As businesses all over America work to re-open in the midst of a pandemic and the “new normal” that surrounds us, Morris & Reynolds is pleased to provide the following info-graphic featuring a variety of topics to consider including:

1. Ready to Reopen Your Workplace?
2. Are Safe Practices In Place?
3. Are Appropriate Policies In Place?
4. Are COVID19 Preparedness Plans In Place?

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Whether you have a question about this topic or need help with any form of insurance, please contact us at any time at 305.238.1000.

Since being established as part of the Coronavirus Aid, Relief and Economic Security Act in March 2020, the Paycheck Protection Program (PPP) has been the subject of additional stimulus bills, legal guidance and interim final rules. In the latest development, Congress passed the Paycheck Protection Program Flexibility Act of 2020, which is a bill that provides borrowers with greater flexibility in spending PPP funds without compromising forgiveness eligibility. President Donald Trump signed the bill into law on Friday, June 5, 2020.  

What is included in the bill?

The bill, which passed with a bipartisan vote, makes the following amendments to the PPP to provide relief to borrowers:

• Loan repayment terms—The bill extends the minimum loan term for unforgiven PPP loans from two years to five years.
• Payroll costs vs. nonpayroll costs— For forgiveness eligibility, the bill reduces the portion of PPP funds that must be spent on payroll costs from 75% to 60%, and raises the nonpayroll cost limitation from 25% to 40%.
• Covered period extension—The bill extends the covered period during which borrowers must spend the PPP funds to be eligible for forgiveness from eight weeks to 24 weeks from the date of origination of the loan.
• Payroll tax deferment—The bill permits borrowers to defer payroll taxes without being penalized while still remaining eligible for loan forgiveness.
• Extension of rehiring safe harbor—The bill extends the rehiring safe harbor by six months to provide borrowers with additional time to restore payroll levels or rehire employees without facing a reduction in the amount of forgiveness for which they are eligible. The original date was June 30, 2020, and the new date is Dec. 31, 2020.

In addition to the provisions above, the bill provides loan forgiveness eligibility exemptions for borrowers that are not able to rehire an employee or a replacement. There are also exemptions for loan forgiveness eligibility for borrowers that are not able to return to the same level of business due to complying with COVID-19-related orders or circumstances.

What’s next?

Borrowers should review the bill carefully and speak to their lender should they have any questions. In addition, borrowers should direct any questions regarding their PPP loan to their lender.

We will continue to monitor any additional developments regarding the PPP and deliver updates as necessary. For more information about the PPP or if you need help with any form of insurance, please contact us at Morris & Reynolds Insurance at any time at 305.238.1000.

Before the coronavirus (COVID-19) pandemic, the merits and pitfalls of working remotely were often debated. As states went into lockdown to help stop the spread of the coronavirus, many workforces were forced to go online and quickly adapt to a remote-only work environment. Now, as the pandemic evolves and offices and worksites reopen, employers are likely to experience an influx of requests from employees to continue telecommuting.

Is This the New Normal?

Life lately has been far from business as usual. During lockdown, we’ve experienced a paradigm shift. Remote working—or telecommuting—may no longer be seen as a workflex arrangement for select employees. As businesses reopen, it’s not as simple as flipping a switch. Every company and industry is unique and will have to decide what’s best for their business, employees and customers.

For many companies, prolonging a remote work policy is not just a safety measure. As summer approaches, it’s a logical approach to help employees with young children. With daycares, schools and after-school or recreation programs closed, parents are figuring out how to entertain young children at home while still working. Continuing remote work policies can also provide management some more time to reconfigure office floor plans and procedures to be a safer environment. Some companies may extend working from home for employees simply because it’s been working out well.

Requests Start Rolling In

As the decision is made for employees to come back to the office, employees may begin to have remote work requests. Likewise, companies may be more accepting of those requests than prior to the pandemic. Some companies could even make their entire operations remote as a new way to manage facility costs.

Employees may have personal reasons for requesting to work from home instead of coming into the office every day. Keep in mind the following common reasons:

• Fearing contraction and spread of COVID-19 to family members or their household
• Caring for children or other family members
• Complying with social distancing mandates
• Saving on commute time
• Being more productive

Lastly, employees also may have quickly acclimated to working from home and would like to simply continue that work situation. As states start opening up again, employers should have a plan to address the post-pandemic workplace and workforce.

Compliance Considerations

If remote work policies weren’t created when employees were sent home to work as the COVID-19 outbreak picked up, they should be now. Make sure your return-to-work or transition plan is consistent with local and state regulations. It’s also important to ensure compliance with the Families First Coronavirus Response Act when responding to work-from-home requests.

This isn’t a one-size-fits-all situation, and employers should have justified and documented explanations when reviewing and responding to requests. Along with legal and business considerations, employers should keep the following factors in mind when granting work-from-home requests:

• The request is due to an issue related to the Americans with Disabilities Act. If that’s the case, employers should discuss possible reasonable accommodations with the employee.
• The employee has been able to meet expectations while working remotely during the pandemic. If expectations have not been met, consider whether the performance issues can be managed remotely once the pandemic subsides.
• Business needs have changed in a way that physical presence in the workplace is or is not required.
• The company has discovered that productivity has increased. Remote working has been proven to be so effective that the company wants to encourage employees to continue to work remotely, if they’d like to.
• Employers should consider how similar workflex requests have been handled in the past.

Common reasons for denying remote work requests include if the position requires the employee to work in the office or if the employee has had previous disciplinary incidents.

After finalizing a return-to-work plan, the next step for employers is to update all job descriptions to clarify whether positions require working on-site and whether employees are eligible to work remotely. Having those decisions and reasons documented will help managers respond to employees’ requests. Similarly, having those guidelines on paper will help employers respond to prospective employees who are looking for remote work positions or other workflex options. This may also open up the door to recruit from a vast talent pool not restricted by geographic distance from the office.

While working in a post-COVID-19 world, everyone will have to adapt and find what works best to protect employers and employees—whether that’s in or out of an office setting. To learn more about responding to and accommodating remote work requests or any other topics related to your insurance coverage, losses and risk management please contact Morris & Reynolds Insurance at 305.238.1000 at any time as our professional agents and underwriters are happy to help.

Civil unrest can create unique challenges for businesses. Specifically, business owners face the risk of vandalism, stolen or damaged goods and extensive property damage. With this in mind, it’s crucial to take steps to mitigate the risk of potential damages to your business during periods of civil unrest.

Review the following guidance to help keep your business protected in these situations.

Stay Informed

First and foremost, make sure you stay informed via local authorities, news outlets and social media on potential events or issues that could lead to civil unrest within your community. This practice will allow you to be more aware of when civil unrest is most likely to occur and take a proactive approach to protecting your business.

Assess Property Vulnerabilities

Next, it’s important to assess your business property for potential vulnerabilities. In doing so, you will be able to better determine where to focus your mitigation efforts.

Be sure to conduct a thorough inspection of both your own property and the surrounding area—including neighboring businesses, parking lots, alleys and streets—for specific risk management issues (e.g., gaps in security measures, potential traffic or crowding concerns, the type of property at risk and concerns for employee and customer safety).

Protect Your Property

After assessing potential vulnerabilities, make sure you implement adequate security measures to help keep your business fully protected. Potential security practices to consider include:

• Utilizing security cameras
• Implementing an intruder alarm system
• Boarding up property windows and doors
• Ensuring proper locks on all windows and doors
• Installing motion-sensing external lighting and glass break sensors
• Hiring security guards

Remove Valuables

Try to remove as much cash, merchandise and high-value supplies or equipment from your property as possible. In particular, if your business utilizes a fleet of vehicles, consider moving them to a temporary, secure storage location. This way, you will be able to proactively minimize your losses in the event that your business is targeted.

Further, consider utilizing signage to communicate that money and high-value items have been removed from the premises to help deter potential thieves.

Alter Business Hours

If you suspect that that civil unrest could take place near your property, consider temporarily altering your business hours (e.g., opening or closing earlier than normal) to avoid putting your employees and customers in a dangerous situation. However, make sure you properly communicate these changes with your staff and customers to prevent any confusion. In some cases, it may make sense to temporarily close your business.

Avoid Unnecessary Conflict

In the event that civil unrest takes place while your business doors are open, it’s crucial to educate your staff on how to respond appropriately and avoid unnecessary conflict. Establish an evacuation plan that allows for employees and customers to safely leave the area during a dangerous situation. Designate specific staff to be responsible for securing the property (e.g., locking doors and boarding up windows) before evacuating.

If a potentially dangerous individual confronts any of your employees before an evacuation can occur, encourage them to react calmly and avoid using violence or responding aggressively. Designate specific staff to be responsible for contacting the local authorities or emergency services, if necessary. If the individual attempts to loot or rob your business, allow them to do so—no items are worth the risk of an employee injury or fatality.

Consult Local Authorities

Be sure to express any concerns you have regarding civil unrest in your community with local authorities—including the police department, fire department and government officials—and utilize any resources or guidance that they provide. Consider requesting additional police presence or temporary street closures near your business if you are particularly concerned about the threat of civil unrest.

Secure Proper Insurance

Apart from these loss control methods, you can ensure ultimate protection during periods of civil unrest by securing proper commercial insurance coverage. For additional risk management guidance and insurance solutions or inquiries related to any other topics related to your insurance coverage, losses and risk management please contact Morris & Reynolds Insurance at 305.238.1000 at any time as our professional agents and underwriters are happy to help.

Carrier Premium Credits and ERISA Fiduciary Obligations

Due to COVID-19 and state and local stay-at-home orders, utilization of group medical and dental insurance benefits is down.  As a result, some carriers recently notified employers that they will be issued premium credits. When asking how these premium credits should be treated by the employer, we often compare then to the ACA’s medical loss ratio (MLR) rebates.  While these premium credits are not MLR rebates, a similar decision must be made to determine whether they, like MLR rebates, are ERISA plan assets.

Background

As background, the Affordable Care Act’s MLR rule requires health insurers to spend a certain percentage of premium dollars on claims or activities that improve health care quality, otherwise they must provide a rebate to employers. At the same time the U.S. Department of Health and Human Services issued the MLR rule, the U.S. Department of Labor (DOL) issued Technical Release 2011-04 (TR 2011-04), which clarifies how rebates should be treated under ERISA.  Under ERISA, anyone who has control over plan assets, such as the plan sponsor, has fiduciary obligations and must act accordingly.

Clearly, the premium credits we are seeing are not subject to the MLR rule; however, a similar analysis applies.   TR 2011-04 clarified that insurers must provide any MLR rebates to the policyholder of an ERISA plan.  However, while the DOL’s analysis was focused on MLR rebates, it recognized that distributions from carriers can take a variety of forms, such as “refunds, dividends, excess surplus distributions, and premium rebates.”  Regardless of the form or how the carrier describes them, to the extent that a carrier credit, rebate, dividend, or distribution is provided to a plan governed by ERISA, then the employer must always consider whether it is a “plan asset” subject to Title I of ERISA.  If it is, then as the party with authority and control over the “plan assets,” the employer is a fiduciary subject to Section 404 of ERISA and bound by the prohibited transactions provisions of Section 406.  In other words, to the extent that a refund is a plan asset, it must be used for the exclusive benefit of plan participants, which may include using it to enhance plan benefits or returning it to employees in the form of a premium reduction or cash refund.

Treatment of Premium Credits to Employers

In situations where an employer uses a trust to hold the insurance policies, the DOL’s position is that the rebates are generally assets of the plan.  However, in situations where the employer is the policyholder, the employer may, under certain circumstances, retain some or all of a rebate, credit, refund, or dividend.  When considering whether a rebate is a plan asset, the terms of the plan should be reviewed.  As discussed below, some employers draft their plan documents in a manner that allows them to retain these types of refunds.  If the terms of the plan are ambiguous, the DOL recommends employers use “ordinary notions of property rights” as a guide.

When determining whether carrier credits, dividends, distributions or rebates are ERISA plan assets, the DOL will look to the terms of the documents governing the plan, including the insurance policy.  If these governing documents are silent on the issue or unclear, then the DOL will take into consideration the source of funding for the insurance premium payments.  In such situations, the amount of a premium credit that is not a plan asset (and that the employer may therefore retain) is generally proportional to the amount that the employer contributed to the cost of insurance coverage.  For example, if an employer and its employees each pay a fixed percentage of the cost, a percentage of the premium credit equal to the percentage of participants’ cost would be attributable to participant contributions.  In the event that there are multiple benefit options, a premium credit attributable to one benefit option cannot be used to benefit enrollees in another benefit option.

The Plan Document

Employers can draft their plans to make it clear that the employer retains all rebates, credits, distributions, etc. if the rebates, credits, distributions, etc. do not exceed the employer’s contribution towards the benefit.  If given this flexibility in the plan, the employer may not have to return a portion of the premium credit to employees or use the credit to provide a premium reduction.  While this gives employers more flexibility, employers should consider that carriers communicate some premium refunds, such as an MLR rebates, to both the policyholder and participants, therefore employees know the employer received money back from the carrier and they may expect something in return.   Therefore, there is the potential for employee relations issues with this approach.

If the plan document does not provide this flexibility to the employer, is silent with regard to the use of such funds, or is unclear about how such funds are allocated, then the employer should treat any premium credits like they are ERISA plan assets (to the extent they’re attributable to employee contributions) and allocate them accordingly.

Allocating the Employees’ Share of a Premium Credit

The portion of the premium credit that is considered a plan asset must be handled according to ERISA’s general standards of fiduciary conduct.  However, as long as the employer adheres to these standards, it has some discretion when allocating the premium credit.

If an ERISA plan is 100 percent employee paid, then the premium credit must be used for the benefit of employees. If the cost of the benefit is shared between the employer and participants, then the premium credit can be shared between the employer and plan participants.

There is some flexibility here.  For example, if the employer finds that the cost of distributing shares of a premium credit to former participants approximates the amount of the proceeds, the employer may decide to distribute the portion of a premium credit attributable to employee contributions to current participants using a “reasonable, fair, and objective” method of allocation.  Similarly, if distributing cash payments to participants is not cost-effective (for example, the payments would be de minimis amounts, or would have tax consequences for participants) the employer may apply the premium credit toward future premium payments or benefit enhancements.  An employer may also vary the premium credit so that employees who paid a larger share of the premium will receive a larger share of the premium credit. 

Ultimately, many employers provide the employees’ share of the premium credit in the form of a premium reduction or discount to all employees participating in the plan at the time the premium credit is distributed.  Employers should review all relevant facts and circumstances when determining how such a credit will be distributed.

Regardless, to avoid ERISA’s trust requirement, the portion of a premium credit that is plan assets must be used within three months of receipt by the policyholder.

Conclusion

Employers that would like additional flexibility in how to treat carrier premium credits should work with counsel to update their plan documents. Even for plans with flexibility built into the terms, we encourage consultation with counsel to review the facts and circumstances surrounding any such premium credits to ensure compliance with ERISA. 

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Whether you have a question about this topic or need help with any form of insurance, please contact us at any time at 305.238.1000.