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Can you fire an employee while they are out on a workers' comp claim?


Can you fire someone while they are out on a Workers’ Comp claim?  Yes….but be careful and cross all your t’s and dot all your i’s before you do!

You can terminate a workers’ comp claimant as long as they are not protected by any other laws.  So before moving forward with the termination you must determine the following:

                Is the claimant protected under the Family and Medical Leave Act?

                Is the claimant covered under the ADA laws?

                Is the claimant being terminated for any other discriminatory reason?

Now, once you’ve covered all those points you still need to assess the consequences of the termination.

Negative Consequences can include the possibility that a Workers’ comp Commissioner might be more sympathetic toward an unemployed claimant and/or the length a claimant is out of work may exceed the norm due to the fact that they don’t have a job to return to.

Conversely, the positive side is you may be able to terminate a poor-performer/problem employee.

construction risk advisorsRemember, the most important thing is documentation, documentation, documentation!  If you are terminating any employee, claimant or otherwise, make sure you have written records of poor performance evaluations and conversations, documents of attendance abuse, etc.  And we highly recommend you contact your lawyer prior to issuing that termination!

Workers' Compensation Newbies


The Hartford just came out with a very simple guide to help small business owners understand how workers' compensation works, and why your business should be carrying it. 

Link to Work Comp Guide

If you read the guide and want to learn more about the exciting world of contractors workers' comp, we've written an article or two about it!

Getting Injured Workers Back to Work

Back to the Basics: Workers' Compensation

The High Costs of Late Claim Reporting

Every Contractor With a Family Should Buy Workers' Compensation Insurance

Do You Have an Injury Prevention Plan in Place?


"The Bureau of Labor Statistics estimates that approximately 3.3 million serious work-related injuries and about 4,300 fatalities occurred in 2009. The human cost of preventable workplace injuries and deaths is incalculable. However, according to the 2010 Liberty Mutual Workplace Safety Index, the direct cost of the most disabling workplace injuries and illnesses in 2008 amounted to $53.42 billion in U.S. workers compensation costs, more than one billion dollars per week. This money would be better spent on job creation and innovation. Injury and illness prevention programs are good for workers, good for business and good for America." - Dr. David Michaels Assistant Secretary of Labor


Does your construction company have an Injury Prevention Program, or do you just wait until an employee is injured?  It is possible to prevent every injury, you just need to have a program in place and monitor it regularly.

OSHA has just released a new web page with east to use guides on how to implement an effective system for finding and fixing workplace hazards.  Addressing the hazards before an accident occurs should be your #1 goal.

Most successful injury and illness prevention programs are based on a common set of key elements. These include: management leadership, worker participation, hazard identification, hazard prevention and control, education and training, and program evaluation and improvement.

You can access OSHA’s new web page at

Back to the Basics: Umbrella/Excess Liability


umbrella insurance, construction risk advisorsPretty sunny here in Connecticut this afternoon.  So sunny that you might need an umbrella.  Do you know what else needs an umbrella?  Your contractor insurance program!  Just like an umbrella protects you, your hair, and your clothes from bad weather, your insurance program’s umbrella goes over several of your lines of coverage to protect your company’s checkbook.  It’s common for construction companies to go their entire lifespan without ever needing their umbrella or excess limits to pay a claim.  I also keep an umbrella in my car, but it too rarely gets used.  But it’s still there if I ever need it. 

(disclaimer: Travelers didn’t pay me to write this)

What is it?

An umbrella goes over a few lines of your insurance coverage to provide additional limits if you exhaust the policy limits of the underlying policy.  In most instances, the umbrella provides additional limits to your Commercial General Liability, Business Auto, and the Employer’s Liability portion of your workers’ comp policy.  Say that you have a 2 million dollar general aggregate on your CGL policy.  You haven’t had any claims yet this year, so your limits are still 100% intact. Let’s say you have a massive claim that has insured costs of 2.4 million dollars.  Your CGL policy will use all of its 2 million dollars worth of limits, and then your umbrella will pick up the additional 400K.  If you didn’t have the umbrella, you could be getting your company’s checkbook out to cover the additional 400K.  If you’ve got an extra 400K lying around, more power to you, but for 99% of contractors, coming up with a few thousand dollars for a few million dollars worth of umbrella coverage often makes a lot more sense.   One caveat to how the umbrella responds, is that it normally has a Self-Insured Retention or deductible.   Something in the ballpark of 5-10K is standard.  10K is nothing to laugh at, but it probably won’t bankrupt your company like a bill for 400K could.

Why should my construction company should carry it?

For our commercial construction clients, it is not that rare their upstream parties to require  $3,000,000-5,000,000 limit worth of general liability limits. Very few Commercial General Liability policies will offer limits higher than $2,000,000 so to comply with their contracts, most of our clients buy an umbrella to split the difference.  We advise that you buy an umbrella that will satisfy the majority of your contractual obligations.  If most of the contracts you sign require a $5,000,000 limit, buy your regular CGL and a $3 MM umbrella.  If most of the contracts you sign require a $10MM umbrella, either the upstream party is making you have the same limits as them even though they’re 20x your size, or you’re a huge contractor working on huge, high-profile jobs. The other reason for purchasing umbrella coverage is that it’s relatively inexpensive for the amount of coverage dollars it affords.  Once you buy the first million, the subsequent millions go down in price substantially.  Again, spend a few grand up front, and save your checkbook for payroll and new equipment instead of insurance claims.

Types of Claims:

The types of claims that trigger umbrellas are usually the same claims that trigger news stories, trips to the hospital, and immediate OSHA visits.  I don’t mean that in a joking way, but if your company is responsible for a claim that costs five million dollars, people are going to know about it and odds are good that significant property damage has occurred.  When we’re talking to clients about their umbrella, we often bring up the make believe scenario of “imagine what the claim would cost if one of your dump trucks crashes into a bus full of nuns, orphans, and their puppies.” 

Loss Control Suggestions:

Any loss prevention strategies that work for CGL and Business Auto also apply to your umbrella.  The umbrella doesn't cover your property because the property is insured to a specific value and maximum claim costs are predicted and insured for. It also doesn't respond to workers' comp injuries because workers' comp injuries don't have limits.  The checks keep coming until the injured worker is back at 100% or compensated for any permanent disability. We hope you always buy an umbrella but never ever, ever, ever have to use it.

About the author:

Dan Phelan runs the marketing department at Construction Risk Advisors when he's not out helping his clients with risk management and insurance issues.  If you want to connect on twitter, he's at @fixyourrisk and here on Facebook

dan phelan litchfield insurance group

Back to the Basics: Workers' Compensation


describe the imageSome of our clients needed some insurance help that unfortunately took precedence at the end of last week over blog posts.  We’ll be cranking them out fast and furious until Friday, and will get through all 13 that were promised.  Today we’re going to be digging into Workers’ Compensation.

What is it?

A number of years ago when I was in insurance school, our teacher taught us a rhyme to help us remember what workers’ comp is:  Workers comp is meant to be the sole and only remedy for work related injury.

Workers’ comp has been available in the United States since 1911 as a way to prevent employees from suing their employers for at work injuries.  Prior to workers’ comp, if the employee had any contributory negligence in their injury, regardless of whether it was due to faulty machinery or a dangerous location, the injury was then their problem.  Industrial and construction accidents were accepted as a fact of life, and workers’ comp was designed as no-fault insurance to pay for any at work injuries with the acceptance that the injured party could not sue their employer after receiving medical and wage benefits.  More history on workers’ comp systems around the world is available HERE.

Why should my construction company carry it?

Unless one of these bullet points applies to your company, you are legally required (at least in Connecticut) to carry this coverage.

In Connecticut, here are the types of employers and employees that aren't legally required to carry workers' comp:

  • Domestic employees working less than 26 hours weekly  – or officers of fraternal organizations paid less than $100 per year.  
  • A corporate officer is automatically included and must carry WC unless they elect to exclude themselves.
  • Sole Proprietors and partners are automatically excluded , but may elect to include themselves.
  • Single Member LLC are automatically excluded, but may elect to include themselves.
  • Multi Member LLC members are like Corporate officers – automatically included but can exclude.

If you’re a contractor with a wife and kids, here are some more reasons to buy it


Types of Claims:

Any injury sustained by an employee in the course of performing their job is considered a workers’ comp claim.  Whether it happens in the office, in the field, in the car, or at your desk, workers’ comp is your first dollar source for getting compensated for medical treatment and lost wages.

Loss Control Suggestions:

Make safety your construction company’s #1 goal. 

Provide safety training and personal protective equipment to each and every field employee.

Post-offer, pre-hire drug testing.  People that aren’t drunk or on drugs, statistically don’t injure themselves at work as much as people that are.

Safety committees.  Make one.  Meet quarterly at the very least.

Toolbox talks.  No matter how seasoned the employee, people can forget and become complacent.  Keep safety top of mind at all times.


One last thing to think about. Your experience modification factor drives your comp premium and your ability to bid jobs with certain general contractors and owners.  Keep it low, and keep your company competitive.

If you want to read some more on workers' comp, here are the other 20 or so blog posts that we have written about it

About the author:

Dan Phelan runs the marketing department at Construction Risk Advisors when he's not out helping his clients with risk management and insurance issues.  If you want to connect on twitter, he's at @fixyourrisk and here on Facebook

dan phelan litchfield insurance group


And because everybody enjoys funny safety pictures...

comp1 resized 600comp2 resized 600

comp3 resized 600

comp4 resized 600comp5 resized 600

Preventing Workplace Violence Seminar 5/25/2011 in Torrington Connecticut


workplace violence resized 600Want to attend?  Sign up HERE

Workplace Violence – think it can’t happen to you?  Think again……

Statistics show it happens in all industries; manufacturing, retail, wholesale, even construction! Workplace violence is the fourth-leading cause of fatal occupational injuries in the United States.

Violence in the workplace is a very real and serious safety and health issue.  For that reason OSHA has even issued a guidebook for handling violence in the workplace and is discussing whether to implement standards!

There is no sure way to predict someone’s behavior; no specific profile of a potentially dangerous person.  There may be warning signs, there may not be.  Their hostile actions may not even be work-related, but arise from a domestic situation or “road rage” attitude. 

Whatever the cause or the outcome, you as the employer need to provide a safe workplace for your employees.  Do you have safeguards in place?  Do your managers and employees know what to do if workplace violence occurs?

There are many ways to obtain information and training on this issue. 

We are even offering a workshop to help educate employers.

This presentation/workshop focuses on recognizing the early warning signs that precedes an attack and how best to react if an incident occurs.  Nationally, American businesses lose $32 to $36 billion a year in revenue, productivity, low employee morale, absenteeism and legal fees arising from the combination of workplace and domestic violence impacting the workplace.


Attend this seminar and learn how to create a healthy work environment as well as how to prevent problems before they happen.

Date: May 25, 2011

Registration: 8:30 a.m.  Seminar: 9:00-12:00 p.m.

Presenter:  Dennis Golden and Jennifer Lownik, IM-Safe

Location: Litchfield Insurance Group, 126 South Main Street, Torrington, Connecticut 06790

Want to Attend?  Sign up HERE

What is a Waiver of Subrogation?


waiver of subrogationWhat is a waiver of subrogation? You've seen this in construction contracts, on certificates, and many of your insurance policies have it, what what exactly is a Waiver of Subrogation and what does it do?  A waiver of subrogation, also known as a "transfer of rights of recovery" is a mechanism that insurers use to transfer risk and to limit the rights of recovery from another party on behalf of the insured.  Confused?  An example of how a "Waiver of Subrogation" would work in a workers' comp claim scenario is this:

A laborer at ABC HVAC is on XYZ General Contracting's site.  ABC's laborer is injured because a piece of wood wasn't cleaned up by one of XYZ's workers.  ABC's injured worker collects workers compensation for his injury, but because a waiver of subrogation was in place, ABC's insurance carrier can  not go after XYZ's insurance limits to get the money they spent on the claim due to XYZ's negligence in maintaining the job site.  Because ABC’s worker was injured, and ABC’s insurance carrier is on the hook for 100% of the medical and indemnity costs of the claim, ABC HVAC’s experience modification factor will increase, as well their workers compensation costs for the next three years.  Depending on what ABC’s experience mod was prior to the claim, this spike could also hurt their ability to bid jobs requiring an experience mod lower than 1.00.

If a waiver of subrogation were not in place, ABC's insurance carrier could have subrogated back to XYZ's insurance carrier and make them pay the percentage of the claim that they were responsible for.  This would have minimized the expense costs for ABC’s workers comp carrier, as well as minimized the effect that the claim had on ABC’s experience mod.

A popular misconception by many upstream contractors is that they are insulating themselves from liability downstream by requiring their subcontractors to provide a waiver of subrogation in their favor.  While they are insulating themselves from the workers compensation insurance carriers of their subs, they are not insulated from having a suit brought by the injured worker and his/her family.  Also, depending on the level of negligence by the upstream party, their general liability policy could be called upon to pay both defense costs as well as a settlement.

One last thing to consider about risk management and waivers of subrogation.  There are two ways to obtain this coverage endorsement.  It can be added to your policy for an annual fee, or can be obtained on a one off basis whenever required by contract.  We advise our clients to have it built into their policy so that there isn't a possibility that they are in breach of contract by forgetting to have it endorsed separately for every job requiring it.

Want to get technical?  Great article on about WOS here

If you missed our post about it last week, this blog as well as many others related to construction and contracting are available on Mike Rowe's Trades Hub.

Do you love workers compensation as much as we do?  Here's the rest of our blog posts about it!

Have a question about your construction risk management program that we haven't answered on the blog yet? Ask a Risk Advisor!

Differentiating Between Leased or Temporary Workers


There are a few coverage issues for contractors to contemplate when leasing an employee or hiring a temporary employee:


Leased worker means a person leased to you by a labor leasing firm under an agreement to perform duties related to your business.


Temporary worker means a person who is furnished to you to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions.

 Each line of insurance treats these types of workers differently:

General Liability definition of “Employee” includes a “leased worker” but excludes a “temporary worker”.  Under the GL an employee/leased worker cannot sue or collect for bodily injury; Workers' Compensation is the primary source of any bodily injury to the employee/leased worker.  Whereas, the temporary worker does not fall under the employee exclusion.  The “temporary worker” could sue their temporary employer for bodily injury under the General Liability and collect pain and suffering.


Automobile Liability similar to General Liability, the auto does not define a Temporary worker as an employee.  Here is an example:  In the course of  unloading an ABC Construction truck, a passerby is injured and brings suit against EEC and the individual that caused the injury (temp worker).  ABC Construction would, of course, have coverage under the automobile policy, and if the person causing the injury is an employee or leased worked, he or she would also be protected.  Your automobile liability will not defend the temporary worker in this situation.


Workers' Compensation If you use an employment agency or leasing company we need to review their contract.  Most will state they are responsible for Workers Comp.  We need to be sure they have endorsement WC 00 03 01 Alternate Employer Endorsement on the policy.  This endorsement extends the Leasing Company’s Workers' Compensation coverage and employers’ liability coverage to ABC Construction.  It is used to extend primary coverage to employees of the leasing company when they are leased to another company.

The temporary worker poses a coverage exposure for contractor utilizing the added manpower; one solution would be to have a subcontract agreement in place along with the necessary insurance requirements (additional insured endorsement and waiver of subrogation on all insurance).

* All discussions in this post are hypothetical, and laws vary state by state.  Please consult legal council and review your current insurance program prior to drafting any contracts and becoming involved in any temporary or leased employee scenario.

The High Costs of Late Claim Reporting


From our friends at Liberty Mutual

View as a .pdf

Late claim reporting

Construction Accidents Can Have Civil and Criminal Consequences


A former construction foreman has been charged with four felony counts in connection with a 2008 construction accident.

April 07, 2011 /24-7PressRelease/ -- In the same way that a drunk driving accident may result in criminal (DUI) charges as well as civil claims (for property damage or injuries caused in the accident), worksite accidents may also give rise to both criminal charges and civil claims for damages.

A recent case out of San Luis Obispo County is a perfect example where both civil and criminal consequences arose out of a construction accident. A construction site foreman was charged with two counts of involuntary manslaughter and two counts of violating the Labor Code in connection with a worksite accident in 2008 that resulted in the death of two men.

Criminal Charges

Two workers were removing struts from a pipe laid in a trench when an excavator working on another section of the trench reportedly struck a city water line. Both workers were trapped in the trench, and drowned.

According to the San Luis Obispo Tribune, the foreman instructed the workers to continue digging even though he had been warned that there was a water line in the excavation area. Investigation documents indicate confusion whether there were utility lines, reported the New Times. The foreman told investigators that he may have looked at a site map upside down, not seeing the water line marking, or that he may have relied on an unmarked map.

He now faces a total of six years and four months in jail if convicted of all four felony charges.

Civil Settlement and Fines

Criminal charges were not filed against the construction company; instead, the District Attorney sought and the company has agreed to pay monetary and safety reform. The construction company has agreed to pay $3 million, which will be divided among San Luis Obispo County, the California District Attorneys Association and the City of Paso Robles. The company will also adopt new safety procedures to improve employee safety at its excavation sites.

According to a company vice president, other settlements outside of court were also made with the families of the victims.

The company is appealing two $70,000 fines levied against it in early 2009 by the Division of Occupational Safety and Health (better known as Cal/OSHA) for a serious and willful violation.

Recourse When Workers are Injured

While not every construction accident results in both criminal and civil consequences, injured workers still have the right to pursue compensation for their injuries -- in some instances pursuing damages against those whose negligence caused the worksite accident.

When a worker is injured in a construction-related accident, there are various types of recourse, including:

- Workers' compensation: Injured employees can file an administrative claim with the workers' compensation insurance for money for medical bills and lost wages

- Court settlement or litigation: Injured workers can file a civil action to pursue money damages

- Civil fines and penalties: State, federal or local agencies and entities may impose fines and penalties on the employer for safety or other violations.

- Criminal charges: The employer, or individual supervisors or co-employees, may face criminal charges when their role in the accident is so egregious as to rise to the level of criminal responsibility.

Not all recourse against the employer directly affects injured workers or their families. That is, civil fines or criminal charges are generally used to punish the employer, or as a basis for educating the employer and correcting the dangerous conditions that gave rise to the accident.

On the other hand, workers' compensation benefits are paid directly to the injured worker. Similarly, if a worker brings a courtroom action against the employer or supervisor, to the extent a jury award or court settlement is reached, that money would be paid directly to the injured worker. Verdicts and settlement money is used to compensate for medical expenses or loss of wages.

Jury awards can also be used to punish employers if the employer acted willfully, committed gross negligence or acted in disregard of humanity. In these instances, the court may impose punitive damages, which are awarded to the victim even though the purpose is to punish the employer.

Any workers who have suffered an illness or injury due to a workplace accident should contact a personal injury attorney to determine whether they have a claim for damages and to protect their right to claim those damages.

Article provided by Shapiro, Galving, Shapiro & Moran, PC

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