Friday, January 31, 2014

California Administrative Law Judge (ALJ): Adult Film Workers Are Employees

Note: This is a serious safety topic, it deals with the life and death of employees. To some extent, covering this story does reflect my sense of humor. But what you need to take away from this are 3 things.

First, Bloodborne Pathogens can apply anywhere, especially in places that you may not think. For example, a cashier at a fast food restaurant. A good restaurant will have a dedicated maintenance or janitorial person that handles cleaning. It is not uncommon to have cashiers wipe down tables, mop the floor, or check/stock/clean the bathrooms at slow times.

Cleaning the bathrooms may trigger Bloodborne Pathogens training requirements. What about if an employee (not seriously) cuts themselves. Even if the manager just gets them a bandage and they are fine to return to work, the Bloodborne Pathogens Standard may be triggered. What if the manager tells the cashier to mop the blood drops off the floor?

The second thing to take away is the issue of independent contractors. Most general contractors require all subcontractors and their employees to go through the general contractor's safety training. Even if the GC has an approval process where subcontractors' employees are trained and approved to work for the GC, they are still required to go through site specific training.

Many GCs even go further by covering all subcontractors and their employees under the GC's work comp even if the subcontractors have their own comp. I have even been on site where the GC extended their liability coverage to the subcontractors.

Finally, this ruling may only be California, but California is a precursor to what will follow in the rest of the country.  Don't believe me? Look at gay marriage, pollution control, social program expansion, universal healthcare, immigration, and the list goes on.

Warning: The following and links to the ALJ decision graphically outlines practices on the sets. Some people may find the descriptions disturbing. Some links to entities mentioned may point to adult themed sites.

On to the story....

AHF: Cal/OSHA Issues Landmark Ruling Against Treasure Island Media On Bareback Porn

January 23, 2014
Los Angeles
From Yahoo Finance

In a first-of-its-kind legal ruling, California’s Division of Occupational Safety and Health Appeals Board rejected an appeal by the Bay Area condom-less porn company and issued a broad rebuke to Treasure Island Media, Inc., finding that the issues cited in the company’s bareback porn film citations are serious. Last February, AHF filed Cal/OSHA safety complaints against Treasure Island over its production of condom-less gay adult films; the complaint was AHF’s first targeting producers of bareback gay films.

AIDS Healthcare Foundation (AHF) has learned that in a first-of-its-kind legal ruling against aCalifornia adult film production company, California’s Department of Industrial Relations, Division of Occupational Safety and Health’s Appeals Board (Cal/OSHA), has rejected an appeal of several workplace safety violations issued by Cal/OSHA against Treasure Island Media, Inc., (TIM) a Bay Area adult film production company that primarily serves and produces condom-less, or ‘bareback’ films for the gay market. In a landmark—and at times graphic—36-page ruling filed with the Department of Industrial Relations’ Los Angeles Legal Unit on January 8th, Cal/OSHA Administrative Law Judge Mary Droyovage issued a broad rebuke to Treasure Island Media, finding that the issues in Cal/OSHA’s original bareback porn film citations against the company are “serious.”

“For the first time ever in California, Cal/OSHA’s Appeals Board has, in a formal trial of an appeal of several safety violations lodged against a California adult film company, overruled the appeal and upheld the citations and fines originally issued to Treasure Island Media for its condom-less porn productions,” said Michael Weinstein, President of AIDS Healthcare Foundation. “Treasure Island has been quite outspoken in its opposition to condom use in the company’s films. That is partly why we filed workplace health and safety complaints with Cal/OSHA: to press for the enforcement of existing state and local workplace regulatory guidelines which require the use of condoms in their—and all—adult films produced in California. After Treasure Island took its OSHA case to trial, claiming that the performers in their films were independent contractors and that the section of the regulations regarding Bloodborne Pathogens did not apply to the adult film industry, the court sustained Cal/OSHA’s citations after testimony and evidence were presented. This ruling is a milestone for workplace safety in California, and the first time OSHA has had the opportunity to weigh in so clearly and forcefully on workplace safety on adult film sets.”

In February 2013, AHF filed several ‘Notice of Safety or Health Hazards’ complaints with Cal/OSHA, the state’s health and safety regulatory and watchdog organization, over the lack of condom use in adult films produced by Treasure Island Media, Inc. over its production of condom-less gay adult films. AHF’s complaints asserted that the films demonstrate unsafe—potentially life-threatening—behavior in a California workplace, as the sexual acts filmed without participating performers using condoms depict the unprotected exchange of bodily fluids.

The Treasure Island complaints were AHF’s first in a series targeting producers of bareback gay films. AHF filed similar worker safety complaints with Cal/OSHA beginning in August 2009 against 16 California-based adult film companies, and in the years since, filed additional complaints specifically targeting Steve Hirsch’s Vivid Entertainment as well as Larry Flynt’s Hustler Video. To date, Cal/OSHA has opened investigations into several of the companies, has cited and fined several, and is still evaluating and considering additional investigations of some of the remaining companies.

Several of Treasure Island’s Cal/OSHA citations arose from one 2009 film submitted as evidence by AHF in its ‘Notice of Safety or Health Hazards’ complaints to Cal/OSHA last February. The film depicts unprotected sex involving several men, as well as scenes depicting one of the men receiving the previously collected semen of over 1,000 men into one of his body orifices.

In sustaining Cal/OSHA’s workplace safety citations against Treasure Island Media, Administrative Law Judge Droyovage found that:  
  1. Section 5193 (of the Bloodborne Pathogens statute) applies to the adult film industry;  
  2. Barrier protection is the only workplace safety equipment that will satisfy the standard;
  3. Performers in Treasure Island Media’s films are employees;     
  4. They (film performers) were exposed to bloodborne pathogens;      
  5. Treasure Island Media violated section 5193 and did not have any of the following at the time of inspection:
    1. An exposure control plan
    2. Minimize or eliminate exposure by using protective equipment
    3. Provide Hepatitis vaccinations
    4. Conduct and document exposure incident evaluations
    5. Communicate hazard information in the form of training, signs and labels
    6. Maintain medical and training records     
  6. The violations were serious in that there is a “substantial probability that employees would suffer serious exposure resulting in serious physical harm or death if violation occurred.”

"This Cal/OSHA ruling against Treasure Island is a milestone in three important ways,” added AHF’s Weinstein. “1) the ruling unequivocally states that the adult film performers are employees, not independent contractors, as the industry regularly asserts, and as such are indeed covered under OSHA workplace safety statutes; 2) it was the first time an adult film company cited has actually gone to a full trial for appeal with Cal/OSHA instead of settling, paying—or ignoring--its citations; and 3) it is the first time an adult film company has also lost in this precedent-setting court ruling.”

In closing....

You can find Cal/OSHA's Vital information for workers and employers in the adult film industry here:

You can find the IRS guidance on Independent Contractor or Employee here:

Thank you for reading.

FCC warns of Phone Scam!!!!

The Federal Communications Commission (FCC) has recently learned that an old long distance phone scam that leads consumers to incur high charges on their phone bills may now affect wireless consumers.  In the past, consumers have been fooled into making expensive international calls by scam artists who leave messages on consumers’ answering machines or their email accounts.  The messages urge consumers to call a number with an “809,” “284,” “876,” or some other area code to collect a prize, find out about a sick relative, or engage in sex talk.

Wireless consumers are now receiving similar calls from phone numbers with three-digit area codes that appear to be domestic, but are actually associated with international pay-per-call phone numbers.  While wireless companies are working to block suspicious numbers on their networks, some consumers may become victims of this scam.

You can download the document in .pdf format to email and print it out, the link is here:  Below is the warning from the FCC in .jpg (image) format.

 Thank you for reading.

Monday, January 27, 2014

Microsoft extends XP anti-malware support past end-of-life date

January 16, 2014

Microsoft has announced this that it will continue to provide anti-malware support for Windows XP until July 2015 - a little over one year after its end-of-life date on April 8.

The company will release "signatures" that will be used to identify and ward off malware for Windows XP systems. These signatures will continue to be delivered to Windows systems running various Microsoft security and management products.

This includes users running its free Microsoft Security Essentials, marking a change in thinking for Microsoft, who had previously said that Security Essentials would lose support on April 8.

Company officials had previously consistently warned that Microsoft would not provide patch support for Windows XP after April 8, and that the continued used of the operating system would expose it to zero-day attacks from hackers and malware. That message hasn't changed, despite the introduction of the signatures.

"This [antimalware support announcement] does not affect the end-of-support date of Windows XP, or the supportability of Windows XP for other Microsoft products, which deliver and apply those signatures," Microsoft's announcement stated.

 Moving on up

Windows XP will still lose product support on April 8, leaving it vulnerable, although antivirus signatures will help to identify any malware that may attack them. Microsoft will not issue security patches unless customers sign up for a subscription-style payment scheme.

Third party vendors have come to the aid of Windows XP users, however. Kaspersky Labs will provide antimalware support for Windows XP through 2018 for consumers and through the latter half of 2016 for business users. Trend Micro is promising Windows XP support through January 30, 2017.

Microsoft downplayed their effectiveness however: "Running a well-protected solution starts with using modern software and hardware designed to help protect against today's threat landscape."

Redmond's message is clear: Windows XP users should move on to Windows 7 or Windows 8.

A third of IT professionals still run Windows XP

December 18, 2013

Spiceworks have announced today the results of a report, aimed at addressing issues facing IT professionals as the Windows XP end-of-life (EOL) deadline draws near.

The study, entitled "Getting Over Your XP" (link opens a PDF), revealed just how prevalent the operating system remains 12 years after its release.

According to the survey, 76% of IT professionals run Windows XP on devices within their place network. Of that number, 36% will leave XP as the operating system after its end-of-life occurs. This means that when Windows cease to provide security updates, patches and bulletins for the operating system, 27% of professionals will continue to use it. Reluctance to upgrade will increase the risk of malicious attack.

Lack of budget

An upgrade to Windows 7 appears to be the favored course of action. 96% of those asked said they ran it, or would run it, on their network. This is compared to 42% running Windows 8 or 8.1 and 30% running Apple's OS X. 48% of those asked who still had XP said they planned to decommission their devices and purchase Windows 7 machines. Three quarters of those asked pointed to "maintaining a similar user experience" as their primary reason for upgrading to Windows 7, not Windows 8 or 8.1.

Why do so many still use Windows XP? Lack of budget, time and resources were stated by professionals as the main reasons why an upgrade from XP hasn't occurred on their networks yet. 55% cited a lack of budget, 39%t a lack of time to do so and 31% a lack of resources.

The survey was conducted in October 2013 and had more than 1300 respondents. A majority of those asked were in North America and comprised a variety of industries including healthcare, education, finance and government.

My Commentary...

IT Professionals by the Numbers:
  • 76% run Win XP
  • 27% will continue to use Win XP after its end-of-life
  • 96% would run Win 7 on their network. 
  • 42% (only) would run Win 8/8.1 
  • 30% run Apple's OS X 
Of those who will replace XP, 75%  will choose Win 7 machines to "maintaining a similar user experience" as opposed to Win 8/8.1.

Why do so many still use Win XP?
  • 55% lack of budget 
  • 39%t a lack of time
  • 31% a lack of resources

But what is the real reason so many still use Win XP? 

Just as with accident investigation I say look for the "Root Cause." The root cause in my investigation of this matter finds that is because Old Faithful (Win XP) works good!

Thank you for reading.

Thursday, January 16, 2014

Founders Pavilion Will Pay $370,000 to Settle EEOC Genetic Information Discrimination Lawsuit

Jan 13, 2014
From: EEOC

NEW YORK - Founders Pavilion, Inc., a former Corning, N.Y. nursing and rehabilitation center, will pay $370,000 to settle a discrimination lawsuit filed by the U.S Equal Employment Opportunity Commission (EEOC), the agency announced today.

The EEOC charged that Founders Pavilion requested family medical history as part of its post-offer, pre-employment medical exams of applicants. The Genetic Information Nondiscrimination Act (GINA), passed by Congress in 2008 and enforced by the EEOC, prevents employers from requesting genetic information or making employment decisions based on genetic information.

The EEOC also alleged that Founders Pavilion fired two employees because they were perceived to be disabled, in violation of the Americans with Disabilities Act (ADA). According to the suit, Founders Pavilion also refused to hire or fired three women because they were pregnant, in violation of the Title VII of the Civil Rights Act of 1964 (Title VII).

The EEOC filed suit in the U.S. District Court for the Western District of N.Y. (EEOC v. Founders Pavilion, Inc., 13-CV-01438), after first attempting to reach a pre-litigation settlement through its conciliation process.

As part of a five-year consent decree resolving the suit, Founders Pavilion will provide a fund of $110,400 for distribution to the 138 individuals who were asked for their genetic information. Founders Pavilion will also pay $259,600 to the five individuals who the EEOC alleged were fired or denied hire in violation of the ADA or Title VII.

After the lawsuit was filed, Founders Pavilion sold its Corning, N.Y. nursing facility to Pavilion Operations, LLC d/b/a Corning Center for Rehabilitation and Healthcare and ceased operating any business. If Founders Pavilion resumes conducting business, the consent decree requires Founders Pavilion to post notices and send a memo to employees regarding the lawsuit and consent decree. They will also adopt a new anti-discrimination policy that will be distributed to all employees, provide anti-discrimination training to all employees and provide periodic reports to the EEOC regarding any internal complaints of discrimination.

Pavilion Operations, the buyer of the Corning, N.Y. nursing facility, agreed as a non-party signatory to the consent decree. They will revise their anti-discrimination policies and will include specific references to genetic information discrimination, disability discrimination, and pregnancy discrimination laws and will include a complaint and investigation procedure for employee complaints of discrimination. Pavilion Operations will also provide anti-discrimination training to all of its employees.

"This is our third lawsuit since the enactment of the GINA law and the first one that is systemic," said David Lopez, EEOC General Counsel.  "Employers need to be aware that GINA prohibits requesting family medical history. When illegal questions are required as part of the hiring process, the EEOC will be vigilant in ensuring that no one is denied employment opportunities on a prohibited basis."

"Employers should take heed of this settlement because there are real consequences to asking applicants or employee for their family medical history," said EEOC New York District Director Kevin Berry. "The EEOC will pursue these cases to the fullest extent of the law to ensure that such genetic inquiries are never made of applicants or employees."

EEOC Trial Attorney Konrad Batog said, "We are pleased that Founders Pavilion worked with us to resolve this lawsuit and that Pavilion Operations signed onto the consent decree, agreeing to provide its employees anti-discrimination training and revise its anti-discrimination policies. The resolution of this lawsuit should serve as a message and educate employers about genetic information discrimination and help ensure compliance with the laws that the EEOC enforces."

Addressing emerging and developing issues in equal employment law, which includes genetic discrimination, is one of the six national priorities identified by the EEOC's Strategic Enforcement Plan (SEP).

"Trust No One..."

This is the famous line of FBI Special Agents Fox Mulder (played by David Duchovny) on the television series "The X-Files."

This is good advice. I live by it.

So how does this apply to you? If your company requires post-offer, pre-employment medical exams of applicants, then chances are that the doctors are taking family medical history. Even if you do not see the family medical history, the doctor may offer an opinion of "fitness for duty," and that decision may be based on family medical history.

You need to ensure that occupational medical centers avoid asking discriminatory questions. You also need to ensure that if an applicant is having the family doctor sign off, that they are excluding protected information.

The problem with doctors:

Another potential problem looms with the doctors themselves. Doctors are best at "TELLING," many even have very good listening skills, but most have very poor teamwork skills, and even worst customer skills. When I go to a doctor, regardless if it is an emergency or annual physical, I am the consumer and the owner of my body, and I have the FINAL SAY!

Most doctors do not want to hear this. For too many years they were the magicians and keepers of secrets. People just blindly followed their advice, and if anything happened, the doctor did all that he could.

Furthermore, the whole process of medical procedures is designed to reenforce the doctor's dominance and absolute power. 

The internet changed all that. It has opened the public's eyes that there are good doctors and there are bad doctors. Patients now have knowledge, understanding, and access to information that they never had before. The way doctors interact with patients is changing. Patients should discuss findings with their doctor AFTER the exam, fully dressed, sitting down with the doctor, on an equal footing.

Patients are encouraged to "fire" their doctor if they do not respect their autonomy. Even laws such as HIPPA and ACA empower patients to take more control over their medical decision making. Doctors are resisting, they now "fire" patients that question them. Soon laws will change to curb this practice as the ACA brings about a shortage of doctors.

Disclaimer: I have an excellant relationship with my current physician. My previous physician was horrible.

I digress... back to GINA. Doctors are ingrained with taking family medical history. Even the AMA touts family medical history:

Gathering a complete and accurate family medical history is extremely important as genetic medicine explains more diseases. In fact, the Surgeon General has named Thanksgiving as Family History Day. Since several family members gather together on Thanksgiving Day, it's a great opportunity to talk to family members and learn more about their health history.  Several tools have been developed to aid both the physician/health care provider and the patient in documenting family history.  The family history tools below have been developed by the AMA and/or other trusted groups.   
Source: AMA website
Here some things that you can do:
  • The EEOC offers guidance on their website here:  
  • Do not blindly trust that the physician's office is not collecting family medical history. Many even require it as a condition of being seen as a patient.
  • Check the requirements and practices of any physicians, occupational medical facilities, etc. to ensure that they are not collecting protected information (under GINA, ADA, etc.), but that they are ensuring patient dignity as well. 
  • Only gather the information needed, evaluate what information you really need.
  • Avoid Third Party information (such as from a work comp TPA). 
  • Be aware of the EEOC's distinction between a "test " and a "medical exam." More info here:
  • Avoid "personality tests" and a "psychological exams." More info here:

Thank you for reading.

U.S. Workers’ Comp Industry Revenues Could Decline

Jan 12, 2014
From: Insurance & Financial Advisor Webnews

In a new report, Standard & Poor’s Ratings Services predicts revenues for the U.S. workers’ compensation insurance industry could decline amid economic weakness and an unsettled labor market.

“We remain pessimistic about the near-term profitability prospects for the U.S. workers’ compensation market despite improved pricing in the past couple of years,” said S&P credit analyst Siddhartha Ghosh. “We base our cautious view of the industry on such factors as continuing high unemployment levels and economic uncertainty, potential adverse reserve development, higher health care costs, and emerging risks like the expiration of Terrorism Risk Insurance Program Reauthorization Act in 2014 and significant uncertainty regarding the ACA.”

In its recent report, S&P explains that demand for workers’ compensation in the U.S. depends greatly on economic cycles with a strong correlation between premium growth for workers’ compensation insurance and the state of the labor market.

S&P cited unemployment and the GDP as affecting premium growth, noting that consumers remain worried, wages are virtually stagnant, unemployment remains high and the cost of living is rising.

Concerns about the on-and-off political gridlock in Washington, D.C., uncertainty about the implementation of the Affordable Care Act (ACA), and the potential for higher interest rates remain foremost on the minds of many, according to S&P.

Reauthorization of the terrorism insurance program is also crucial.

“We believe the bottom lines of most workers’ compensation insurance carriers would be hurt, as early as 2015, if TRIPRA is not extended in its existing or a comparable replacement form,” said S&P’s Ghosh. “This could affect our ratings on these insurers. We believe the commercial lines insurers most vulnerable to potential rating downgrades are those that have sizable workers’ compensation exposures and/or have significant geographical concentration.”


There is a hard market. Insurance companies need to make money from insurance and NOT on investments of reserves. Therefore they have to increase rates (to cover loss of investment returns) to adequately cover claims.

The bad economy coupled with the ACA is causing businesses to cut back on number of employees and hours worked. This leads to a decrease in insurance premiums paid (NOT in rates though).

Thank you for reading.

NAFTA Does Not Protect Mexican Business from Workers' Comp Requirements

from: The Bugle
Jan 15, 2014

PHOENIX -- A Mexican firm cannot claim the North American Free Trade Agreement excuses it from having to provide workers' compensation coverage for its employees doing business in Arizona, the state Court of Appeals has ruled.

In a decision this week, the judges also rebuffed arguments by Porteadores del Noroeste S.A. de C.V. that Arizona's requirements to care for injured workers were preempted by provisions of the U.S. Constitution giving the federal government the exclusive right to regulate foreign commerce. Appellate Judge Michael Brown, writing for the unanimous court, said he and his colleagues found no evidence that anything in federal law or regulation intended to preempt state worker-protection laws.

The case involves Adan Valenzuela, a Mexican citizen and resident, who was injured in a rollover accident north of Nogales and suffered numerous injuries.

After being treated first at a Nogales hospital and then at Tucson's University Medical Center, he returned to Mexico where he requested a determination of disability and benefits from the Instituto Mexicano del Seguro Social. That agency provides coverage for lost wages for injured workers.

While IMSS provided benefits, it paid only some medical bills.

Valenzuela filed a claim with the Industrial Commission of Arizona. And because Porteadores had no valid Arizona workers' compensation insurance, the claim was paid by a special fund of the commission

The commission then sought to recover its costs from Porteadores.

Attorneys for the company argued that NAFTA controlled its corporate activities in the United States and therefore the commission lacked jurisdiction. They also said requiring a foreign employer to comply with Arizona's worker's compensation laws would violate federal law.

The appellate court did not see it that way.

"States have a strong interest in protecting employees working within their borders,' he wrote. And Brown said the state constitutional requirement for a workers' compensation system is designed to maintain a "just and humane' law to "relieve workers and their dependents from burdensome, expensive and litigious remedies.'

That latter part refers to the fact that workers' compensation in Arizona is a no-fault system: An employee injured in a work-related accident is entitled to have medical bills and part of lost wages covered without having to sue the employer to prove negligence.

Brown also noted that Arizona law makes any employee injured in the state eligible for benefits, even if the worker was not hired in the state.

Brown acknowledged that Congress approved NAFTA 1994 as an agreement setting out trade rules with Mexico and Canada.

But he said the federal law implementing NAFTA specifically spelled out that only the U.S. government can use the agreement to challenge any state law. And that, Brown said, did not occur here.

The judge acknowledged that the exclusive power of Congress to regulate foreign trade can curb state regulations if there is a "special need for federal uniformity.' But Brown said the court could find nothing in NAFTA or any other any trade agreement that suggested the federal government intended to preempt state laws protecting workers.

In fact, Brown wrote, there is nothing in NAFTA or other agreements mentioning workers' compensation at all.

Over again...

This is reminiscent of the California Tribal Staffing Companies around 2003. Read on about Tribal Staffing Companies...

Tribal warfare: a Native American tribe raises the hopes of compensation managers desperate for lower insurance premiums, but instead winds up incurring the wrath of California regulators.

Fast-food restaurant owner Safar Ghaffari, a foot soldier in the small-business community's war on steep workers' comp rate hikes, sought in late 2002 to secure affordable coverage for roughly 120 employees at four restaurants he owns in Humboldt County north of San Francisco near the Oregon border.

Ghaffari says he acted on the advice of his insurance broker who suggested he find coverage through an occupational-injury system run by the Blue Lake Rancheria, a tiny Native American tribe with just 53 members spread across 42 acres. "The coverage was better and it stayed within the spirit of the workers' comp law," says Ghaffari.

Insuring through the tribe meant that Ghaffari would be able to pay the cost of occupational-injury and medical indemnity benefits coverage at half the rates paid by scores of businesses--rates set by the state of California.

But before a deal could be finalized, California labor officials began questioning the carrier's integrity, eventually forcing Ghaffari to purchase coverage from a more expensive state fund.

Ghaffari wasn't pleased. "It costs twice as much, and they fight you tooth and nail over any claim," he fumes. The state demanded that he deposit 20 percent of his estimated annual premium, which was nearly $50,000.

"I can't print money fast enough to do that," says Ghaffari, who pleaded with the regional labor office in Eureka, but to no avail. So state officials shut down one of his three Denny's franchises and a steakhouse.

Ghaffari consoled crying employees after voluntarily closing the other two Denny's operations until less than a week later when he raised the necessary cash.

The trouble with California's workers' comp law is that the state doesn't simply issue a citation, Ghaffari gripes, "they just shut you down. That's unfair and it doesn't help the state or the employer. Many small businesses are going belly up."

The state of California doesn't see it that way. State officials say they worry that American Indian tribes may not always have the requisite capital to pay compensation claims, should the need arise.

"If they are not capable of paying their claims," says Rebecca Westmore, staff counsel for the California Department of Insurance, "then claimants are either out of luck or have to go to the California Guarantee Association."

In addition, advocates for workers' insurance rights say there's a reason the state has standards which private-sector employers must follow in the interest of their employees.

"The state regulates workers' comp insurance to assure workers and employers that the money will be there to pay claims and that insurance rates are fair," says Eric Oxfeld, president of the UWC-Strategic Services on Unemployment & Workers' Compensation, a watchdog group to ensure that workers are adequately protected on the job.

Battle Lines Harden
Ghaffari is not alone in his despair at finding affordable insurance for workers. Thousands of small-business owners are looking for ways to loosen the grip that insurance costs have on their bottom lines.

In fact, a billion-dollar staffing industry employing thousands of workers, permanent and temporary, is seeking to use tribal ordinances to lower the cost of insurance to client businesses, and a bill pending in the California Legislature would allow employers to bypass buying workers' comp coverage when covering employees through tribes.

Take the temporary-staffing agency Mainstay Business Solutions, for example. The agency, formed last June and owned entirely by the Blue Lake Rancheria, has placed more than 10,000 temporary workers with about 2,000 corporate clients. It self-insured all comp claims under tribal ordinance and until recently, the agency had made available a low-cost alternative to California's pricey worker' comp coverage as part of the bundled-services it offered to 350 employee-leasing company clients.

But last year the California Department of Industrial Relations issued a work-stop order to several International House of Pancakes restaurants and slapped Mainstay with a $100,000 fine. And last November, all of Mainstay's employee-leasing contracts were terminated after the agency agreed to indemnify its clients if the state tried to fine them.

The staffing company isn't alone. Michael Hansen, president and CEO of Mainstay, says he knows of three other "sovereign nation" staffing agencies--Labor Source, General Labor and ISS--operating in California, Oklahoma and Nebraska, that provide employee benefits through tribal ordinance. Eric Ramos, CFO of the Blue Lake Rancheria and a member of the tribe, says it's easy for people to overlook the benefits of Mainstay's business model and the advantages to it brings to non-tribal businesses located off the reservation.

He contends that city, county and state officials have marginalized tribal governments and their right to sovereignty. "It's easy for people in the outside world to beat up Indian tribes based on their tribal gaming operations," says Ramos, a founder of Mainstay.

For the tribes like Blue Lake Rancheria and their ancillary corporate interests like Mainstay, the time had come to act in the face of rising workers' comp rates. "The old adage in Indian country is whether to ask for permission now or beg for forgiveness later," says Ramos.

And so, the tribe and Mainstay acted first and began offering insurance coverage. They figured they would ask questions later.

But in the eyes of the state, the tribe had done so without permission. All of which means that the parties are squaring off in court.

To Court--Of Course

The California Insurance Department has filed several motions seeking to prevent licensed insurance agents and brokers from marketing, soliciting and selling insurance coverage offered by Mainstay.
Westmore says the state is not convinced the tribal council is qualified to adjudicate compensation claims cases that come before it. "We're not familiar with the make-up of that council or even if the tribe knows how it works," she says.

"If they are not capable of paying their claims, then employers have no recourse and claimants will be forced to seek assistance from the state," she also says. "The state then has the right to subrogate its claim against the employer, causing the employer to pay for the individual claim that normally would have been covered under a workers' comp policy."

Hansen says these fears are completely unfounded. Claimants have nothing to worry about. Insurance through the tribe offers the insured access to a 40,000-strong credentialed PPO network guaranteeing access to 70 percent of the state's physicians and hospitals, as well as vocational rehabilitation benefits and the use of mediation rather than litigation to resolve disputes.

Consequently, Mainstay can offer a cheaper alternative to the expensive rates levied by the California compensation system, which critics say is broken and dysfunctional.

"California has 2,000 permanent partial disability awards for every 100,000 workers," he says. "The next-highest state is New Jersey at 900. You're telling me it's twice as dangerous to work in California as New Jersey? Absolutely not. The difference is it's easier in California to settle a claim than fight it."

The tribe's appeal process is grounded in mediation, not litigation, and that lowers the insurance premiums for policyholders.

Mainstay, thanks to the economic backing of the Blue Lake tribe and its profitable casino operation, has more than $12 million in surplus to fund $1.7 million in reserves for future claims liability on 401 claims. A total of $462,000 in payments have been made to injured workers on these claims. "We're very well funded relative to our claims liability," Hansen says.

Revenue from the Blue Lake tribe's casino provides a safety net for injured workers if the loss fund contributions set aside in trust fall short of covering the entire cost of claims.

In short, Mainstay and the tribe say they have a case against the state of California. As a result, Mainstay has filed suit in Superior Court seeking to regulate its own licensed agents and brokers. A verdict is expected to take at least two years.

California Insurance Commissioner John Garamendi remains unconvinced. He says insuring workers through tribal ordinances amounts to back-door scheming.

"Because the schemes fail to comply with the licensing requirements of California law, the arguments about providing sufficient benefits, claims adjustment and mediation are irrelevant," he says. Injured workers with so-called "coverage" under one of these tribal insurance programs would miss out on the full protections afforded under California law.

"There is no assurance that the Indian tribe or any other entity offering this product will have sufficient financial reserves to pay claims due over the extended life of a workers' compensation benefit," says Garamendi. Agents or brokers who sell illegal insurance products will have their licenses revoked, he says.

A Question of Precedent

The question before the litigants is whether the tribe has a right to be in the occupational-injury business off an Indian reservation. Both sides point to case law arguments to support their case.

Among the cases Mainstay cites that grant tribes sovereign immunity from state regulation in several areas of employment: Worchester vs. Georgia, which dates back to 1832, California vs. Cabazon and Segundo vs. City of Rancho Mirage, both of which were decided in 1987.

Moreover, Mainstay notes that case law affirming the sovereign right of tribes to govern their own workers' compensation claims both on and off reservation land can be found in Oneida Indian Nation vs. Oneida County from 1972 and Sac & Fox Nation vs. Hanson from 1995.

Late last year, Mainstay hired a lobbyist and political consulting firm to cajole the state legislature about the importance of enabling all employers to choose their own exclusive network of providers with a certain percentage of access to doctors and hospitals and pursue claims mediation rather than litigation.

California Indian tribes have successfully argued that they're exempt from regulation governing the state workers' comp system, notes Scott Rubel, an attorney with Rose, Klein & Marias in Ontario, Calif., citing a recent California Supreme Court case (Middletown Rancheria of Pomo Indians vs. Workers' Compensation Appeals Board et al.).

But at the same time, Rubel questions how the Blue Lake Rancheria Indian tribe can make available to non-tribal entities tribal-governed insurance without subjecting itself to California's insurance benefits regulation.

"The law is clear: You cannot sell insurance in the state of California unless you're licensed to do so," he says. "The tribe doesn't have a snowball's chance in hell of winning this issue because they're trying to expand their sovereignty into the United States. And if another nation like Mexico or Canada tried to do this, we could consider this an act of war."

Applying tribal law to non-tribal employers through an employee leaseback agreement just will not fly, says Rubel. Most workers have no idea they are subject to tribal law and not entitled to rights guaranteed by California law.

Westmore says the California Insurance Department views the tribes' chance of success as a long shot. "It's an issue that will have to be resolved at the state or federal Supreme Court level," she says.

Since the California Department of Insurance is bound by the McCarran-Ferguson Act of 1945, she says, "some would say it does not comport with the sovereign immunity Congress granted to the Indian tribes, which does not let them engage in business off the reservation affecting the citizens of California."


This also reminded me of a parody of the tribal staffing companies, it was an advertisement for Amish Staffing Services. They claimed a workers' comp exemption based on religious beliefs.

Thank you for reading.

Intuit Acquires Workers' Comp Service Provider

Jan 14, 2014

Intuit Inc. announced on Monday that it will acquire privately-held Prestwick Services, a subsidiary of Prestwick Holdings. The Massachusetts-based company is a provider of payroll-based billing and payment solutions for the workers’ compensation industry.

Traditional workers’ compensation plans involve large pre-payments based on estimates, with the potential for substantial extra payments at year-end audits. With the acquisition of Prestwick Services and its TRUPAY technology, Intuit will open the platform that enables workers’ compensation insurance premiums to be calculated in real-time, based on actual payroll, and will not require small business owners to switch insurance carriers or agents.

The company says that small businesses with pay-as-you-go workers’ compensation will benefit from the acquisition through increased accuracy of premium calculations, increased cash flow, since it doesn't require large lump sum pre-payments, and the convenience of an automated premium collection system.

“This transaction furthers our commitment to helping small businesses manage every aspect of their business, so they can be free to focus on doing what they really love,” said Ginny Lee, senior vice president and general manager of Intuit’s Employee Management Solutions division. “We are very pleased to be adding a team that brings deep insurance industry experience as well as their robust TRUPAY technology platform. Together, we look forward to providing more benefits to our small businesses customers as we work to bring even more insurance carrier partners onto the platform.”

The integration of Prestwick Services means more than 1 million Intuit payroll customers will have access to flexible payment options from 15 top insurance carriers, without requiring a change to their existing agent-client relationships.

When the transaction closes, Prestwick Services will become part of Intuit’s Employee Management Solutions division.

“Our drive has always been to make running a business simpler. Intuit’s expertise in doing just that, coupled with our TRUPAY technology, will enable workers’ compensation insurance carriers to better serve their small business clients with flexible payment options while retaining the benefits of existing client-agent relationships,” said Adam Black, founder of Prestwick. “As part of Intuit, we’ll be able to benefit millions of payroll customers by putting our technology into the hands of a trusted brand that has a long history of innovation and delighting customers.”

The transaction is expected to close during the second quarter of Intuit’s fiscal year 2014, which ends Jan. 31, and is subject to customary closing conditions.

Another nail in the coffin of the PEO industry?

The PEO industry has faced many challenges recently causing many to close their doors. This is just another PEO benefit being offered by traditional carriers.

Thank you for reading.

Heating Fuel Shortage Prompts Multiple States to Suspend DOT Hours of Service Rules

Cold weather has boosted demand for heating fuels across the country. Natural gas prices are up, especially in the Northeast. At one point prices for natural gas into New York City jumped nearly tenfold from an average winter price of $5.68 per million BTU to $55.49, according to Bentek Energy, an analytics company.


With cold weather setting in and crops being harvested, Wisconsin has an energy shortage. State officials say there isn’t enough propane gas available right now.

In fact, the propane can’t come into the market fast enough to fuel home and business furnaces, grain driers, and gas grills.

Governor Scott Walker declared an energy emergency, and ordered some temporary changes to the rules to allow propane tanker drivers to move more fuel between now and November 7th.

There are nine propane pipeline terminals in the midwest, but only three in Wisconsin at Superior, Owen, and Junction City. The short supply is causing truckers to wait long periods of time to get filled. In some cases, truckers are traveling as far as North Carolina to obtain the fuel.

The Governor’s emergency order does not suspend laws pertaining to the transportation of propane, but it does make some temporary allowances to certain Wisconsin and federal hours of service restrictions.


Part of the problem is getting the gas from where it's produced — these days, in places like Western Pennsylvania — to the population centers where it's burned. Sometimes there just aren't enough pipelines to meet the demand. In those cases utilities and other users start bidding up prices. Regulated utilities are willing to pay a lot to keep the gas flowing.

Due to a prolonged period of severe cold weather across Pennsylvania that has resulted in serious logistical problems associated with the distribution and delivery of propane gas and heating oil, Governor Corbett has issued a Proclamation of Propane and Heating Oil Emergency effective until 12:01 a.m., January 26, 2014, and has directed the Pennsylvania Department of Transportation to waive any laws or regulations in the manner and to the extent necessary to permit the motor carrier operations necessary to provide supplies of propane gas and heating oil adequate to preserve the public welfare in the Commonwealth. 


Earlier this week Oklahoma Gov. Mary Fallin declared a state of emergency in response to the propane shortage in her state. She joined 18 other states in issuing executive orders. Normally propane truck drivers are restricted in how long they can work each day. But for the next week or two drivers will be exempted from those rules. And in Oklahoma out-of-state suppliers will have an easier time bringing fuel in to meet the increased demand.

 Other States:
The list of executive orders for all the states can be found here: Hours-of-Service Exemptions

Thank you for reading.