knowledgeable attorney for representation. Just remember that as a federal law, the Americans with Disabilities Act supersedes your state workers compensation laws and provides a floor level of protection. Anything you do with return to work through your workers compensation insurance company should exceed this floor level of protection for your workers, either disabled on the job or otherwise.
Another mistake that is often made in returning injured employees to work is insisting that they not return to work until they are able to perform full duties. There is a lot of evidence that transitioning your injured employees back to work for short periods of time or for other light duties will help reduce malingering and will also improve the employee’s mental health. Many people derive their sense of self-worth and motivation from their ability to be productive. Helping them be productive in some capacity as early as possible will help your reduce your workers compensation claims costs and thus reduce your restaurant workers comp insurance rates as well.
Don’t ignore co-morbidities in your injured workers, particularly as you transition them back into the restaurant for light duty work. Co-morbidities are health issues outside of the workers comp injury that make the recovery process more difficult for the injured employee. Examples of this are hypertension, diabetes, obesity and depression. While most of the costs associated with co-morbidities in returning injured workers back to your restaurant to work are shouldered by the workers compensation insurance company, this could change with the gradual implementation of Obamacare rules. So if your restaurant does not provide health insurance for your employees, you may find most of this cost shifting to your workers compensation insurance claims and thus driving up your workers compensation premiums over time.
This last pitfall may seem counterintuitive at first glance. And that is that an overreliance on the physician treating your employee for guidance on when to let them return to work could be a mistake. If the physician is not trained in your workplace policies, job duties and does not have a solid understanding of exactly what the work in your restaurant entails, then you may be better served to let your workers compensation insurance company guide you for when you can allow your injured employee to begin to return to work for either light duty or full time work.
What I would advise for restaurant owners who are dealing with high workers compensation claims costs and thus high premiums, is to choose your workers compensation carrier very carefully. I would suggest that you consider buying your workers compensation insurance only from an insurance company that specialize in workers compensation insurance and that does not sell any other forms of insurance. These specialty companies tend to have greater expertise in return to work programs and often have nurses on staff to help evaluate the injured employee’s ability to return to work. Their knowledge base can often keep your out of trouble with the EEOC and the ADA, both of which are potential huge liabilities for your restaurant in these cases.
At Clinard Insurance Group, we insure hundreds of restaurants all across North Carolina, South Carolina, Georgia and Tennessee. We would love to help you with all of your restaurant insurance questions so please feel free to call us, toll free, at 877-687-7557.
Most restaurant owners understand that their future workers compensation insurance rates are directly tied to the number and size of the claims that are filed against their workers compensation insurance today. These policies are experience rated so your past will inevitably come back to either haunt you or reward you. This one truth about workers compensation insurance makes the idea of preventing or limiting the size and the scope of future losses very important to most savvy restaurant owners. The best workers compensation insurance companies will have safety plans and programs that they can provide to you for free, often along with onsite inspections to help you understand your most dangerous risks. But the best safety plan in the world is a complete waste of time if your employees are not dedicated to making it work. So how do you get them to buy in to your idea to keep them safer? Here are a couple of ideas to help you get the compliance that you need to run a successful safety program for your workers.
Open the lines of communication. This sounds simple but it requires a change to your routine so it is tougher to do than you might think. You need to tell your staff how they are doing safety-wise. They need to hear what they are doing correctly and they also need to hear what they need to change and where they need improvement. When you build your communication channels, make sure that information can flow both ways – you need to hear from them about what they would change and where they are having difficulty implementing some of the changes that you requested. Check with your workers compensation insurance company for help in delivering and sustaining your message over the long haul.
Show and explain the real life benefits of your safety program. Talk about exactly how this new program will impact your workers. One of the highest priorities that workers cite in surveys is coming home in one piece to their families after work each day. Help them understand that this is exactly what you are working towards. If you can identify benefits that will accrue to your restaurant, then perhaps you can also use some of these benefits to set up reward programs to compensate your employees if safety is achieved. While you can’t force a change in attitude, you can get people to want to be safe and to be accountable for their actions so do what you can to get your employees actively involved in your safety program.
Repeat your message, using different media. Use posters, safety meetings, video content, email reminders and notes from you, the boss. Most people learn visually so using any photos that you can in your messages to them will greatly increase the learning and retention rate.
Use stories as examples. If you have any stories to tell in this area, you will find that your employees will hear these more completely and are more likely to respond to and remember them. Your workers compensation insurance agent can probably also help you by providing real life claims stories that he or she has encountered.
Set goals that aim high and plan to reward success. Let your employees know exactly what you expect from them and how you plan to take the entire restaurant there. Let them know how you will measure success and keep them abreast of all progress toward you goals. If you can find a way to reward them for their participation and the success of the program, do this as well.
At Clinard Insurance Group, located in Winston Salem, NC, we insure hundreds of restaurants all across North Carolina, South Carolina, Tennessee and Georgia and we would love to help your restaurant keep your workers safer and keep your workers compensation costs down. If you would like our help, please call us, toll free, at 877-687-7557.