Tag Archives: Compliance

Best-Practice Insurance Needs for 1099 Contingent Workforces

The rise of the on-demand economy, part of a broader long-term growth trend in the contingent workforce, is expected to reach 43 percent by 2020. This means millions of new independent contractors operating as independent businesses will be required to have some type of business insurance. Some coverages are mandated by the companies they contract with, some mandated by upstream contracting companies, some manadated by law, and yet others simply advisable from a business/personal protection viewpoint.

Whether you already run an independent business, are thinking about becoming a 1099 contractor, or own a company that works with independent contractors—the information that follows will help you understand the types of insurance coverages that both companies and contractors should have in place to operate in a best-practice protected manner.
 

IDEAL COVERAGES: WHY YOU MAY NEED THEM

If you own a company that regularly deploys 1099 contractors, industry best practices may suggest that those contractors procure and maintain at least some form of the commercial insurance coverage described below, in place for any services they provide to, or on behalf of your organization. The IC coverages many times work together with your own coverages to provide multiple layers of protection.
 

The Workers’ Compensation Triad

One of the most complex areas of insurance for contingent workforces involves the triad of coverages related to Workers’ Compensation and Occupational Accident. These twin coverages, and the related Contingent Liability coverage, all operate together to provide accidental injury coverage to employees and independent contractors—and to ensure that each worker type is routed to the correct coverage.  Workers’ Compensation provides wage replacement and medical benefits to hired employees whereas Occupational Accident Insurance provides similar benefits, but to independent contractors and their own subcontractors.

Keep in mind that there are other insurance policies that may be required and requirements vary from industry to industry.
 

Workers’ Compensation

Workers’ Compensation insurance is a legal requirement in most states if you have one or more employees. But, what about independent contractors?

If you’re an independent contractor with no employees, you are generally not legally required to carry Workers’ Comp for yourself. However, there are exceptions depending on the state or type of business industry you provided services for.

If you’re contracting company, it is important to ensure that independent contractors purchase their own accidental injury insurance—and for independent contractors this coverage many times is supplied in the form of Occupational Accident coverage (see below). This coverage will respond to pay any medical bills, disability payments, injuries or wage replacement they sustain or require while providing a client with their services.

Some companies opt to cover independent contractors within their own Workers’ Comp policy. However, if you operate a business in an industry where the likelihood of injury to contractors is high (logistics, construction, manufacturing), you likely want to avoid including contractors on your company’s policy as their claims can adversely affect your rate for years.  In addition, coverage of ICs with your own employee Workers’ Comp coverages may cause confusion, leading to misclassification claims (ICs claiming employee status).
 

Occupational Accident

Occupational Accident insurance helps to cover independent contractors who are injured while under contract for a specific job. This type of coverage can help pay for medical bills, death benefits and replace certain lost wages. Businesses that enable Occupational Accident insurance coverages for ICs can protect themselves from expensive and time-consuming claims by independent contractors seeking employee benefits under the company’s Workers Comp policy. Limits in coverage allow organizations to manage costs and independent contractors can have peace of mind that they are protected.

Notably, while contracting companies may help enable procurement of Occupational Accident coverage, it is typically the independent contractor and related subcontractors that opt into such coverages and pay the related premiums. Keeping track of such coverages for all independent contractors in a contingent workforce, payment of premiums and cancellations can be a major challenge for companies wanting to ensure that all working ICs maintain Occupational Accident coverage. Furthermore, contracting companies typically would not want to be in the business of providing or managing such insurance coverages—once again risking misclassification claims.
 

Contingent Liability

Contingent Liability insurance protects a contracting company should an independent contractor claim to be an employee and sue to be covered under the company’s workers comp policy. Contingent Liability insurance pays for reimbursements should the ‘worker’ win his or her settlement and for court costs the contracting company incurs, providing a shield against the company’s Workers Comp policy even in the event of such a “loss”.

While a contracting company may see benefits from selecting Occupational Accident insurance over Workers’ Compensation, there are several risks involved with relying on minimum coverage alone. An independent contractor may get into an accident and claim to be an employee of the company in an attempt to collect Workers’ Compensation benefits. Even though the company reimburses the contractor in the form of Occupational Accident benefits, it may not cover all the medical expenses to the same extent as Workers’ Comp coverage. As a result, the independent contractor may insist on the larger payment that Workers’ Comp provides. Companies utilizing a high number or percentage of independent contractors should consult with counsel to ensure that reasonable limits are set for required Occupational Accident coverage.
 

OPENFORCE INSURANCE ENABLEMENT

Through our decades of experience and network of trusted insurance partners, we help you reduce your IC misclassification risks and access affordable coverage for you and your independent contractors—so you’re both protected. We also help contracting companies and their insurers fully manage occupational accident enrollment, premium payment and coverage maintenance. Because an independent third party is administering these processes, contracting companies can further distance themselves from potential employer action perceptions.

At Openforce, we’ve made it simple, fast and affordable for businesses and independent contractors to purchase coverages through partner-broker programs and manage the insurance coverages they need to be effective through:

  • Affordable Occupational Accident, Contingent Liability and Workers’ Comp options
  • Insurer-broker agnostic programs and ability to connect to multiple insurance partner options
  • Openforce’s 1099 platform helps ensure every ICs coverage is in place, verified and maintained
  • Settlement deductions simplify payment and maintains ongoing coverage
     

Furthermore, we help properly validate and track the coverage for independent contractors, which is critical for compliance. Companies should always keep updated certificates of insurance, or proof of insurance, on file to confirm that the contractors not only have coverage in place, but that they haven’t missed payments which can cause the insurance to lapse.

Learn more about our insurance enablement solutions and other powerful independent contractor management platform features that help our customers onboard, manage, pay and retain their 1099 workforce.



We Just Made Onboarding Drivers Faster & Hassle-Free

Even for clients using Openforce’s complete mobile onboarding platform, enrollment workflows related to pre-screening, background screens documentation, and authorizations can create a heavy, time-consuming burden for carrier relations administrators.

It’s inevitable that in any onboarding process, there will be delays from third parties and even the ICs themselves. As a result, administrators get caught in the cycle of chasing down information, making calls, and holding all parties accountable to deadlines.

Furthermore, when there are delays in the process, most organizations say it’s because they don’t know the status of the onboarding process and cannot be timely with their follow up.

That’s why Openforce’s Fast Onboard Service was created. We assign an administrator who takes on and expedites the onboarding process while providing clients with visibility into all contractors’ status along the way.
 

GETTING ICs ON THE ROAD QUICKER

With a dedicated Onboarding Team acting as an extension of your department, we can ensure that qualified contractors are onboarded quickly through the Openforce platform faster than clients can typically achieve themselves. Here’s why:

The Fast Onboarding Team is:

  • Knowledgeable on the Openforce system.
  • Fully versed in the Client’s process, requirements, business and people.
  • Dedicated to onboard management only; no distractions or other duties.
  • Able to run overtime with 48-hour advanced notice for urgent needs.
     

PROVEN RESULTS

In a recent benchmarking study, an Openforce Onboarding Coordinator dramatically reduced cycle times and durations for the following:

Openforce’s Fast Onboarding Team helps meet the onboarding and compliance demands of your approved business process, supporting the following:

Additionally, the Onboarding Team will benchmark current enrollment durations that will be used to identify and improve bottlenecks across the entire process, so that clients can see their actual results.

With Openforce’s Fast Onboard Service, companies are able to transfer the burdens of inefficiencies, wasted time, and cost to us.
 

Learn how Fast Onboard Service with complete mobile enrollments provides your company with faster access to enrolled drivers.
 

Contact us today




 

Openforce Awarded SSAE 18

Today, Openforce announced the completion of a third-party audit report demonstrating full compliance with SSAE 18. The successful audit affirms Openforce’s policies and practices for managing the company’s risk and protection controls along with those of their sub-services providers.

Committed to the utmost levels of integrity and customer satisfaction in same-day courier, trucking, final mile, home care, and other verticals, Openforce’s IC Onboard, IC Pay, IC Complete, and its integrated data analytics platform, IC Insight are managed to the highest standards.

Established for advanced IT service providers, the American Institute of Certified Public Accountants (AICPA) Service Organization Controls (SOC) 1 Type II certification provides Openforce customers with an independent auditor’s unbiased level of assurance of corporate controls as it relates to network and logical security, processing integrity, availability, confidentiality, and privacy.

“The SSAE 18 report serves as a continued endorsement of our market leadership in financial processes and controls for independent contractor management software,” said Drake Pruitt, CEO of Openforce. “Openforce is committed to following security and compliance standards that allow our customers to have the proper assurances in the integrity of our systems and processes, along with those of our suppliers.” 

Designed to bring all U.S. standards up to international standards of security compliance, the new requirements set by these regulations are best practices that Openforce has been adhering to for the past six consecutive years.

Four SSAE 18 changes that affect the SOC 1 examination:

  1. Vendor Management
    The most significant change in the requirements that must be met by a service organization is ensuring that its vendor management program for sub-service providers is significantly robust, which monitor the controls at sub-service organizations.
  2. Risk Assessment
    SSAE 18 requires service auditors to obtain a more in-depth understanding of the development of the subject matter than currently required, to better identify the risks of material misstatement in an examination engagement. The goal is to have an improved linkage between assessed risks and the nature, timing, and extent of attestation procedures performed in response to those risks.
  3. Complementary Sub-service Organization Controls
    As more organizations are outsourcing key functions to their own set of subservice organizations, SSAE 18 introduces the concept of “Complementary Subservice Organization” controls. This concept establishes and defines the controls for which user entities must now assume in the design of the system description. SSAE 18 provides more guidance around this area for more consistent reporting across entities and practitioners.
  4. Written Assertion Requirement
    The final change to the SOC 1, per SSAE 18, is that the service auditor obtains a written assertion. This written assertion is the statement found within the SOC report wherein the service organization asserts that the system description provided is essentially true and complete. This statement has always been contained within the SOC 1 reporting document but the requirement that the service organization signs the document was optional.

Today’s on-demand economy is driven by technology that automates processes and transactions to meet the increasing consumer demands for lower cost, high transparency, rapid delivery of goods and services. To meet the challenge, suppliers like Openforce must earn and protect the trust of their customers and supply chain partners. Compliance with audit standards like SSAE 18 are integral to demonstrating that commitment.

“When it comes to proper management of sensitive data related to compliance monitoring, risk management and settlement processing, our customers have complete peace of mind that Openforce has controls and practices in place to ensure the safeguarding of their data,” added Pruitt.

Understanding Your Business License Needs

Traditional work is changing. People want more control over their schedules, flexible working conditions, and to be their own boss. But being your own boss and business owner comes with its own unique set of challenges and unknowns—like whether you need to apply for a business license.

What is a Business License?

A business license allows you to conduct business in a specific city or municipality. Each city and town in the U.S. is different, and their requirements vary as to who must get a business license and how much the license costs. Failure to understand the licensing rules where your business is located can result in serious consequences.

Why do I Need a Business License?

Licenses are required for three main purposes:

  • To identify your business and make sure you are accountable for your actions
  • To protect the public health and safety
  • To keep track of your finances for tax purposes

Much like how incorporating may keep your business (and you) from losing personal assets in the event of a lawsuit, a license provides protection in the event that your business is damaged or if any of your team suffer from an injury. Without the license, you are the one who is held liable, along with your assets and personal finances. Fortunately, getting a business license is neither very expensive, nor time consuming, if you know where to start.

How do I Get Started?

If you’re already up to speed on your business license needs and prefer to secure them yourself, go to Business.USA.Gov. But knowing what you need can be a little tricky—that’s why we provide the resources to help guide our members in the right direction.

As an Openforce member, we offer the resources for business success:

  1. Log into your Member Benefits in your self-service online portal and click on the ‘Business’ tab
  2. Select the ‘Business Licenses’ icon to get started

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This is just one of the many business resources and benefits we provide Openforce members. Let the experts do the paperwork for you, so you can focus on the other more important aspects of getting your business up and running. Ultimately, saving valuable time and having peace of mind that you’ve filled out the proper paperwork is worth the minor expense.

New Rules on NYC Freelance Isn’t Free Act

As shared in our previous blog post, also known as Local Law 140 of 2016, the Freelance Isn’t Free Act enhances and establishes protections for independent contractors by creating and protecting their right to protection from retaliation, full and timely payments, and a written contract.

Final Rules Implementing the Act

The NYC Department of Consumer Affairs has since published final rules implementing the Act. With the final rules taking effect soon, it’s important to understand what’s new.

The related legal blog highlights the following final rules, including:

  • The text of the Act states that it applies to “hiring parties,” defined as “any person who retains a freelance worker to provide any service” (with the exception of government entities). The rules expand upon the coverage of the Act to now apply to actions taken by “a hiring party, their actual or apparent agent, or any other person acting directly or indirectly on behalf of a hiring party.”
  • The rules place significant limitations on the terms and conditions that may be included in a contract entered into between a freelance worker and a hiring party. Specifically, any such agreement may not include:
     
    • A prospective waiver or limitation of rights under the Act,
    • A waiver or limitation on the right of the freelance worker to participate in or receive any relief (monetary or otherwise) from a class or collective action lawsuit or proceeding,
    • A waiver of “any other procedural right normally afforded to a part in a civil or administrative action” (such as procedural rights under the federal or state rules of evidence or civil procedure), and
    • Confidentiality provisions that restrict a freelance worker’s ability to disclose the terms of the agreement to the Director of the NYC Office of Labor Standards. 
  • Under the Act, covered entities may not retaliate against freelance workers for exercising or attempting to exercise their rights under the law. The rules further define what constitutes an adverse action in violation of the anti-retaliation provisions of the Act, namely: “any action… that would constitute a threat, intimidation, discipline, harassment, denial of a work opportunity, or discrimination, or any other act that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right” guaranteed under the Act.
  • The rules further state that retaliation “may be established when a freelance worker shows that the exercise or attempt to exercise any right under the [Act] was a motivating factor for an adverse action, even if other factors also motivated the adverse action.” Thus, the final rules establish a motivating factor causation standard for claims of retaliation, as opposed to a “but-for” standard where retaliation would need to be the sole factor underlying the reason for the adverse action taken.
  • The rules clarify that freelance workers are entitled to the protections of the Act “regardless of immigration status” and that prohibited retaliation includes “any adverse action relating to perceived immigration status or work authorization.”
  • For purposes of defining the value of a contract between a freelance worker and a hiring party (both to establish coverage under the Act and to calculate statutory damages for violations of the Act), the rules state that such value includes “the reasonable value of all services performed and/or anticipated, and the reasonable costs for supplies and other expenses reasonably incurred by the freelance worker.”

We will continue to share updates to the act. In the meantime, any client doing business in NYC, or utilizing the services of a contractor who lives in NYC, should consult with legal counsel to ensure they are operating within the confines of the new law.

Technology Drives Savvy Home Care Agencies to Succeed

A good place to start is with a backend technology solution. The best platforms offer built-in independent care model infrastructure that helps navigate specific challenges and mitigate risk. At the same time, using technology solutions can reduce operating costs and help match service capacity with patient needs.

Modernizing Operations to Meet Internal & External Demands

Following are three ways technology-driven solutions can help you streamline both operational and compliance practices:

1. Prescreen Independent Caregivers
Posting vacancies on recruitment sites, manually reviewing each candidate, and evaluating qualifications is a cumbersome process that leaves many agencies struggling to move independent caregivers through this process and into the field. By implementing an automated prescreening process, organizations can leverage various compliance workflows according to certifications, locations, and a variety of other screening services to expedite the vetting process. This helps ensure that caregivers are compliant and qualified to provide services prior to allocating valued time and resources to move them to onboarding.

2. Navigate Negotiations
Treating independent caregivers as an extension of the agency rather than as a separate business entity can lead to costly compliance violations. Recording the negotiation process prevents exploitation of either entity and minimizes potential compliance issues. Leveraging software with an interactive negotiation platform provides a neutral landscape to digitally capture the negotiation interaction. If the negotiating parties establish a deal or contract using this type of solution, the agreement is documented with clearly established terms that are acceptable for each of the negotiating parties.

3. Establish an Audit Trail
Regulations, labor laws, litigation and audits are constantly in the media. As such, providers need to ensure the defensibility of their compliance strategies. Clear implementation of best practices and documentation of those practices are essential components to withstand regulatory scrutiny. Having a complete end-to-end audit trail tracking the entire independent caregiver interaction lifecycle can seem like an arduous process. But with caregiver management software, agencies can digitally track necessary interactions to provide supporting evidence of its compliance plan and limit vulnerabilities.

Overall, leveraging technology allows agencies to take a proactive approach. Additionally, implementing a tailored solution to ensure your best practices are consistently followed through custom-built workflows helps you work smarter, reduce risk, and streamline operations.

See it in Action with Mosaic
Read how a modern technology platform enabled Mosaic to migrate more than 600 host home independent caregivers across 36 agencies in 10 states into a new, automated system, allowing them to better respond, grow and succeed in home care.

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Streamline IC Workflows Using Indpendent Contractor Management (ICM®) Software

1. Onboarding

Traditional approaches to independent contractor onboarding typically consist of manual, inefficient, paper-based processes that overburden internal employees. While these cumbersome and time-consuming methods may have worked in the past, the increasing pressures to become more agile, efficient, and cost-effective have caused business leaders to seek out alternative solutions that will expedite the onboarding process and get independent contractors ready to provide services quicker.

When utilizing contractor management software, businesses leverage a web-based platform that works by capturing all contractual and compliance documentation in an automated environment. With the ability to create custom enrollment workflows that can accommodate a variety of complex compliance requirements, such as background screening, insurance requirements and various credentials, contracting companies are able to ensure a thorough IC onboarding process while also realizing greater operational efficiencies, increasing resource capacity, and significantly reducing potential compliance risks. Additionally, contractor management software, due to its web-based nature, allows all system users to gain quick, high-level insight into where independent contractors are in the onboarding process at any given time.

 

2. Supplemental Compliance Items and Tracking

Furthermore, contracting companies are able to collect supplemental compliance items such as driver’s licenses, vehicle registration, and certificates of registration while also tracking expiration dates directly in enrollment. Not only does this eliminate the need to ‘hunt down’ necessary documents after the contract has been signed, but it also removes the burden of ongoing, manual document tracking. In addition, contractor management software pushes out automated expiration notifications that alert contracting company administrators and independent contractors when a given document is 60 days from expiration.

 

3. Negotiation

In most cases, rate negotiation processes involve multiple in-person meetings or phone calls that require both independent contractors as well as contracting companies to spend excessive amounts of time away from the tasks and responsibilities that are core to their business. While this may seem like an unavoidable cost of running a business, the digital and on-demand nature of contractor management software enables both parties to significantly reduce the amount of ‘idle time’ spent negotiating their terms of agreement.

By leveraging web-based, interactive negotiations businesses are able to perform and document negotiations in real-time; ultimately eliminating the unproductive errands, like driving to and from meetings, that typically prolong the negotiation process. Additionally, with the ability to track all of the back and forth in the form of an audit trail, and capture the final rate in a document, contractor management software safeguards both parties from any ‘hearsay’ issues related to their agreement.

As the gig workforce continues to grow and evolve, industry leaders will look to adopt the resources and technology needed to drive greater efficiencies and better support business and market demands. While independent contractors have proven to facilitate significant operational and financial benefits to contracting companies, inefficient IC management has left many business leaders struggling with archaic manual processes, potential misclassification, and other costly errors.

However, by using purpose-built contractor management software, organizations are able to gain a competitive advantage by demonstrating to their customers that they’ve invested in a purpose-built software platform to better manage IC compliance and streamline workflow processes; resulting in increased ROI and more satisfied independent contractors that stay connected, compliant and contracted.

To learn how your organization can maximize the benefits of the IC business model, request a software demo.