Applying the wrong workers’ comp class code to your employees can cost you money in a number of ways. If you apply the wrong class code deliberately to score a lower a premium, an audit can lead to large fines and loss of coverage.

The Department of Labor has issued a proposed rule targeting one of the more pervasive, deliberative misclassifications: independent contractors. An independent contractor is generally defined as someone who sets his owns schedules, owns his own tools and can work for other clients. In addition to depriving workers of their rights under the Fair Labor Standards Act, employers will try to lower their workers’ comp premiums by classifying many high-risk and/or lower paying jobs as independent contractors, such as construction workers, truck drivers, and janitors. That way they can exclude those riskier class codes when calculating premium.

In large states such as California, there have been several high profile cases where employers under-reported payroll in the hundreds of thousands of dollars to avoid higher premiums. If discovered by an audit, deliberate misclassification can result in massive fines.. Some firms have defrauded insurance companies by tens of thousands dollars incurring between $1 and $5 million in fines.

DOL’s proposed rule outlines a more specific economic analysis to determine whether a worker is an employee or an independent contractor. The new regulation is expected to assist both employers and workers. A final rule is expected in 2023.

But misclassification can also occur when an employer applies the wrong code to a specific job. All employees have a 4-digit classification code assigned to them. The code describes the kind of work being performed by the employee and the risk or hazard entailed. The risk component is a factor when determining the workers’ comp cost. If a business wanted to commit fraud it simply changes the the job description from warehouse workers to clerical workers. An employer pays less premium for a clerical worker than for a warehouse worker driving a forklift. The less riskier the job, the lower the premium.

The National Council of Compensation Insurance (NCCI) provides classification codes for many states, but states, such as California and New York, have their own workers’ comp rating bureaus and classification codes. If you’re doing business in multiple states it’s important to know both.

While workers’ comp is a significant cost for employers, especially small ones, the costs of skirting the law are worse. Proper classification is essential if your business has one or more employees performing multiple jobs, or if you have two different businesses or corporations. Administrative errors regarding taxes or payroll, or failure to pay a workers’ comp claim, can draw an audit.

Applying the wrong code unintentionally can also cause an employer to pay too much. If an employee’s job description changes this can require a different classification code, entailing either more or less risk. Even the smallest change can necessitate a new code.

If you’re unsure about how to classify your employees, consult your workers’ comp broker.

Being too willing to settle an OSHA citation can cost you in the future, experts say. According to lawyers at the law firm Jackson Lewis, if employers agree to settle a citation rather than challenge it, the Occupational Safety and Health Administration, may see it as a red flag leading to future citations for serious and willful violations or failure to abate. It’s tempting to settle to save legal costs, but if there are grounds to challenge at least some alleged violations, it’s worth it in the long run. ¹

Your staffing firm should determine that alleged safety violations are entirely valid. And because you are providing temporary employees to a client, there is the added challenge to determine who is actually at fault. Construction sites and manufacturing facilities present numerous safety challenges. Also any job site where employees will be dealing with chemicals or smelting equipment. Serious and Willful is more difficult to prove, but even a serious violation can reflect badly on a staffing company.

The safety of your temporary employees is the most important consideration on any job site. But if a serious injury results in a citation, have the facts on your side to challenge it. Here’s how:

1. Meet with OSHA at the informal conference to determine specifically what the violations are and get a better understanding of how the standards apply. OSHA may be applying a standard incorrectly or inappropriately. Make sure your legal counsel has an explicit understanding of what the standard is, so as to determine if your employees on the job site were actually at fault.
2. Contest the citation in a timely manner. You have 15 days to contest. The clock starts ticking the first business day you receive it, according to OSHA. State programs may have different deadlines. Have your counsel draft a formal Notice of intent to Contest. You forfeit your rights if you miss the deadline.
3. Prepare for the long haul. Assuming you are challenging and not settling the citation, the process involves several steps in different locations, and can last several months. Make sure your counsel is well versed in both administrative and OSHA law. Even it you don’t obtain dismissal of the citation you may be able to get some of the items dismissed.
4. Prepare all legal documents and provide witnesses. This includes proof of compliance and responsibilities. If there is some question as to who’s at fault for the violation, your staffing company must provide documentation and case law establishing that it was the client who failed to follow the law.
5. Correct safety violations immediately. According to OSHA, action to mitigate the hazard must happen within the time frame on the citation. Even if you challenge, proactive mitigation may result in OSHA’s reconsidering some count or counts in the citation.

¹JacksonLewis, Challenging OSHA Violations at Occupational Safety and Health Commission is Worth the Effort, Melanie L. Paul, Kristina M. Vaquera (2023)

Work Comp Staffing Solutions * www.staffingcompsolutions.com * (202) 302-1212

As employers return to pre-pandemic norms, and ask people to return to work—at least a few days a week—some employees may struggle more than others with chronic health problems related to COVID. Many who suffered through COVID are dealing with long-term side effects, the so-called long COVID or “long haul COVID”. And like all other business sectors, the staffing industry will feel the impact, as the labor base has shrunk, experts say.

Long COVID, or long-haul COVID, applies to those individuals who have suffered long-term or possibly permanent side effects from COVID, despite recovering from the actual illness itself. Some of these side effects make it challenging, if not impossible, to do their former jobs. According the Centers for Disease Control, these symptoms can include fatigue, heart damage, breathing conditions, difficult concentrating, and even depression and anxiety. Some post COVID sufferers have even reported uncontrollable shaking of the hands and joint pain. Depending on the severity of the conditions, this will have an impact on the number of available employees and the kind of tasks they can perform.

According to the latest data from the Bureau of Labor Statistics, the overall hiring for temporary help employment was up in August. But in general, unemployment rose in August with some employers closing due to lost business or cutting staff because of the pandemic. While data indicate that small businesses are hiring, some businesses such as construction are struggling to find qualified employees to fill skilled jobs. BLS does not indicate whether that is the result of the pandemic but, it doesn’t rule out long COVID.

Some studies estimate that the number of working age adults who have COVID, as much as 33% could develop long COVID, or 10 to 33 million people out of 100 million. A Brookings Institute study says that the impact of long COVID on the work force has resulted in at least 15 % of unfilled jobs.1 Even employees who work remotely including temporary employees, may have symptoms that will have an impact on whether they can perform their jobs.

To the extent that these stats affect the staffing industry, staffing firms may also be struggling with finding qualified workers that some industries require. Three is little that staffing firms can do to accommodate employees with long COVID.

Effect on Workers’ Comp Claims

It’s always been a challenge to prove that communicable diseases are covered by workers’ comp. A temporary employee would need to prove it happened at work. Being exposed to an employee who was ill and then tested positive for COVID, can help make the case, especially if you were in close proximity. Some industries also pose higher risks, such as health care, first responders, and even employees in the transportation industry, who are likely to be in close proximity to commuters. If lingering symptoms persist and prevent an employee from returning to work, that will extend workers’ comp benefits. Depending on how many long-COVID cases effect the staffing industry, X-Mods and premium could increase.

Unfortunately, there is not much information from the insurance industry regarding the impact of longCOVID on workers’ comp claims. According to a study done by the Journal of Occupational and Environmental Medicine in 2021, age was the factor of lost time from work—that is more than 30 days and a claim of $10,000 or more.2 Much of this could be attributed to long COVID. Most of the costs associated with workers’ comp claims were medical, which would indicate the treatment of long-term symptoms 3 . The Office for Civil Rights and the Department of Health and Human Services considers long-COVID to be a disability, and if the initial illness was found to be work-related, was compensated through workers’ comp. Unfortunately, many workers’ comp claims, (32%) and those lasting more than 60 days, had not been closed at the completion of the study.

More studies are likely on the way, but the staffing industry should hope for the best, but prepare for the worst. Fewer available workers in some industries and longer medical claims are the greatest challenges.

1. Is Long COVID Worsening the Labor Shortage?, Brookings, Author: Katie Bach, January 2022

2. Attributes of Long-Duration COVID-19 Workers’ Comp Claims, Journal of Occupational and Environmental Medicine, Authors: Bernacki, Edward J. MD, MPH; Hunt, Dan L. DO; Tsourmas, Nicholas F. MD; Yuspeh, Larry BA; Lavin, Robert A. MD, MS; Kalia, Nimisha MD, MPH, MBA; Leung, Nina PhD, MPH; Willams, Leila DO; Green-McKenzie, Judith MD, MPH; Tao, Xuguang (Grant) MD, PhD, May 2022.

3. Ibid

Anti-bias training is a focus in workplaces right now, especially as workers return to the office. This is no different in the staffing industry. The Equal Employment and Opportunity Commission has filed 10 actions against staffing firms in the last fiscal year, specifically for situations where the staffing firm complied with client requests to provide only certain types of workers for jobs.1 Even though the client is making the request, the staffing firm can be held liable under the joint employer relationship, if it complied with the request. Staffing firms should expect to be on EEOC’s list of enforcement priorities going forward.

Implicit-bias is defined as having unconscious, prejudiced thoughts, or feelings about specific groups, meaning that the person may have no idea they’re doing it and does not necessarily intend any malice. Implicit-bias isn’t limited to gender, race, ethnicity or sexual-orientation, it can also manifest in assumptions about socioeconomic status, family structures, age, and physical appearance. These attributes may trigger implicit-bias in the hiring process by associating these attributes with certain behavior, education, or abilities. For example, a hiring manager may not put much stock in a degree from an historically, black college or university or a community college, despite an applicant having more than the required experience, older employees or Hispanic employees may be passed over as not being fit for the “company culture.” Some hiring managers may even hire someone because they agree with everything during an interview (no push-back) or share common interests/hobbies.

There is implicit bias in the workplace, too. It’s assumed that employees of Asian descent are better at math and may be only considered for teams or positions that reflect that, instead of focusing on their strengths. Women with large families, especially small children, may be passed over for a promotion to a management position because of the demands of child care. Other implicit-bias examples include culturally associating Latinos with parties and celebrations. This makes them ideal for planning office parties. It seems fitting to put African-American employees in charge of leading discussions on Black History month. A manager may be thinking that he/or she is only trying to help an employee succeed by lowering expectations for employees of color.

Recent studies have shown that implicit bias in staffing firms has led to temporary workers not being placed with clients based on attributes they may have that makes them less desirable. These biases can prevent the most qualified employees from being hired, and furthermore, cause good employees to leave what they consider to be a toxic environment. This inevitably leads to the departure of good employees and a less diverse workplace.

Staffing firms should consider incorporating anti-bias training in the workplace to not only make employees and managers aware of these implicit-biases, but give them tools to combat them. Staffing firms should also review their anti-discrimination polices and incorporate examples of implicit bias. This will help them identify when their hiring process is discriminating against certain employees, and flag any discriminating requests from clients.

On the OSHA Front

Changes in reporting and and regulatory enforcement are going forward at the Occupational Safety and Health Administration. OSHA has resurrected proposed rules from the Obama administration that were withdrawn from during the Trump Administration. According to the Federal Register, one such proposed regulation would require employers with 100 or more employees in high-hazard industries to report illness and injuries electronically. This includes the Form 300 and the Form 301. The employer will be required to include its name in the electronic report. OSHA has said it plans to make some aspects of the information public. This information will likely include staffing firms.

Construction firms are likely to get the hit the hardest by this requirement, so staffing firms should be prepared to submit those logs for any workers they place with construction clients. It’s also worth reviewing which party is responsible for reporting injuries and incidents on a job site. The comment period has closed, and no news yet on when a final rule will be published. For more information go to: https://www.osha.gov/laws-regs/federalregister/publicationdate/currentyear.

OSHA Posting and Whistle Blowing Requirements

It never hurts to remember that both staffing firms and clients are required by federal law to post a notice from the Occupational Safety and Health Administration in a visible location. The notice, in the form of a poster, outlines and informs all worker rights under the Occupational Health and Safety Act. It also provides information on how to contact OSHA regarding any violations.

The poster should be placed in a well trafficked area (usually a cafeteria or break room) and be unobstructed by photos or menus. In this world of electronic and social media, violations of this law can be made public with a photo and a post to a social media site. According to a recent article in Newsweek, this happened when an employee posted a photo of a rolled-up poster in the corner of an office on the social media site Reddit.2 It’s possible the notice may have expired, but according to OSHA it does not to be taken down for that reason. Staffing firms should have the latest notice from OSHA placed in a conspicuous location in the office, so they’re not fined.

This dovetails with OSHA’s whistle blower protections. Failure to meet posting requirements can draw a whistle blowing complaint, as can a violation of worker rights or health and safety protocols. Any attempt at retaliation against a whistle blower such as demotion, termination, assignment to an undesirable position, or creating a hostile working environment, can be construed as retaliatory action against an employee by the employer. Fines and subsequent lawsuits can be considerable and expensive. Staffing firms should have solid anti-retaliation programs that provide a process for confidentially reporting occupational health and safety violations. Executives and managers need to be taught and coached on how to appropriately respond and resolve health and safety and compliance concerns including any accusations of retaliation.

Because OSHA has announced it’s intention to scrutinize the staffing industry more closely, staffing firms would be wise to to shore up or add anti-bias training, posting requirements and anti-retaliation efforts. These safety and compliance steps will prevent your company from becoming front-page news.

1. Temporary Staffing Agencies Accused of Biased Hiring Grab EEOC’s Attention, J. Edward Moreno, Rebekah Mintzer, Laura D. Francis, Bloomberg Law, October 14, 2022.

2. Employee says OSHA Poster Was Tossed When Workers ‘Began Asking Questions’ Shirali Bartov, Newsweek, September 23, 2022.

Safety challenges for the warehousing industry are a key focus for the Occupational Safety and Health Administration. This is good news for the staffing industry, which provides warehouse employees to numerous clients throughout the country. It’s more relevant now because Amazon is planning to build even more warehouses, mostly fulfillment centers throughout the country, according to staffing firms that deal with this space. As of May 2021, the Bureau of Labor and Statistics estimates that there were 1.08 million people employed in the warehouse and storage industry-a 13.5% increase over 2020.

The American Staffing Association plans to work more closely with OSHA on this issue thanks to feedback from its members and an OSHA staff that seems to be far more open to input and changes/updates to Temporary Worker Initiatives including warehousing. ASA is working with OSHA to come up with on an “umbrella” warehouse document that will cross reference specific safety challenges faced by temporary workers. This initiative will coincide with updates to the warehouse TWI. One of ASA’s goals is greater outreach to marginalized groups in the staffing space, so they’ll know what to watch for. It will also provide a handy guide for clients, so they’re more familiar with the risks encountered by temporary workers.

OSHA recently released a TWI bulletin on heat-related hazards–both indoor and outdoor. It focuses on what both the staffing agency and the host employer can do to protect employees from heat related hazards. Even though outdoor heat hazards such as agriculture and construction are targeted areas, temporary workers are just as likely to suffer heat related illnesses and injuries in indoor settings, including warehouses.

Other warehouse safety issues emphasized by the staffing industry include but are not limited to:

• Aisle width
• Shrink wrapping machines
• Fork lift injuries
• Conveyor hazards
• Walking services
• Pick tower/module hazards
• Ergonomics

Warehousing has always posed safety challenges because there are so many hazards. One specific safety concern of ASA members is related to pallet “racking” systems where employees use racks as walk ways even though they are unguarded. Warehouse safety issues have come the fore as more companies such as Amazon grapple with increased orders because of the pandemic. As a result, warehouses are starting to pop up around the country. Amazon opened 35 new warehouses in California in 2021. It opened 28 in Texas.

In addition to engaging with staffing firms on this important issue, OSHA has a page on its website dedicated to temporary workers and warehouse safety. It also touches on other safety issues such as powered industrial trucks, such as forklifts, and exposure to chemicals.

How can staffing firms and host employers contribute to a safe warehouse working environment? As with any other industry, communication is essential. Staffing firms must train their temporary workers in general health and safety. But the host employer is responsible for the training associated within a specific industry. Staffing firms must know what duties their workers will perform, what the safety hazards are, and what they need to do to keep their workers safe.

Safety hazards are many and varied, as they relate to proper forklift use, stacking loads, and safely using automated, mechanical machinery. Here are safety protocols that should be established by host employers, verified by staffing firms, and clearly communicated to temporary workers.

1. Pedestrian walkways need to be clearly marked. Clearly marked means yellow tape and guard rails to prevent injuries involving powered vehicles. In addition, proper clearance is necessary to prevent employees from being struck by loads or getting pinned against equipment and racks. Aisle ways must be clear of tripping hazards. Some staffing firms express concerns regarding employees using non-designated walkways above ground level with no fall protection. Host employers need to convey these safety rules to temporary workers and enforce them. Staffing firms should impart this requirement to their employees before they start work.

2. Stacking needs to be done to keep heavy loads from falling. It may seem obvious, but heavy loads need to be stacked on the bottom racks, properly squared, and balanced. Racks need to be properly secured to the ground. When inspecting a site for safety, staffing firms should check the racking systems for stability. In addition to collapsing because of too much weight, forklift collisions with racks can cause a collapse. Some forklift rack collisions have been so catastrophic that multiple racking systems have collapsed fatally injuring workers caught underneath.

3. Use the safety functions on forklifts and other powered trucks. Because of automation most forklifts are equipped with sufficient lighting, sensors for backing up and detecting obstacles. Fully working brakes, so the vehicle stays put when stacking, loading and unloading, are also essential. Per OSHA requirements, host employers are supposed to provide training for all powered vehicles. Staffing firms should make sure the training is being done and that all functions are in working order. Temporary workers should tell the host employer if something is not working properly.

4. Wear personal protective equipment (PPE). Once again, seems obvious, but many employees either forget to put on PPE, put it on incorrectly, or don’t think it’s always necessary in certain situations. Host employers will always require it, and managers are supposed to enforce it. Regardless, staffing firms should tell there employees to always comply with the requirements, even if a manager isn’t thoroughly enforcing the requirements.

5. Inspect worksites and review job positions for ergonomic requirements. Ergonomics is a focus of OSHA because repetitive motions and heavy lifting can cause strain on muscles, backs and shoulders. This leads to long-terms injuries. Staffing firms should make sure that host employers are focusing on ergonomics in the warehouse setting, especially proper lifting techniques. It may also involve employing mechanical lifting equipment where necessary and setting requirements on how much can be lifted at one time. Staffing firms should have their own ergonomic program, but verify that host employers are following through.

6. Be aware of the risks of automated equipment. As more warehouses become automated, the more moving parts there are, especially in automated conveyors and shrink wrap machines. Staffing firms should warn their employees about the pinch points in machinery that can catch clothing including shoe laces. Fingers and even limbs can get caught causing serious injury. Staffing firms need to inspect machinery for emergency shut-off buttons and guards where necessary to prevent injuries. This standard also applies to vehicles. According to the OSHA handbook on warehouse safety, employees should not place arms or legs between the uprights of masts or on the outside of the truck lanes.

This is by no means an exhaustive list of safety issues, but as new warehouses keep being built the need for temporary employers will grow. And without proper training and enforcement, so will injuries and illnesses.