Staffing firms are bracing themselves for more inspections as the new administration ramps up its enforcement. The Biden Administration has reinvigorated the mostly dormant Trump Occupational Safety and Health Administration (OSHA).

The ramp up also includes new Certified Occupational Safety and Health Officials (COSHO), who have very little knowledge of how the staffing firm/client relationship works. The result: citations incorrectly issued against staffing firms for violations of the regulations and contract terms.

Staffing firms say it’s up to the staffing industry to educate not only the COSHOs, but to make sure they’re own temporary employees know what tasks they’re performing and what they’re function is at a worksite. For example, it’s always been a challenge defining and enforcing which entity has the supervisory or management role. This determines who is responsible for occupational safely and health compliance and any injuries sustained on the worksite.

Some staffing firms recommend not using the terms supervisor or manager in job descriptions, if a temporary employee is on-site simply to provide guidance or coaching of temporary employees. Others also recommend that temporary employees understand exactly what functions they’re performing and what they’re trained or qualified to do and what NOT to do.

With this information, the COSHO will have an idea of what the staffing firm employees are responsible for versus the client, should an inspector show up for either a planned or a snap inspection. Here are some other preparation tips:

• Find out what the inspection is about. Is it just a random inspection or has there been a complaint or injury. Get your relevant personnel involved in the opening conference to find out the the scope and details of the inspection.
• Assign a point of contact to interact directly with the OSHA inspector. This person will provide all documents and answer all questions pertaining to the function of temporary employees. Make sure that your employees know who it is and can direct inspectors to the right person.
• Acquaint the new inspectors with the latest documents and guidance from OSHA. OSHA has written several Temporary Worker Initiative (TWI) documents on a number of topics including exposure to heat related hazards, bloodborne pathogens, and injury and illness record-keeping requirements.
• Keep procedural documents handy for the OSHA inspectors. One such document, Best Practices for Host Employers is available on the OSHA website, and includes procedures, tips, and checklists that host employers are supposed to follow. Host employers providing direct supervision and control are responsible for the safety and health of all workers on site whether temporary or permanent. Go over the procedure for how temporary employees are supposed to report injuries and illnesses, and the responsibility of the host employer to report those incidents in their OSHA 300 Logs
• Follow up with OSHA. Some temporary firms have reported that staffing firms may be included in the conversation with the the host employer and COSHO regarding the details of the inspection, even if they’re not involved. The lack of understanding about the role of temporary employees may result in unwarranted citations.
• Go over safety protocols and requirements. The host employer is responsible for enforcing safety requirements on-site. Make sure your temporary employees are well-versed in the rules and requirements. Confirm that proper training has been done by either the host employer or the staffing firm. It is wise to do a walk-through before a scheduled inspection. And, you want to have all these bases covered in the event of a snap inspection.
• Do an occasional walk-through of the worksite to confirm all safety requirements are in place, and ask your temporary employees to report any concerns. They should be able to do this without fear of retaliation.

The staffing industry has always embraced technology to a certain degree, with nearly all staffing firms using an Applicant Tracking System to capture and store candidate and client information. In addition, many staffing companies have added other automation tools to supplement candidate sourcing and onboarding, drive referral efforts and improve marketplace reputation through ongoing marketing campaigns. Prior to the pandemic, the adoption of technology had been following the normal cycle, with innovators and early adopters leading the way and late adopters eventually following along. But the onslaught of COVID changed all of that. The swift and sudden changes forced on the industry turned the slow, methodical evolution into a digital revolution. As a result, far too many staffing firms have implemented automation tools that are too complex for the solutions they seek and are difficult to implement and optimize. The problem with this revolution is that technologies and automation are being adopted with little to no strategic reasoning or planning. It’s a case of doing the right thing for the wrong (or no) reason. We’ve all been around long enough to know that this is a recipe for disaster. And that’s what many staffing firms are beginning to experience. They’ve implemented automation tools that are too complex and difficult to understand. They lack the resources needed to successfully manage the tools and the technological “solution” doesn’t deliver on the promises that were made by the seller or doesn’t really solve the original problem. This is simply a result of jumping into the fray without truly understanding the why. Simon Sinek, author and business consultant, reminds us that we must always “Start With Why.” So how should today’s staffing firm go about introducing technology into their organization? Here are seven factors to consider.

1. Be Deliberate Adopting technology should not be driven by trying to “keep up with the Joneses.” Just because a competitor has a chatbot is not reason enough for you to add one. The process needs to start with clear thinking and planning. Stephen Covey, in his book The Seven Habits of Highly Effective People, identified the concept of beginning with the end in mind. This is a perfect way to strategically plan for automation. First, identify the expected outcome that the resource will deliver, then work backward to identify the right automation solution for that particular need.

2. Assign a Champion Once you have a strategy for implementing technology, it’s a good idea to identify someone who will lead the process of sourcing, selecting, and implementing the solution. I refer to this person as a “champion.” They understand the strategy, have the skills necessary to lead the project, can bring people together from different functional areas or departments, and are passionate about making sure the solution is the right one. Nothing of importance gets done without strong leadership, and the champion of a project is just that.

3. Clean Up Your Database Many technology solutions developed for the staffing industry integrate with the client and/or candidate database. I have seen a number of automation projects stall because the data in the staffing firm’s ATS is obsolete, incomplete or simply inaccurate. The fact that such a critical source of business information is incomplete or corrupted is a problem all by itself, but when you couple it with the introduction of automation, the problem is immediately compounded.

4. Choose a Solution That Fits the Problem. Just because a hammer is available doesn’t mean that your problem is necessary a nail. The right tool is necessary for the right outcome. This is especially true when it comes to implementing an automation resource. Making sure that the problem has been accurately identified and then sourcing a technology solution that addresses that problem is critical. This ties in very closely with our earlier point of beginning with the end in mind.

5. Get Everyone Involved Keeping the automation project in the hands of one person is risky. As you will recall, we stressed the importance of a champion but made it clear that this role is designed to bring other people into the process. Everyone in the organization should be involved in the project, or at the very least, kept informed of key developments and milestones. Quite often, a task force is formed that works with the champion to help keep everyone informed and involved. Adopting new technology should not be kept a secret.

6. Do Your Homework The automation highway is littered with solutions from providers who want you to buy their software. Like any industry, some are better than others and have a reputation for delivering a quality product at a competitive price. Make sure you do your research and find out about all potential suppliers. What solutions do they offer? What do reviews from other customers say about them and their product? How long have they been in business? Do they outsource some of their product development or support? Understanding as much as you can about prospective suppliers and their products is vital. Ask questions – a lot of them.

7. Use Its Full Potential There is a constant theme among staffing leaders about how the organization is not fully utilizing their ATS or some other technology solution they have acquired and implemented. Then, to make matters worse, they proceed to go to the next new automation tool and ignore the fact that they are not using the full potential of the tools they already have. Making sure you are leveraging all of the benefits of the automation you already have (before adding more) is a discipline that will put you head and shoulders above the majority of your competitors

A Final Word

Technology, when used correctly and to its full potential, can boost a staffing firm’s efficiency while driving productivity. This will drive a robust bottom line, but even more importantly, will provide tangible benefits to the client and candidate – and that should be the real driving force behind automation.

Staffing firms work hand and glove with host employers to provide a qualified and safety oriented workforce. Safety is always important, but in some high-risk industries, the danger posed by the failure to follow safety guidelines can have catastrophic consequences.

Safety first for their employees is the guiding principle for all reputable staffing firms. But a common complaint from staffing firms from around the country is that the Occupation Safety and Health Administration (OSHA) does not consistently follow its own rules when enforcing safety standards, frequently to the detriment of staffing firms. This concern also applies to states such as California that have their own departments of occupational safety and health. Many of the rules regarding proper procedure and safety protocols are ambiguous enough that staffing companies are inspected and fined more frequently than the host employers.

It causes no end of frustration for staffing firms and their safety managers that OSHA inspectors seem unaware of their own rules. It doesn’t help that much of the documentation and the required forms don’t take temporary staffing into account. That includes the OSHA 300 Log of recordable injuries and illnesses. According to it’s website, OSHA has been proactive in clarifying rules pertaining to the role of host employers and staffing firms regarding reporting requirements. OSHA and state departments have also touted their efforts to “crack down” on staffing firms and protect the safety of temporary workers.

A COSHO will cite the staffing firm for failure to record injuries and illnesses to employees, even if it is indisputable that the host employer had the day-to-day supervisory role. The federal regulation (9 CFR 1904.31: 1904.31(a) clearly states that “You must record on the OSHA 300 Log the recordable injuries and illnesses of all employees on your payroll, whether they are labor, executive, hourly, salary, part-time, seasonal, or migrant workers. You also must record the recordable injuries and illnesses that occur to employees who are not on your payroll if you supervise these employees on a day-to-day basis. If your business is organized as a sole proprietorship or partnership, the owner or partners are not considered employees for record keeping purposes.”

According to the American Staffing Association (ASA), despite what the regulations say, staffing firms are frequently cited for not recording injuries and illnesses, even if a temporary employee sustained an injury while under the supervision of the contractor. This puts staffing firms in the role of traffic cop challenging inappropriate citations, even if the contractor was the responsible party. According to many staffing firms, the contractor is rarely cited whereas the staffing firms bear the brunt, simply because the COSHO doesn’t interpret the regulation correctly. Staffing firms can hold all parties accountable. Here’s how

Remind the OSHA officials of their own rules and make sure they’re following them at both the state and federal level. For states that have their own departments of occupational safety and health, the rules might be different. The staffing firm should familiarize itself with all regulations. If the COSHO is under the impression that the staffing firm must be cited for not recording injuries or illnesses on 300 Log, just because the injury was sustained by a temporary worker, make sure the official is knows that is clearly not the case in this work situation.

Keep in mind that OSHA also has different recording requirements for different industries. For example, it’s not uncommon for a firm that specializes in light industrial to provide temporary workers for two industries. Make sure you’re familiar with both requirements.

2. Establish which entity is responsible for the day-today supervisory role. This goes both ways. If the staffing firm is the day-today supervisor at a worksite, it must record the injuries and illnesses of the contractor’s employees. The injury or illness should only be recorded once, so there is never a joint supervisory role (Section 1904.31(b) (4)). However, this can cause confusion. According to a letter from OSHA on this issue, “Dayto-day supervision occurs when ‘ in addition to specifying the output, product or result to be accomplished by the person’s work, the employer supervises the details, means, methods and processes by which the work is to be accomplished. ‘” Even if the staffing firm provides supervision on-site, daily to the temporary workers, it still must meet the standard above to be the day-to-day supervisor. OSHA points out that this standard must be based on the “actual facts” at the worksite. Both contractor and staffing firm should be clear on these facts. The entity providing the actual daily supervision is responsible for the recording in the 300 Log “regardless of any wording of the parties contractual arrangements.” This is important for both establishing compliance, and for ensuring the injured worker is covered for workers’ compensation purposes. Regardless of responsibility for recording, both entities are required to have workers’ comp coverage.

3. Inspect the contractor’s worksite prior to the job. Serious safety violations can cause significant injuries and illnesses. Make sure you are clear on exactly what your temporary workers will doing. Bring any safety issues to the attention of the contractor. If training is required for a certain job make sure the contractor is going to provide it. Regardless of who is supervising your temporary workers, safety should be job one. Serious or serious and willful citations can amount to thousands of dollars in fines. The injuries that may occur can increase workers’ comp rates. A safe worksite means fewer if any recordable injuries.

 

Federal mandate or no federal mandate, some employers may require employees to be vaccinated or get regular testing. Employers making use of temporary employees may expect staffing companies to get those employees vaccinated, especially in the health care and hospitality industries. Employers are struggling to find full-time workers and may rely on temporary help to sustain them short term.

Staffing firms need to consider whether it is in their best economic interests to require vaccinations, putting themselves a step above their competition. It’s also unsettled legally and legislatively, at the state level, whether COVID should be considered a work-related illness for purposes of workers’ compensation.

The Occupational Health and Safety Administration—otherwise referred to as Fed-OSHA—has suspended its COVID vaccine emergency temporary standard (ETS) until further notice. States, including California, have followed suit, suspending any further discussion on guidance. One size does not fit all, but according to the suspended ETS, staffing firms who place employees at a host employer location “only the staffing agency would count these jointly employed workers for purposes of the 100- employee threshold for coverage under this ETS.” That being said, even without a mandate, a host employer may require the staffing agency to ensure that temporary employees are fully vaccinated or tested weekly and wear face coverings.

It’s important for a staffing firm to consider what standard its workforce can meet considering the profession, demographic and size. Requiring proof of vaccination is the most equitable approach, especially if that is all a host employer will accept. Staffing firms should consider giving paid time off to employees to get their vaccinations and arranging on-site vaccination clinics for them and their families.

As part of the vaccination policy, employee questions about the safety and the efficacy of the vaccine (given the rise in break-through cases) should be addressed thoroughly. Staffing firms should have a written policy in place regarding vaccinations, including information addressing specific concerns. Ignoring the concerns may cause pushback. Be aware of medical and religious exemptions as well and include those in your policy. Another consideration are those instances where temporary employees can work from home. These arrangements should be discussed with host employers as part of the vaccine requirements.

The Health Action Alliance suggests companies, including staffing firms, identify opportunities to partner with state and local health agencies to support vaccine distribution. Another HAA suggestion is for employers to gather employee feedback in real time so issues and concerns can be addressed right away.

Impact on Workers’ Comp

If a temporary employee contracts COVID and it can be established that the illness was work-related, lengthy illness and possible hospitalization could have a negative impact on experience modifications. As the Christmas season moves in retailers may rely on temporary help through December. It is also the time many states, especially in the Northeast, will see an uptick in cases as the weather gets colder.

Some states, California for one, have passed laws establishing a COVID rebuttable presumption for some categories of employee including health care workers. A bill is advancing in Idaho that would allow employees who get sick after receiving an employee-mandated vaccine to receive workers’ compensation. There are number of states pushing back on mandates including any future federal ones. Florida wants to withdraw from Fed-OSHA.

The weather and possible new variants may concern employers enough to require vaccines, at least for some of their workforce including temporary employees. Doctors and medical data have shown consistently that while break-through cases are on the rise, they are still a small percentage of the COVID cases. People are also likely to get less sick and suffer serious side effects, if they’ve been vaccinated. There is limited data on the new Omicron variant. It is unknown how effective the current vaccines will be. Nonetheless, this should not discourage staffing firms from pushing ahead with vaccination efforts.

Industry and State Vaccine Rates

The most recent data show the industry with the lowest rate of vaccination is agriculture (49%). This is followed by construction (55%), food and beverage (61%), manufacturing (64%), and transportation (64%).1 These are all industries that rely on temporary workers. Transportation is concerning given the supply chain issues. Trucking associations are pushing for and may succeed in getting exemptions, especially since truckers do not actually report to an office. But the Biden administration is planning to mandate a vaccine requirement for essential travel that crosses U.S. Borders. This includes truckers. It would take effect in 2022.

Health care workers who have been subject to vaccine mandates, have one of the highest rates at 70%. White collar workers also have a greater percentage of vaccinations.

As for states, data have shown that blue states have higher rates of vaccination, especially in the Northeast and California. In blue states fully vaccinated residents range between 72%-61%. But red states are catching up. In Florida 71% of the population has had one dose and 60% of the population is fully vaccinated. 2 This may not prevent an uptick in infections as cold weather sets in, especially in blue states. According to a recent survey of 500 employers, more than 50% of employers are requiring a vaccines in the workplace, most of which are in California. 3 Many of the largest employers at least for employees in the U.S. are implementing some kind of vaccine requirement for those employees who come into the office including Cisco, Amtrak and MGM Resorts International. Union Square Hospitality Group requires vaccinations for staff and guests. Fashion companies and retailers including Saks and TJX also have requirements for employees.

In some red states governors are pushing back on mandates of any kind including employer mandates. This may require staffing firms to encourage vaccinations by making it more convenient and accessible, should court challenges and state efforts prove unsuccessful.

1. These industries have low vaccination rates—and that could be a big problem for vaccine mandates, Megan Leonhardt, Fortune, Oct. 21, 2021

2. US Coronavirus Vaccine Tracker, US Facts, Nov. 24, 2021

3. The New Workplace Employer Report, Sequoia, ABC 7 News, Nov. 17, 2021

In 18 states cannabis and Washington D.C.—also referred to as marijuana (pot or weed) as it is also known, is legal for recreational, as well as, medical use. In the majority of the rest of the country it is decriminalized in some way, in particular, for medicinal purposes. Nation-wide, cannabis sales have increased 67% as of 2020.¹ As a result of the growing legal acceptance of cannabis, and thus, greater use, staffing agencies, face increasing challenges to workplace safety. As an agency that supplies employees to numerous industries in both high and low risk categories, making sure employees are clean on the job is crucial to both the safety of workers and the costs of workers’ compensation claims.

There is also the cannabis industry itself. It has grown significantly since full legal status in many states and is currently worth $61 billion in the U.S. This includes retail, growing operations, and industry-specific supplies, and manufacturing, just to name a few. Those businesses are also making use of temporary workers and have their own workers’ comp costs.

Cannabis: What Is It

While it is different than the intoxicating effects of alcohol, it is a psychoactive and mind-altering drug. It can include high amounts of tetrahydrocannabinol (THC), which causes the pleasurable effects such as relaxation, focus and creativity. It’s short-term effects include giddiness and an altered perception of time and events. But the side effects in some people, can include lack of coordination, delayed reaction time, anxiety, paranoia, and nausea. Cannabis that just contains cannabidiol (CBD), does not cause euphoria or intoxication—a “high.” It is legal in every state, and is mostly used for medicinal purposes to relieve such ailments or issues as migraines, anxiety, and insomnia.

Twelve percent of Americans are active marijuana users. If someone consumes cannabis with THC on an occasional basis, say on the weekends, even after the initial effects have worn off—an individual is no longer “stoned”–it can remain in the system for up to 30 days.

CBD should not be a problem in the workplace, unless its purity is compromised, that is, it contains more than 0.3% of THC. Pure CBD oil can remain in the system for 3-5 days. Sometimes up to two weeks. Unfortunately, there is no governing body that tests for purity. An employee may use CBD for help sleeping. If it contains just enough THC, an employee drug test will come back positive. ²

The purpose of this paper is to discuss the risk of cannabis to employers, including staffing companies, in the workplace. This includes the legality and thoroughness of testing protocols, workplace safety in the world of legal marijuana—whether medical or recreational, the impact of cannabis use on workers’ comp claims, and workers’ comp coverage for staffing firms that provide employees for the cannabis industry.

Drug Testing by Staffing Companies

In states, such as California, where it is legal for recreational use, it is problematic for employers and staffing companies. Using cannabis at home among friends can be relaxing and pleasurable because it’s more likely to contain THC. In the workplace the effects can increase the risk of injury to the user and other employees.

Drug testing by staffing agencies is done on a fairly routine basis. The reason is because the client wants the staffing agencies to do the testing. Staffing, especially on-demand staffing, is essential to many industries. Staffing agencies want to provide competent, and safe workers, but the legality of cannabis in many states makes it difficult to determine if an employee is simply a user of CBD for health reasons, or a user of cannabis with THC for recreational purposes.

Despite cannabis laws at the state level, the US government still classifies marijuana as a Schedule 1 drug under the U.S. Controlled Substances Act. There are efforts to change this, but currently, employers subject to federal standards must comply with the law. In other words, zero tolerance. Employers not subject to federal standards have a greater challenge.

The Occupational Safety and Health Administration recognizes the right of employers to maintain a drug-free workplace in the interests of health and safety. However, this only applies to the prescreening process. Once employed, employers, including staffing companies, will be governed by laws in states where they’re located or where they provide employees. In some states there are restrictions on, if or when, an employer may do “random” drug tests. In California, an employer may only perform a random drug test under specific circumstances.

The employer may require a drug test as part of the application process. This preps employees ahead of time to be drug-free for a certain period of time (this is where “fake pee” is sometimes used. More on that later). In those incidences when an accident or injury occur, employers will conduct a drug test on the spot to determine if an employee was under the influence of marijuana or some other drug.

As for the responsibility of the staffing company, it must provide a rigorous pre-screening process to ensure that only clean employees are provided to the client. Rigorous means it must be clearly spelled how the testing was done and what protocols were used. There should also be an established chain of custody between the staffing agency and the laboratory. This should all be documented for liability purposes. If an employee chooses to use cannabis at any time while working for an employer, the staffing firm can prove on its end that it followed procedure. It can also pick up other issues or red flags that may have an impact on an employee’s performance such as the use of steroids.

The most common test in the staffing industry for drug screening is a urine test. However, it is not always the most accurate. It can also pick up alcohol or prescription drugs. It can also be fooled (see fake pee). And as mentioned above, employees using CBD for medicinal purposes may test positive because its purity is compromised. It’s recommended that backup methods such as the testing of hair and saliva be used to get the most accurate result.

Hair samples are the most accurate and thorough. It has a longer detection window and picks up a pattern of drug use going back months or even a year. But it can’t isolate only sporadic drug use. ³ Considering the prevalence of legal, recreational cannabis, this may be too high a standard, unless the jobs being filled require it.

Saliva can’t be tricked and can pick cannabis, cocaine, and opiates, which may be helpful as part of a drug-use evaluation. It can detect a more chronic drug user because it has such a small detection window-between-minute and a 48-hours. ⁴ It is incumbent upon the staffing firm to determine which testing procedure works best for the client and paints an accurate picture of drug-use. Once again, counsel should be consulted to ensure testing procedures are not in violation of any state laws. Because of the possibility of false-positives, a medical review process should be part of any drug screening guidance. ⁵

Once an temporary employee is one the job, he/she might be subjected to a random drug test by the employer. Employees strongly under the influence of marijuana containing THC pose a significant threat to safety and possible litigation. But “here’s the rub” writes Ryan McCoy, an attorney with Seyfarth Shaw, “…our Constitutional right to privacy generally protects against a random, suspicionless drug tests. Because an employer’s right to drug testing relies on a balancing test (is the employee’s privacy interest outweighed by the employer’s interest in keeping the workplace safe and drug-free?)”

There are work-a-rounds for pre-employment testing, especially in states where marijuana is legal for recreation. Potential job applicants, fearing a positive drug test, may make use of so-called “fake pee.” It can be purchased at smoke shops along with a device to keep it at the appropriate temperature. This is more likely to succeed if a temporary employee or new hire can go to any doctor, including a chiropractor to take the test. Staffing firms should direct the employee to a specific doctor with supervision. Once again it falls to the staffing firm to do all it can to provide new hires or current employees that won’t fail a random drug test, regardless of whether random drug tests are likely to be performed or not.

Staffing firms should review their policies on this matter and update them as appropriate, depending on the states where they provide employees to companies. It’s also a good idea to consult counsel to ensure that employees rights are not being violated, even for pre-screening. Most U.S. employers rely on staffing agencies to do rigorous drug testing per their contracts with the agency. Failure to take accurate, legal steps for testing can reverberate back on the staffing company.

McCoy goes on to say that courts will usually find there are less intrusive ways than random drug testing to protect employers. Employers face litigation for violating a worker’s rights just as much as they might for injury to or death of employee, if a toxicology test proves the employee was under the influence.

If a staffing firm should happen to conduct random drug tests on the employees it provides, it’s best to determine if the job is dangerous enough that safety is so essential to a job that a stoned employee threatens the life and health to themselves or others.

Drug Testing in Times of COVID

If and when employees start returning to the physical workplace full-time, drug testing and its many protocols may start butting up against COVID-19 testing, and it’s variants. During COVID, substance use and abuse increased. That included the use of cannabis. For staffing firms that provide employees in high-risk industries, pre-employment screening for drug use may require some extra scrutiny. Once again because of the legalization of cannabis for recreational use, states will have different laws stating how, or even if, an employer can regulate cannabis use outside the workplace.

There is also the issue of where and when to get drug tested. There was and still is some reluctance to get drug testing done at facilities that also test for COVID because of the possibility of exposure. ⁷ Staffing firms should take that concern into consideration when establishing a drug testing policy.

Cannabis and Work Injuries

The most obvious reason for pre-screening for temporary employees, is to lower the possibility of injuries in the workplace, and subsequent claims. An expensive workers’ comp can lead to expensive medical costs, increased premiums, and an increase in experience modifications. For these reasons employers must be aware of legal challenges. Even if an employee is injured on the job while under the influence of cannabis, and it is confirmed by an on-the-spot drug test, the employer—in some states-­has to prove that the drug use was the direct cause of the accident.⁸ If an employee is impaired and falls off a ladder that can easily prove the work accident was the direct cause of the impairment. On the other hand, if an employee is under the influence of cannabis, and a poorly placed box falls on them, that is not the direct cause of the impairment.

This is important, as under many state workers’ comp laws, the claim will be accepted, if there is no direct cause. The staffing agency just needs to be ready to provide documentation that it followed all its testing procedures. If the claim is not accepted there will be no impact on the staffing firm’s workers comp costs. Staffing firms need to check the laws in the states they operate in, especially if there is a chance that the employee can collect “some” workers’ comp, and determine if it would have an impact on premium.

There is also the employee under the influence of illicit drugs that injures another employee in the workplace. Because an individual under the influence of marijuana will have slow reaction times, accidents will happen. A forklift driver under the influence marijuana who hits an employee on the floor is easily the direct cause of the accident with an on-the-spot drug test to prove it.

Still, treating the injuries can increase workers’ comp costs for the staffing agency in medical, X-Mods and ultimately premium. Although the data are not complete, the opposite is being posited in academic circles. Being under the influence of marijuana for pain management for older employees results in fewer mistakes, thus few accidents. ⁹ A discussion for later down the road.

State laws are also inconsistent regarding the use of medical marijuana. Because cannabis use is prohibited under federal law, employees with a medical marijuana exemption will not be covered by the federal Americans with Disabilities Act. Despite federal law, there are a patchwork of state laws that prevent discrimination against the use of medical marijuana. Staffing firms should talk to their brokers and legal counsel regarding medical marijuana and workers’ comp coverage.

The Cannabis Industry and Workers’ Comp Coverage

Due to the legality of cannabis throughout the United States at the state level, the cannabis industry including the growing and the selling of cannabis and related products has taken off, the various facets on the industry are required to follow all safety regulations and carry all insurances. Failure to do so will result in inspections and fines from insurance departments and occupational and safety and health agencies.

It’s improving but many marijuana growers and retailers are lax in safety standards and certain regulations. According to experts studying the industry there has been more of an emphasis on growing the business than enforcing safety regulations ¹⁰. This, despite the fact, that employees in the cannabis industry have the same occupational safety and health issues as other industries, including the slip/trip and fall, repetitive motion injuries, and injuries caused by exposure the toxins. ¹¹

Some cannabis shops and growing operations might be reluctant to approach OSHA or a state safety regulatory agency because of the illegality of marijuana at the federal level. They’re also going from a business that operated illegally to a legal business. They may think that the laws and regulations don’t apply to them. ¹² For this reason, work-related accidents can be more frequent and less likely to be reported. Make sure the client employer carries workers’ comp insurance. Because staffing firms are in a joint employment arrangement with their clients, both must must carry it. Injuries due to lax safety standards can reflect negatively on the staffing firm, and its experience modification.

Class Codes and Stigma

According to workers’ comp underwriters who focus on the cannabis industry, businesses are wrongly reporting class codes is a pervasive problem. For those who obtain workers’ comp insurance, some of the operations grow so quickly they also forget to update their payrolls, an oversight that can result in calculating the wrong workers comp premium. Payroll and class codes are part of calculating the premium, as they are used to determine the risk associated with the various jobs performed.

Most rating bureaus now include cannabis in classifications related to growing, cultivation, products, manufacturing, and packaging for distribution. The Workers’ Compensation Insurance Rating Bureau of California includes cannabis in several different classifications. For example, it classifies cannabis retailers as stores-retail 8017(1). If the buds are trimmed but not packaged for individual sale, 0035 is assignable. Baked goods such as brownies and cookies are classified under 2003—Bakeries and Cracker Mtg. ¹³

Other categories include cultivation, pharmaceutical preparations, sales outside retail stores, cannabis infused beverages, manufacturing, drivers, and, a very important occupation for the cannabis industry—security. These are an important part of premium. As the industry evolves, staffing agencies supplying temporary employees to various businesses, need to be up-to-date on all of them.

The cannabis industry isn’t always getting it right. For example, there are cultivators using class codes for manufacturers and trimmers to classify some of their risk when they should be using growers for the entire operation. Another example is retailers who will use clerical codes when they should be using retail stores to classify risk. ¹⁴

“It’s a question on every single new venture….Let’s say its a multi-state, multi-faceted business with manufacturing, class codes are a main topic of discussion, and moving to existing accounts…accounts that have been with other markets and consider coming to us, and we look at these past accounts, these past policies just to see how they were classified, I’d say one and four are mis-classified,”says Cameron Ward, vice president of commercial services for Canjun Insurance, an underwriter focused on the cannabis industry. ¹⁵ This can change the premium from $50,000 to $100,000. This maybe a matter of simply forgetting to add new risks as a cannabis operation grows to include new facets of the trade. Depending on how the risk is mis-classified, the insured could be paying too much premium, or not enough.

It’s imperative that staffing agencies are up to speed on which classification codes go with each risk for the temporary employees they’re supplying. They also need to make sure that the grower or retail establishment knows that state safety regulations apply to them and that they’re being enforced. Drug testing also plays a roll, as many of the employees may be users. For staffing agencies that provide employees to the cannabis industry, they need to be extra diligent in requiring thorough and secure pre­employment drug testing.

Even when the cannabis industry tries to obtain workers’ comp insurance there are roadblocks. Cannabis is still a stigma regardless of its legality. For this reason, insurance companies may be reluctant to provide coverage to staffing companies that specialize in that area, due mainly to federal law. The same is true of banking. It will be assumed that individuals working in that industry are more likely users, and associate the entire industry with unhealthy and reckless behavior—a business run by and employing individuals who are “stoners.” It will be assumed that employees under the influence are likely to get injured.

But states are stepping up the game in response to the explosive growth of cannabis. In 2018, the California Department of Insurance endorsed and helped rollout a program encouraging insurance carriers to provide workers’ comp coverage to the cannabis industry. As the encouragement by states continues to grow, more carriers are getting on board.¹⁶ An experienced staffing workers’ comp broker can assist in both finding workers’ comp coverage and meeting safety requirements.

Cannabis as a thriving industry is here to stay. As it becomes more acceptable other states may legalize it for recreational purposes. Staffing firm brokers and employers should be prepared, not only for the increased possibility of frequent users in the workforce, but the need for temporary employees every facet of the industry.

Notes

1. Cannabis Industry Statistics 2021: How the Essential Industry Performed Last Year, Flowhub.com
2. CBD: What Employers Need to Know, Rajy Abulhosn, Workforce.com (2020)
3. Hair, Saliva or Urine Which Is Best for Drug-Testing Job Candidates? Roy Maurer, SHRM, February 2018
4. Ibid
5. Ibid
6. Random Drug Tests (Still) Not Advisable in Most California Workplaces, Ryan McCcoy, California Peculiarities, Seyfarth (2017)
7. Navigating Your Workplace Drug Testing Protocol after the Pandemic, Clarissa Windham-Bradstock, Forbes.com; July 2021.
8. Can You Still Receive Workers’ Comp if You Fail a Drug Test, Rich Frankel, Bross & Frankel, p.a. (2019).
9. Legal Weed Could Reduce Workers’ Comp Claims, NJ Professor Claims, Montana Samuels, Patch; February 2021
10. Cannabis worker safety, Barry Bottino, Safety and Health Magazine (2019)
11. CanGen Insurance Services, About CanGen, Canngenins.com
12. Ibid
13. Classifications Applicable to Cannabis Industry Operations, Workers’ Compensation Insurance Rating Bureau of California Learning Center (2018)
14. Wrong Workers Comp Class Codes in Cannabis is Worrying, tv (2020)
15. Ibid
16. California’s cannabis insurance marketplace continues to grow with commissioner’s latest approval, http://www.insurance.ca.gov/0400-news/0100-press-releases/2018/release064-18.cfm

Driving a combine harvester through a wheat field or welding bolts on the side of a sky scraper 200 feet up. Which employer will have higher workers’ comp rates? It’s not the easiest question to answer given all the variables, but access to care and safety programs play as big a role as risk. From a big picture standpoint, the larger industries in urban areas employ more workers’ in myriad professions. It stands to reason there will be more accidents and likely higher workers’ comp rates. Depending on the industry there may be a greater quantity of classifications, but they vary in risk. Even in a low risk profession, a serious injury or two can cause rates to sky rocket, a huge expense especially for a small firm.

According to the Bureau of Labor Statistics in 2019, the largest number of work-related accidents are in the health care industry followed by retail and manufacturing. Nursing assistants suffer the most work-related injuries. In a rural setting, there will be fewer medical facilities with few employees, so fewer accidents. But a large hospital in an urban area with a constant flow of patients, mean more staff and a greater chance of injury.

The last 14 months have also had an impact because of COVID. Statistics available from licensed rating bureaus, show a decrease in rates from 2019 to 2021 in most professions. In addition to changes in classifications, this likely reflects fewer employees. This applies to industries one would find in both an urban and rural setting. Thus, the focus of this white paper is on which professions and injuries drive the costs and what impact location may have.

According to the Merriam Webster dictionary, urban is defined as of or relating to cities and the people who live in them. A city is defined as an inhabited place of greater size, population, importance than a town or village. It stands to reason that in a city, there will be more and larger places of employment crammed next to each other on busy streets with a mixture of white and blue collar jobs.

Rural is defined as of or relating to the country, country people or life, or agriculture. In small rural towns, there will probably be some light industry that provides a significant number of jobs. There will also be doctors’ offices, small grocery stores, a lawyer or two, and insurance agencies. These are low risk employers and will likely have low X-Mods depending on the number of workers’ comp claims filed. The rates are relatively low, especially with fewer employees.

Many employees may live in rural or suburban areas and commute to cities to work. Injuries that occur commuting to and from work are not compensable in most states. If your job requires travel or you commute between job sites, any injuries incurred are covered by workers’ comp.

The most common workers’ comp injury in both urban and rural setting is the slip (or trip) and fall. The best outcome is some medical attention with some time of work and possibly pain medication. The claims are accepted and paid and costs easily absorbed. The downside is these accidents are more likely to lead to serious injuries to knees and especially backs. The workers’ compensation benefits to employees can be long-term treatment, temporary or permanent disability and lost time. This doubles or even triples the claim. The occupations in urban and rural areas can also determine the injury type. A hazardous, high-risk profession can lead to catastrophic injuries beyond a torn ACL.

Rural Areas Access and Safety: A Crucial Component to Workers’ Comp Rates

When one thinks of rural areas, the first industry that comes to mind is commercial farming. It’s a huge, essential industry that employs between 2-3 million migrant and seasonal workers every year, according to the United States Department of Agriculture. The risk varies depending on the type of work being done. And each type of agricultural job has a separate classification to represent the risk. A worker who operates farm equipment will have a different classification from a worker who picks strawberries.

According to studies done on injuries in rural versus urban areas, preventable injuries were far more likely to occur in rural areas. A contributing factor to this is that people living in rural areas were less likely to wear seat belts. This could certainly happen to employees during the course of employment, but federal statutes govern seat belt laws. If an employee driving a commercial vehicle in a rural area has a clean record, but simply forgets to put his seat belt on, an employer will be on the hook for this. If the employee has been warned and still doesn’t wear a seat belt, an employer will likely fight a claim.

Another factor that contributes to the costs of rural workers’ comp injuries is the use of opioids. Workers injured in a rural setting are more likely to be prescribed opioids as a stop gap for pain relief because access to health care is more difficult _1. A specialist may be several hours away and appointments longer to get. This means a costlier outlay for employers for medications. The injuries can vary from mangled and crushed limbs in farm machinery or tractor rollovers, and injuries in car accidents going from one agricultural site to another, or transporting produce. Harvesting by hand has its own risks including injuries from bending, stooping, and lifting. In addition to the opioids, the injuries can be substantial, perhaps leading to the loss of a limb or permanent disability.

In addition to equipment related injuries, heat is also a contributing factor to illness and even death. Occupational safety and health are shared equitably by the the grower and farm labor contractor. Some Growers think that the FLC provides a buffer of protection for them against liability. This couldn’t be further from the truth.₂

In California, the law defines an FLC as the following: Any person/legal entity who, for a fee, employs people to perform work connected to the production of farm products to, for, or under the direction of a third person; or any person/legal entity who recruits, supplies, or hires workers on behalf of someone engaged in the production of farm products and, for a fee, provides board, lodging, or transportation for those workers, or supervises, times, checks, counts, weighs, or otherwise directs or measures their work, or disburses wage payments to these persons.

The farm labor contractor is essentially a staffing firm. If you’re an FLC in California you are required to have both a license from the Division of Labor Standards and Enforcement and a certificate of registration from the U.S. Department of Labor Wage and Labor Hour Division. As part of the joint employer liability, a grower must vet a farm labor contractor to ensure that it has the injury and illness and prevention plan (IIPP) and a heat illness prevention program (HIPP). FLCs are required to provide proof of workers’ comp insurance. Other states likely have similar requirements for licensing.

Heat presents a significant risk and farm labor employers are required to provide adequate shade and water. The HIPP is very specific about how much shade must be provided based on the temperature, and how much water must be provided to farm workers per shift. Another important requirement is that supervisors keep a close eye on workers’ for signs of heat illness. In keeping with the rural setting a prevention plan must also have specific instructions on how to notify emergency personnel, and provide precise directions on how to get to the worksite, which could be many miles away.₃

As the agency in charge of providing the labor, all health and safety requirements must be followed. This includes that supervisors are complying with the requirements in the HIPP and workplace safety in general including access to and proper use of first aid. From a workers’ comp perspective, the FLC should document that it provided the information on wage and other compensation terms and conditions to the workers, and a copy of the paystub with confidential information removed.₄ This is important given that it contractors should also provide the grower with the number of workers that are being employed for purposes of payroll. The FLC should also make sure the grower is complying with similar requirements and not impeding or jeopardizing the safety of workers.

Harvesting is becoming more mechanized, but even then, workers still must be protected from the heat and stay hydrated. For instance, combine harvesters with vehicle cabins must have A/C units. Despite the precautions, farm labor contracting is still high risk and, unfortunately, an easy target for skirting the law. Recently, The California Department of Insurance charged a farm labor contractor with 20 felony insurance and tax fraud after allegedly under-reporting payroll by over $17 million resulting in a loss of over $1.42 million to their insurance companies. The scheme was uncovered when a worker was injured after a trip and fall and subsequently treated in a garage by an unlicensed professional, according a California Department of Insurance news release.

In addition to not following treatment protocols, the FLC under reported payroll to attain a lower workers’ comp premium. This can be an all to common experience if growers fail to properly vet their FLCs. Failure to comply with these requirements can lead to illness and other heat-related injuries, the result of which can increase the FLC’s experience modification.

Large acreage with workers spread out and even language barriers, depending on the number of migrant workers, can make it difficult to monitor safety compliance. Another challenge in the fields is the legal status of farm workers, many of whom come from Latin America. Even though, FLCs and farmers are supposed to confirm work visas and permits, workers fearful of losing their jobs are less likely to report injuries, or as demonstrated above, do not receive treatment in a medical facility. Temporary employees should be well-versed in the safety requirements and those requirements should be in multiple languages. Make sure the grower also has the same standards in place.

The Impact of COVID-19

The availability of vaccines and more people getting vaccinated has caused the rates of COVID to drop in many states including California. Workers in the agricultural industries are considered an essential critical infrastructure workforce. Depending on the type of agricultural work, whether it be ranching or food cultivation, the Centers for Disease Control still warns that agricultural employers and workers need to adapt and practice safety protocols based on the situation. There will need to be greater emphasis on masking and distancing, if agricultural workers’ are sharing transportation or employer provided living quarters.

Agricultural workers can also spread COVID through the sharing of surfaces such as tools, farming equipment and toilet facilities. As with every other safety issue, the FLC should have a COVID assessment and control plan. According to the most up-to-date guidance from CDC, “Owners/operators can respond in flexible ways to varying levels of disease transmission in the community and be prepared to refine their control plans as needed.”₅

A control plan should reflect the specific region, work site space, job tasks, and other features of each farm, ranch, orchard, or other agricultural operations and locations. Those involved in the work can best set priorities and assess how realistic these recommendations are for specific situations at their facilities.”₆

COVID Guidance will continue to change, so with so many other factors in workers’ comp, clear safety guidelines and enforcement of those guidelines is crucial to keeping rates down in rural areas, despite the inherent dangers.

Urban Settings Have Greater Safety Challenges

Urban areas have more employers with greater numbers of employees. In large cities such as New York, Chicago and Los Angeles, the city centers are made up of a significant number of white collar businesses such as banks, law firms and accountancy firms. These jobs are considered low risk, thus will have lower X-Mods. However, it’s in the cities where the mega law firms are located, which means more employees, including clerical, which means a larger payroll. There are also numerous restaurants both high and low-end, with a mixture of risks.

But you will also find hospitals, warehousing, manufacturing, and large construction projects with much higher risks. Even in department stores and malls with a mixture of white and blue collar jobs the risks vary commensurate with the job. For instance, a store manager versus an employee who stocks shelves: Stocking shelves requires heavy lifting and standing on ladders.

The most common workers comp injury is a slip and fall, and it’s just as likely to happen to a lawyer as to a welder, but even taking that into account, the riskiest jobs to be found in urban areas will be on industrial premises such as heavy construction or manufacturing. Major road work and warehousing also expose workers to high risk. Many of the jobs will be in higher payroll classifications, so a spotless safety record and a good staffing broker to make sure a company is using the proper classification codes is crucial to keeping rates low.

Construction companies erecting skyscrapers and road repairs carry a heavy risk, thus rely on the highest safety standards to keep workers safe, including fall protection. But despite a sterling safety record, a smaller construction firm may still end up paying more in workers’ comp premium. The reason being that experience modifications are also based on payroll, and a smaller company has a lower payroll to absorb the risk from a major claim. This can saddle a small construction firm with a higher X-Mod, even if its safety record is as good as a larger firm’s. This isn’t always the case, but it can become an issue from a profitability standpoint, as certain projects, especially government jobs, will only accept bids from construction firms that have 1.00 X-Mod or lower.₇

Making sure a construction company has the correct workers’ comp classification code is also an important component of the workers’ comp rate. The class code is based on the risks associated by each type of work an employee performs. Construction and warehouse operations have numerous jobs. But as there are so many components, especially to construction, not all the jobs will be high-risk Some states use the National Council on Compensation Insurance to determine their class codes. Other states, such as California, have their own licensed rating bureaus to determine codes. They are frequently the same, but changes will be made periodically to class codes in certain industries. Staffing firms supplying workers need to consult their brokers on classification codes. It also helps to know the safety record of the firms they’ll be working for.

As for safety standards, written plans are essential and usually required. As with farm work, the construction firm contracting for the work must make sure these standards are being followed by all workers including subcontractors and temporary workers. Staffing firms should also follow up on this. A fall from a one story building or a pallet collapse in a warehouse can result in catastrophic injuries.

Accidents involving pallet collapses are on the most common accidents in warehouses. This is usually the result of items not be stacked and wrapped properly on the pallet, an important safety component. Inadequate spacing between items can cause balance issues as a pallet is being lifted.₈ Fork lift crashes are also common, usually due to improper training.

In manufacturing some of the common work-related injuries, over-exertion, vehicle accidents and being struck by falling objects. These accidents are preventable if there are safety plans in place and being followed.

On construction projects, the most common jobs causing serious injury and or death are falls, being struck by objects, caught between and object and electrocution. Even something as haphazard as a nail gun accident through the foot or hand can result in a significant amount of lost time. Just the number of jobs pose different different risks. Staffing firms that provide workers for construction projects need to have strict safety plans that address each one, including fall protection, confined spaces, and eye and ear protection. Fall protection is required above a certain number of feet. A properly fitted harness and an appropriate tying off point will keep the worker safe, if he should slip or encounter faulty scaffolding—another common safety issue. If these standards are ignored, or not properly conveyed, accidents are far more common.

Opioids

Employers with workplaces in urban areas are closer to needed to medical care, so opioids as a stopgap don’t drive their use. But opioids are still prescribed and can add to the cost of a workers’ comp claim. According to the Workers’ Compensation Research Institute, injuries associated with construction work and mining were more likely to be prescribed opioids as part of pain a medication prescription. They were also more likely to receive opioids for longer periods of time and in larger doses.₉

It’s estimated that workers’ prescribed opioids for pain were more likely to spend time off work. According to the National Council for Compensation Insurance, workers with low-back injuries with over 7 days away from work and 3 prescriptions 6–12 months after injury following at least one prescription in the first 3 months, resulted in temporary disability that was more than three times longer than for similar workers with similar injuries who did not receive any opioid prescriptions.₁₀

COVID-19 and social isolation caused by shutdowns and job losses also exacerbated the over prescribing of opioids, especially if surgeries were delayed for work-related injuries. The good news, despite the pandemic, opioid prescribing for workers’ comp injuries is going down in most states, but the amounts prescribed still vary.

Construction Stands Out

Despite advances in safety equipment and training, construction still faces disproportionate rates of injury-fatal and non-fatal. According the to the Bureau of Labor Statistics, in 2019 construction workers account for 20 percent of the deaths (1 in 5 workers), yet account for only six percent of the workforce (11.5 million workers).₁₁In the same year, there were 200,000 non-fatal injuries in construction.

According to experts in the construction industry, the reason fatal and non-fatal injuries remain high is because of the failure to follow safety procedures. Construction stands out because eight out of the ten most common safety violations are found in construction including fall protection, lockout-tag out procedures and defective scaffolding.

Staffing firms need to have a detailed safety plan for their workers’ and confirm that the construction company does as well. Identifying hazards and taking steps to mitigate risk cut down significantly on work-related accidents. Safety protocols such as procedures on operating heavy equipment should also be included. Site managers need to make sure all protocols are being followed. Even properly attaching a fall protection harness can be done haphazardly, if a worker hasn’t read the procedure or is in a hurry.

While by no means a comprehensive list, here some quick bullet points staffing firms should heed:

• Familiarity with the job site including the location, specifications, and condition. Any one of these items can present a safety issue.
• Make sure the worker meets the qualifications for a specific task. This includes proper training and certifications
• Confirm who your workers will be reporting to and that a steady stream of communication is maintained. This is especially important for workers with limited English skills.
• Assign an individual(s) to contact in case of an emergency. Also keep emergency numbers such fire departments and paramedics where workers can access them.
• Conduct a morning meeting—usually referred to as a tailgate meeting–to go over safety procedures and protocols. These meetings can include standard reminders to workers to wear hardhats and PPE equipment or COVID-19 safety protocols.

Even as COVID-19 is passing, safety procedures remain in place and can be difficult as communication on construction projects doesn’t lend itself to Zoom. Masks and distancing are still as much a reality as fall protection. We hope for not much longer.

Workers’ comp rates are a reflection of safety as much as they are of risk or location. That does not change, regardless of whether workers perform their jobs in a rural or urban setting. Staffing firms need to be cognizant of the risks in different professions and what impact location might have. Is medical help just a few blocks away or several miles away? The answer is one of many variables to consider in a safety program.

1. Correlates of Opioid Dispensing, Vennela Thumula and Ti Chun Liu Workers’ Compensation Research Institute (2018)

2. Farm Labor Contractors: Essential and Risky, What Every Grower Needs to Know, Amy Wolfe, president and CEO of AgSafe (Aug. 1, 2019)

3. UC Davis Western Center for Agricultural Health and Safety, Heat Illness Prevention Standard Requirements.

4. See Footnote 2.

5. Agricultural Workers and Employers Interim Guidance from CDC and the U.S. Department of 9 Labor, February 21, 2021

6. Ibid

7. CCIG, Not Winning Construction Jobs? It Could be Your E-Mod, April 2018.

8. MSDSonline, a-velocityEHS solution, Four Common Warehouse Accidents and How to Prevent Them (2016).

9. See Footnote 1

10. The Impact of Opioid Prescriptions on Duration of Temporary Disability. Neumark, D., Savych, B., Lea R. (2018). National Council on Compensation Insurance. Update, March 6, 2018, WC-18-18. 11. Occupational Safety and Health Administration, Commonly Used Statistics (2019)

11. Occupational Safety and Health Administration, Commonly Used Statistics (2019)