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Understanding the New Experience Rating Formula

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Steven Bell, VP Underwriting & Sales, Lovell Safety Management Co., LLC

When I started in insurance nearly 33 years ago, I was asked to train 100 colleagues on experience rating. New to the industry, I remember looking at the old formula and wondering how I was going to explain it to a group of non-actuaries. I solved the problem by not explaining the actual formula but the underlying concepts.

Insurance had its start in the Guilds and maritime trade of Europe. Tradesmen in Guilds would pay into a pool to cover loss due to fire, theft, or disablement. Underwriters would buy shares of a ship’s cargo, thereby spreading their risk of loss among multiple ships. Workers’ compensation insurance attempts to solve a similar risk of loss by spreading the cost of worker injuries over many employers in similar trades or businesses.

In New York State, workers’ compensation rating begins with the creation of what is known as a loss cost for 580 classes of businesses such as plumbers, electricians, and office workers. The loss cost is created by taking the total losses for those in a similar class of business and dividing it by the total payroll for those same businesses. The result is the loss cost, which is an average unit of cost that can be charged for each one hundred dollars of payroll exposure.

If we know one thing about averages, it is that they can be unfair, because not everyone is average. The experience rating formula attempts to solve this problem by tailoring the cost of insurance through an additional credit or debit for each employer based on their individual loss experience.

Effective 10/01/2022 NYCIRB implemented a new simplified Experience Modification Formula

=   Actual Primary Losses  +  Expected Excess Losses
        Expected Losses

Why was the old experience modification formula changed?

The New York Compensation Rating Board performed a study which revealed that the prior experience rating plan was not equitable. The inequity can be best illustrated in what is known as a quintile test. NYCIRB placed each employer into one of 5 quintiles. The goal of the new plan was to produce, for each quintile, a loss ratio of 100%, meaning for each dollar of loss there should be a dollar of premium.

 

NYCIRB Actuarial Explanation Memo, Exhibit 2

Based on the study’s results, the new plan appears to address the inequities, however, the overall adjustments for those in quintiles 1 and 5 can be quite significant.

What does the new Experience Rating Formula mean to the average employer?

The new plan will likely result in larger credits and debits depending on your loss experience. In addition to the formula change, the new plan makes all New York businesses eligible for experience rating and it eliminates the Merit Rating Program and the use of interstate ratings. The plan introduces a novel variable split point and claim capping procedure to make sure the new plan doesn’t result in too large a swing.

Claim Capping Procedure

Number of Claims

Maximum Experience Modification

1

1.12

2

1.40

3

1.75

4 or more

2 + (.000003  x  Expected Losses)

In year one of implementation, the experience modification will be the lowest of either the new formula, the claim capping procedure, or the old formula plus 30 points. In year two, it will be the lowest of the new formula or claim capping procedure.

There are two core principles that apply to both the old and new formula. First, larger businesses with more employees and higher payrolls are more likely to produce consistent results. Second, the fact that a loss occurred has higher predictive power than the relative cost of a given loss.

Practical Example

Let’s compare three small residential carpentry contractors with the same payroll ($500,000) in each year of the formula.

Contactor

# Claims

Actual Losses

Primary Losses +

Expected Excess Losses /

Expected Losses =

Calculated Exp. Mod.

Max. Exp. Mod.

A

1

$50,000

$11,000

$35,154

$45,300

1.02

1.12

B

5

$50,000

$50,000

$35,154

$45,300

1.88

2.14

C

0

$0

$0

$35,154

$45,300

0.78

NA

The first two examples show the impact of loss frequency. While both A & B have $50,000 in actual losses, B has a much higher experience modification due to 5 claims. Let’s assume each of the 5 claims were valued at $10,000, for a total of $50,000. It is conceivable that each of the 5 claims could have been $50,000 for a total of $250,000 in losses. But the severity of claims is less impactful, as the formula caps the amount of losses based upon payroll size.

What can an employer do to impact their experience rating?

The obvious answer is stop having losses. This is easier said than done but should be the primary goal as the cost of an injury is much greater than the impact to your insurance costs. The losses and exposure used in the formula generally consist of 3 years, so if your policy renews on 4/1/23, the three years used in the formula are 4/1/19 through 4/1/22. This means actions taken today won’t impact your experience modification for another couple of years.

Creating a culture of safety will pay dividends beyond the reduction of losses. One key strategy involves considering paying for non-reportable injuries as set forth in section 110 of the NYS WC Law. To summarize, if an injury requires two or less first aid treatments, no loss time beyond the work shift, and is not permanent in nature or involves injury to the face, then you as an employer have the option to self-pay. If the injury requires further treatment or loss of time, you can report it at that time noting you initially treated it as a first aid claim.

What have we learned about the new experience modification formula?

The new formula attempts to correct the imperfections of the old formula by rewarding the top 20% of businesses with lower experience modifiers while punishing the bottom 20% of businesses with higher costs. While the formula itself is simpler, the system is still quite complex. Practically, it means that many employers will see significant swings in their experience modifications. Whether this is good or bad for you as an employer depends on whether the swing is a credit or a debit.

Major Retirement Plan Changes in the SECURE 2.0 Act of 2022

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Nicholas L. Shires, CPA, Dannible & McKee LLP

On December 29, 2023, President Biden signed the Consolidated Appropriations Act of 2023, which contained the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act of 2022 (also known as SECURE 2.0). Included in SECURE 2.0 are dozens of retirement-related provisions that are intended to enhance provisions from the original SECURE Act of 2019. This article summarizes a few key provisions.

Expanding Automatic Enrollment in Retirement Plans

Beginning in 2025, new 401(k) plans must automatically enroll participants when they become eligible. However, the employees may opt out. The initial automatic enrollment contribution amount is at least 3% but no more than 10%. Then, the amount is automatically increased every year by 1% until it reaches 10%. All current 401(k) and 403(b) plans are grandfathered, meaning the requirement does not apply to plans established before the applicable date. There is also an exception for small businesses with 10 or fewer employees, new businesses (i.e., have been in business for less than three years), church plans and governmental plans.

Increasing the Age for Required Minimum Distributions

Employer-sponsored qualified retirement plans, traditional IRAs and individual retirement annuities are subject to required minimum distribution (RMD) rules, which require that accumulated benefits begin to be distributed by the Required Beginning Date. SECURE 2.0 increases the required minimum distribution age to 73 starting on January 1, 2023, and boosts it to 75 starting on January 1, 2033. This change allows people to delay taking RMDs and paying tax on them.

The law also relaxes the penalties for failing to take full RMDs, reducing the 50% excise (or penalty) tax to 25%. If the failure is corrected in a “timely” manner, the penalty would drop to 10%.

Higher Catch-up Contributions

Defined contribution retirement plans under Code Sec. 401(k), Code Sec. 403(b) or Code Sec. 457(b) are permitted, but not required, to allow participants who are age 50 or older to make additional pre-tax elective deferrals, known as “catch-up” contributions. Catch-up contributions are elective deferrals that, among other things, are not subject to the annual elective deferral dollar limit ($22,500 for 2023). The annual dollar limit on catch-up contributions is $7,500 for 2023.

Deferrals under Savings Incentive Match Plan for Employees (SIMPLE) plans are subject to a reduced annual elective deferral dollar limit ($15,500 for 2023). The annual dollar limit on catch-up contributions to SIMPLE plans is $3,500 for 2023.

Beginning January 1, 2025, individuals who are ages 60 to 63 can make catch-up contributions up to the greater of $10,000 ($5,000 for SIMPLE plans) or 50% more than the regular catch-up amount in 2024 (2025 for SIMPLE plans). The statutory dollar amounts are indexed for inflation commencing in 2026.

Eliminating Unnecessary Plan Requirements Related to Unenrolled Participants

Under both the Codes and ERISA, employees that are eligible to participate in a defined contribution plan must receive numerous intermittent notices and explanations of their rights and options under the plan, such as an explanation of available investment options. These intermittent notice requirements generally apply even where eligible employees have opted not to participate in the plan.

The Act amends the Code and ERISA to provide that defined contribution plans are exempt from intermittent notification requirements concerning eligible participants that elect not to participate, who have already received a summary plan description and any other notices related to initial eligibility to participate in the plan (unenrolled participants). Intermittent notifications include disclosures, notices and plan documents. However, an unenrolled participant must still receive: (a) an annual reminder notice of their eligibility to participate in the plan, as well as any applicable plan deadlines; and (b) any document they request that they would be entitled to receive under existing law absent this Act provision. This provision applies to plan years beginning after December 31, 2022.

Conclusion

SECURE 2.0 is one of the broadest pieces of retirement plan legislation in decades and will have lasting impacts on all types of retirement plans. It is important for employers to review existing retirement plan documents to ensure compliance with the above rules and other rules included in SECURE 2.0. There may be required amendments needed to bring retirement plans into compliance on the various compliance dates.

Nicholas L. Shires, CPA, is the partner-in-charge of tax services at Dannible & McKee, LLP, a public accounting firm with offices in Syracuse, Auburn, Binghamton and Schenectady, New York.  The firm has specialized in providing tax, audit, accounting and advisory services since its inception in 1978.  For more information on this topic, you may contact Nick at (315) 472-9127 or visit online at www.dmcpas.com.

The State of The Regional Construction Industry

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By Earl Hall, Executive Director, Syracuse Builders Exchange

2022 proved to be a good, but challenging year for construction industry employers.  Buoyed by both private and public sector investments throughout central New York, the industry enjoyed an abundance of work but saw tighter margins as competition remained strong.  Employers endured supply chain issues, a thin labor market with labor shortages and sky-rocketing inflation that impacted material costs.  In the end, 2022 was a good year for most contractors, but of course their attention has quickly shifted to future opportunities and challenges.

Opportunities

Over the next 1-3 years, central New York will enjoy an extraordinary amount of capital investment by both public and private sectors; however, many of the private sector projects will be subsidized by various governmental entities.  While the normal, routine, and periodic construction work in higher education, public education, hospitals and medical facilities, manufacturing facilities and the service industry will continue, new projects of significance will draw most of the attention of the general public and many contractors.

Besides the well-publicized Micron Corporation’s 20-year investment in their Clay, NY facility, expected to break ground in 2024, contractors will be focused on Onondaga County’s new $90 million aquarium in the Inner Harbor; a $100 million STEAM school in downtown Syracuse; the $2.3 billion Route 81 reconstruction project in and around the city of Syracuse: the $108 million investment in and around Onondaga Lake/Inner Harbor; and $1 billion for development of a new Syracuse neighborhood near Route 81 in the city of Syracuse.  This anticipated construction, in addition to the Davis-Bacon federal infrastructure projects such as sewer and water treatment plants, and highway and bridges reconstruction, will provide employers with an abundance of building and heavy/highway bidding opportunities over the next 3 years.     

Challenges

Labor shortages and lack of skilled labor remains a huge problem with no immediate solution.  Many of the new craftspeople entering the commercial, industrial, and institutional sectors of the construction industry are not skilled or trained to be productive for employers competing in those markets.  In many cases, contractors are being very selective on the projects they bid and occasionally choosing not to bid on projects for fear of a lack of a skilled, productive work force.  While employers and unions alike are investing in future training facilities, such will take time to properly attract and train the next generation construction worker.

Inflation continues to adversely impact contractors’ material costs, as uncertainty remains when bidding on projects.  Anticipating the cost of materials 6-9 months prior to the project starting remains a challenge for estimators and project owners alike.

Wages will increase significantly over the next 3 years.  One of the many features which attracted Micron to central New York is the relatively low cost of labor.  With labor shortages already at historically low levels, demand for skilled labor will increase wages.  Many employers are already experiencing such today, often paying premiums above those wages negotiated in collective bargaining agreements.   Although many of the New York State prevailing wage rates for construction are derived from the Construction Employers Association of Central New York’s collective bargaining agreements, many believe employers will continue to pay above those rates to not only attract new employees, but to retain their current workforce.

Conclusion

Although contractors across the country are experiencing many of the above-noted opportunities and challenges, central New York is well positioned to take advantage of the capital, institutional and governmental investments in our region of New York.  These opportunities do not come without challenges, but what history has shown is that construction industry employers throughout upstate New York are innovative, resilient, and determined.  This region of New York state enjoys some of the best specialty subcontractors, suppliers, general contractors, and construction managers in the United States.  Project owners are fortunate to have access to such contractors as the on-time, on-budget deliverer of construction goods and services will continue despite any challenges the future may hold.  Contractors relish in challenges as opportunities and solutions are often created when challenges are presented.

Enfoqué Images: The Sky’s the Limit

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Elizabeth Landry

Jackie Vidler’s mother always knew her daughter was an interesting, eclectic, and creative person who did things just a little bit differently. Those characteristics reveal why Vidler has always had an interest in art, specifically photography. However, like many people who have an artistic bent, she never dreamed she would be able to make photography her career.

When Vidler had her own daughter 14 years ago, her passion for photography really took off. She found herself wanting to capture all the special moments as her daughter grew, and photography helped her achieve that goal.

“I was taken aback at how fast time flew by and how quickly one milestone was replaced by the next,” Vidler said.

Shortly thereafter, she accepted a job offer to assist a local photographer, and she eventually became an artistic director. Vidler quickly realized how fulfilling it was to be able to document important moments and memories for others: she photographed weddings, families, pets, and any subjects that came her way.

Never being one to stay complacent with her current situation, though, Vidler knew she needed to branch out on her own. Around 2010, she created Enfoqué Images and became a small business owner herself.  She named her business “Enfoqué,” which means “in focus” in Spanish, as a way to pay homage to her Puerto Rican heritage.

For Vidler, her passion for photography stems from her desire to help others and to capture the progression inherent in life.

“It’s easy to recall the before and the after. But there’s so much more to life than just the beginning and the end. The true beauty of any story lies in the middle,” Vidler explained.

A New Client: The Construction Industry

After several years of operating Enfoqué Images, Vidler found herself wanting to expand the business even further. She began to explore how her business could offer photography services to other local businesses, since she has always had a desire to help others and give back to the community.

“Businesses are ideal clients for me because every great business has a commitment to continuous improvement, leaving so much progress to capture. Documenting a brand’s product or service helps to establish visual representation for that business. It’s my own professional spin on showing a business that we ‘see’ them,” she said.

After completing an extensive application process, Enfoqué Images became a Minority and Women Business Enterprise (MWBE) in 2019. The MWBE certification helped expand the reach of Enfoqué Images, opening up new opportunities in the construction industry, specifically. Although Enfoqué Images had been providing photography services to other local industries in the Syracuse area, Vidler found that construction businesses were the most natural clients because progression is so central to every construction project.

As a full-service photography and videography studio serving the construction industry in central New York, Enfoqué Images assists quality management through outstanding photographic documentation during the entire contract period. Services include photography of existing conditions, mobilization, safety setup, material storage, demolition, construction progress, inspection punch list items and final close-out. Enfoqué Images is certified for government contracting through the City of Syracuse, both federally and statewide. The business is certified with industry codes NAICS, 541922 in commercial photography, NAICS, 512120 in motion picture and video and NIGS, 91572 in photography services.

For Vidler, photographing for construction contracts is especially enjoyable because it allows her to truly focus on the process happening in real-time, and because of its fast-paced nature.

“It’s really cool to see a project come together. We did progression documentation for Industry Standard USA at the Syracuse VA hospital when they were putting in new sidewalks. It was cool to go up weekly and to see the progression over the weeks. And of course, you never know what you’re going to get. I might get a call saying, ‘the pourers are going to be here tomorrow, so we need you here tomorrow’ and we’re ready to go. It’s really exciting. It’s great to see a plan come together and to watch it grow,” she described.

Expanding Horizons with Drone Photography and Videography

In order to further progress and evolve as a business, Vidler became interested in utilizing drone technology to add aerial photography and videography services to Enfoqué Images’ repertoire. She knew that utilizing aerial technology would expand her business’ opportunities even further, but by no means was obtaining the needed certification simple or easy.

“I made the investment in purchasing drone equipment. I researched and studied the ins and outs of aerial documentation. After almost a year of extensive and intensive studying, I made it happen, passing my drone pilot license testing and obtaining my Part 107 UAS Remote Pilot Certification in 2019,” Vidler stated.

While flying a drone may seem intuitive to some, Vidler described how the knowledge she gained during her certification process is complex and covers many topics.

“The drone license test is very interesting. It’s certainly not simple for the everyday person to understand,” she said. “I had to learn about the different types of clouds, learn how to read different types of maps, know about the different air spaces and remember not to fly the drone above 400 feet, for example. It’s pretty intense.”

Although obtaining her drone photography certification was strenuous, Vidler knew it would be essential in order for Enfoqué Images to flourish in the company’s work with construction contracts. The construction industry had already experienced tremendous benefits from utilizing drone technology, and she wanted to be able to help local construction efforts by offering aerial photography and videography services herself. Drones provide a new vantage point in the sky that improves the visual documentation of any construction project. Aerial documentation benefits many aspects of construction, including the mapping, planning, surveying, safety, inspecting and service needs that are integral to project success.

The safety benefits of drone technology have been a major draw for Enfoque Images’ construction clients. “I was talking to a potential client recently and I mentioned that I do drone photography and videography. He said, ‘Wow, that’s really great – so, my guys wouldn’t have to get up on the scaffolding and scale the side of the building to check out some corrosion, it would just be sending up a camera?’ It helps save the companies manpower and can even help avoid injuries, which is great,” Vidler explained.

In her research into drone photography and videography, she also found reports that showed construction companies that utilize drones have experienced significant improvement in their operational efficiency and reduced overall costs. Drone technology allows photographers to capture aerial data easier and faster, and allows for improved decision-making, more thorough identification of worksite issues and greater predictability for project schedules.

Vidler explained how she takes great pride in offering these state-of-the-art services to her construction clients. “As a drone photographer, I can offer contractors the best images available to help attain their goals. They’ll be able to use their photos to show the various angles of the project and to demonstrate their abilities to meet the requirements of the hiring agency,” she said.

Onward and Upward

From its humble beginnings over 10 years ago, Enfoqué Images has grown leaps and bounds into the small business it is today. Although the business’s capabilities and services have expanded and evolved in many ways, the core passion behind Vidler’s work has remained the same: to help others through photography and to support the local business community.

Over the next several years, Enfoqué Images will continue to grow and help highlight the progress demonstrated by local industries. For the construction industry specifically, Vidler emphasized that progress should be documented both on and off the jobsite. “With construction, obviously documentation of the actual physical project is a huge part of it, but it’s important to note we also offer headshots and social media content, for example. Those services may not be directly related to the jobsite but there’s always a way I could help the businesses and support them through photography and videography,” she said.

As the business offerings expand, Vidler is also looking forward to growing the Enfoqué Images team. “I will be extending the Enfoqué Images brand as an umbrella to cover all aspects of photography. I want to onboard other photographers and provide a space for each of them to take the lead in the industry areas they have a passion for,” she stated.

When asked about the overall reach of the business in the future, Vidler expressed her excitement about the possibilities, but emphasized that Enfoqué Images will always be ingrained in the central New York business community. “Enfoqué Images, at its core, will always stay a local business. I will always be connected and giving back within the community that’s home to me. But for the future reach of Enfoqué, I feel it is limitless. I take pictures in the sky now, so I can confidently say ‘the sky’s the limit’.”

Research and Development Credits Within the Construction Industry

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Nicholas L. Shires, CPA , Abby K. Sweers, CPA, Dannible & McKee, LLP

When taxpayers think of research and development (or R&D), most picture scientists in long white coats mixing liquids in a laboratory. However, the meaning of research and development in the tax world goes far beyond that. While the construction industry may not be the first that comes to mind when thinking about R&D, it certainly contains its fair share of qualified projects. For construction companies that take advantage of these R&D projects, changes are on the way.

Originally introduced as a temporary credit in the Economic Recovery Tax Act of 1981 (ERTA), the R&D credit was made permanent in 2015 with the passing of the Protecting Americans from Tax Hikes (PATH) Act. For construction companies that qualify for the R&D credit, thousands of dollars in credits can be claimed on the associated income tax returns, depending on the level of qualified expenses. While the R&D credit has been around for several years, effective for tax years beginning after December 31, 2021, as part of the Tax Cuts and Jobs Act (TCJA) of 2017, the treatment of qualifying research expenses used in the credit are undergoing a major change.

Generally, for projects to qualify for the R&D credit, they must be technological in nature, and their application must be intended for use in developing a new or improved business component or process for the taxpayer. In addition, substantially all the activities of the research must be elements of a process of experimentation relating to a new or improved function, performance, reliability or quality. Within the construction industry, these research projects could include developing new processes that would reduce the time spent on site, creating new materials for use in projects with unique conditions, designing or improving tools and equipment that would lead to improved job efficiency and many more. For example, say a contractor is working on a road in an area that endures heavy snowfall. If they were to develop a new mix of materials (asphalt, concretes, etc.) that would experience less wear and tear from the snow, that would be considered R&D.

The qualifying research expenses can be broken down into two categories: (1) in-house research expenses and (2) contract research expenses. The in-house research expenses include wages paid to an employee for engaging in qualified research, amounts paid for materials and supplies used in the conduct of qualified research and any amounts paid to another person for the right to use a computer in the conduct of qualified research. Contract research expenses include 65 percent of any amount paid to another person, other than an employee, for qualified research.

As previously mentioned, the way that these R&D expenses are to be treated by the taxpayer is altered for tax years beginning after December 31, 2021. The TJCA amended Internal Revenue Code (IRC) § 174, which outlines the treatment of research and experimental expenditures. Previously, taxpayers were allowed to immediately deduct their qualifying research expenses in the year they were paid or incurred. Based on the amendments to IRC § 174 included in the TCJA, taxpayers must now capitalize these expenses and amortize them over five years.

For example, assume a taxpayer has $200,000 of qualified research expenses for the 2022 tax year. Prior to the TCJA amendments, the taxpayer could expense all $200,000 of these expenses in the year they were incurred. Under the new rules, the taxpayer must capitalize these expenses and would be entitled to an amortization expense of $20,000; $200,000 divided by 5 years and applying a midpoint to amortization to cut the first full year expense in half, as specifically stated in the code section.

Although these changes may appear to make the credit less lucrative, this should not deter taxpayers from pursuing the credit as it’s still very beneficial to those that qualify. The Internal Revenue Service has been known to look further into these credits when claimed by taxpayers, so it is important to contact your tax professional early to ensure that proper substantiation is being maintained throughout the process of each qualifying project.

Nicholas L. Shires, CPA, is the partner-in-charge of tax services and Abby K. Sweers, CPA, is a tax manager with Dannible & McKee, LLP, a public accounting firm with offices in Syracuse, Auburn, Binghamton and Schenectady, New York.  The firm has specialized in providing tax, audit, accounting and advisory services since its inception in 1978.  For more information on this topic, you may contact them at (315) 472-9127 or visit online at www.dmcpas.com.

A-Frame Ladders Vs Platform Ladders

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Wael Khalil, CSP  Safety Representative Lovell Safety Management Co., LLC

Have you noticed in recent years that more general contractors are requiring platform ladders instead of standard A-frame ladders? As a matter of fact, some general contractors (GCs) will not allow ladder usage on their jobsite, period. On some construction sites, A-frame ladders have become a tool of last resort when performing work at an elevation. Most GCs would prefer that employees use manlifts, scissor lifts, boom lifts or other elevated work platforms rather than ladders. The main reasoning behind this philosophy is to eliminate a primary source of costly fall injuries.

FALLS CONTINUE TO BE THE LEADING CAUSE OF DEATH AND SEVERE INJURY IN CONSTRUCTION. In 2020, there were 351 fatal falls to a lower level out of 1,008 construction fatalities (BLS data). A 2014 study published by the Centers for Disease Control and Prevention (CDC) cited ladders as being a leading cause of workplace injuries. According to the study, an estimated 81% of construction-related falls treated in U.S. emergency rooms involved a ladder. The most common ladders used on construction sites to perform work are A-frame ladders. When these ladders are used in accordance with required safety work practices dictated by manufacturers and regulating bodies, they can be a very useful and safe piece of equipment. Unfortunately, A-frame ladders are misused more often than we would like to admit.

Most injuries associated with A-frame ladders occur when employees climb higher than the 3rd step from the top, when overreaching to the side of the ladder, missing or slipping off the bottom step/rung, and using a worn or damaged ladder. Many of these hazards can be significantly minimized by using platform ladders instead of standard A-frame ladders.

On a platform ladder, you are typically standing on a 1’x1.5’ (or larger) platform, not a 3” ladder rung. This provides the use of a firmer and more stable surface to stand on, which minimizes fatigue and subsequently slipping off ladder rungs. The elimination of the ladder cap and second rung eliminates the potential hazard of climbing too high on the ladder. In addition, the fact that the user is standing firmly in the center within the framing of the ladder, the potential of falls due to reaching to the sides of the ladder is minimized.

 

While platform ladders will not eliminate all ladder fall hazards, they can be another tool that can significantly help minimize the potential for fall-related injuries when used properly. As employers, we still need to practice the fundamentals of hazard prevention through steps outlined in the same 2014 CDC Article:

1) plan the work to reduce or eliminate the need for using ladders by apply­ing safety-in-design and constructability prin­ciples to finish as much of the work as possible on the ground;

2) provide alternative, safer equipment for extended work at elevation, such as aerial lifts, supported scaffolds, or mast climbing work platforms;

3) provide properly selected and thoroughly inspected ladders, that are well-matched to employee weight, task, and location;

4) when applicable, provide proper accessories to supplement safe ladder use; and

5) provide adequate ladder safety information and training for employees.

Familiarity and compliance with the provisions of safety regulations, such as recognizing ladder types and conditions, and using ladder positioning and other safe ladder practices, are crucial to reducing injuries from ladder falls.

LSM Group Members Can Contact Their Local LSM Safety Representative for Further Assistance Regarding Proper Ladder Selection or Ladder Alternatives.”

Building an Effective Job Site Safety Program

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Paul Coderre, Vice President of Risk Management Services, OneGroup

If you’re a contractor, your job sites present the most consistent and, in most cases, the greatest potential for employee, subcontractor and visitor injuries. While your shop, yard and office can generate occasional accidents, most injuries occur on the job site. The reason isn’t mysterious – your job sites carry the greatest risks and hazards. For the most part, those risks and hazards are known and recognized by site superintendents, foremen, and workers.

So, why do we still have incidents and injuries if most of the hazards are known? It comes down to the level of risk that you, and in turn your supers and employees, are willing to accept in order to get the job done. Other than asteroid strikes, earthquakes, and locust swarms, if we recognize something as a hazard, we can reduce or eliminate the risk of an injury. Now that you’ve rolled your eyes, let me say that I agree with you. If we want to get anything done; on a construction site, or getting to work, or walking across the street, we must accept a certain level of risk. We can’t escape risk; it is inherent to life.

However, the level of risk we accept is not an all-or-nothing proposition. In construction, deciding the level of risk we will accept is a dynamic part of our decision-making process. As business leaders, you make those decisions. If your job requires an excavation, there is risk associated with that part of the job. Your risk acceptance decision could range from high-risk (excavation without a trench box or cut-back) to low or moderate risk, in which you apply controls to minimize the potential for collapse or cave-in. The accident and injury results that your organization faces are an outcome of your risk mitigation decisions.

But how do we keep people on our job sites from taking decision making into their own hands? We are all familiar with the employee who works on the roof without a harness and lanyard; or the one that operates a saw without the guard; or the one that uses the unsteady scaffold, on the brink of falling over. That’s where we come back to the fact that this is your company. You decide the level of risk that your company is going to accept. The trick is getting that message out and making sure your decisions are followed.

Easy job site safety fixes can be tempting – do some inspections, hold a couple toolbox talks and – boom – your job sites are safe. Unfortunately, job site safety is more involved than that. If you leave the decisions up to your employees without any guidance, then your job site and your results are uncontrolled. The level of risk being accepted is being left to the person you hired yesterday.

Here are the key elements of an Effective Job Site Safety Program:

  • Commitment
  • Understanding
  • Communication
  • Accountability

Consistently applying these elements of risk management to your organization will result in a risk level that you have decided is acceptable.

Commitment: Do your site supervisors manage the risk on your site (to your expectations), or do they go through the motions? I often go into organizations as a safety consultant, and am handed a three-ring binder, and am told, “This is our safety program.” It typically requires the supers to hold daily toolbox talks, document their safety inspections, hold workers accountable for everything from wearing hard hats to lifting with their legs, and more. The jobsite usually engages in some variant of the program described, but very rarely do they enforce every step of that program.

When you develop your safety program, make sure it is your program. We put together program templates for companies all the time. Each time we put together a program template for a company, we tell the owner to go through the program and make it their own; eliminate the things that don’t apply to their operations and even more importantly, eliminate or modify the things they do not intend to do. Once the program is built to accommodate an acceptable level of risk, commit to it. Make that program the rule by which you, your supervisors and your employees will live by. This is by far the most important aspect of keeping job sites safe.

Understanding: After building your safety program, you must make sure that everyone in the organization (particularly your managers and supervisors) understand your expectations. They should know, and be able to apply, the protocols you established in the plan without having to reference it (because it’s at the office or in the trailer, not out on the job).

If you have certain requirements for inspections or training or PPE, the supervisors should know the requirements and why they are in place. They must also know your level of commitment to those requirements. Only then will they understand that they must maintain that acceptable level of risk on your site, because that level of risk will yield the results you are looking for. And only then will your supervisors understand the need for them to administer those protocols over the job.

With the understanding built among the supervisors, they will also extend that understanding to the employees. Again, if the employee group doesn’t understand the expectations, they can’t be expected to work within them. Building this understanding takes both continuous training (upon hire and periodically during the project) and constant reinforcement by the supervisors – which brings us to our next element.

Communication: Risk management is a very broad discipline, particularly in construction. Minimizing the possibility of an accident or injury can include everything from health exposures (i.e., silica), to mechanical (i.e., power tools), to electrical (i.e., arc flash), to falls (i.e., ladders and scaffold) and many other risks. We cannot expect employees to intuitively know or understand all our expectations. Therefore, we must commit to continuous communication of those expectations as the demands arise. If a job involves work from elevations, then we must build understanding in those risks. If it involves a chemical exposure, then that must be trained (establish the expectation) and reinforced with continuous reminders.

Much the same as establishing the expectations for production results, your supervisors must continuously be present to build understanding of the safety protocols, and to provide appropriate reinforcement to workers based on observation. The term “reinforcement” brings us to our next element.

Accountability: The term accountability has developed a negative slant in recent years. Holding your staff accountable is really just making sure they are operating to your expectations, which isn’t a bad thing. Accountability, driven by the process of providing feedback and reinforcement to people, is the most important way to make sure they understand what you desire for your company and for their safety. Holding someone accountable could mean providing positive feedback or acknowledging that an individual (or group) executed their jobs successfully. On the other side, accountability can also mean providing feedback if the group did not perform as expected, requiring you to restate your expectations or provide additional education or training on an issue that was missed. If your expectations continuously go unmet, you can make risk-based decisions as you find appropriate.

However, you look at it, holding people accountable and providing feedback is the best way to ensure that your expectations (safety program) are being followed. Don’t shy away from routinely providing feedback.

Summary

The bottom line is that job site safety isn’t rocket science (unless you’re building a launch pad). Effective job site safety is based on deciding what you are trying to get done and the level of risk that you are willing to accept to do it (commitment), teaching your people about your expectations (understanding), continuously reinforcing those expectations (communication), and letting people know whether or not they are meeting those expectations.

Nothing will be as effective as creating a thorough and realistic safety plan and making sure it is enforced at all times. For those just getting started on Building a Job Site Safety Program, here are few items:

  • Get a Safety Program Template
  • Train your employees
  • Conduct site inspections
  • Do accident investigations, and
  • Maintain the appropriate documentation.

This is a much shorter list of things to do, you’ll notice that the title was also shortened by taking out the work “Effective.” The only way to have an effective job site safety program is to take a comprehensive approach and follow through with it.

For more information, please contact Paul Coderre, Vice President of Risk Management Services at PCoderre@OneGroup.com.

MAJOR CHANGES COMING REGARDING CERTIFICATION AS A VETERAN OWNED SMALL BUSINESS (“VOSB”) AND SERVICE-DISABLED VETERAN OWNED SMALL BUSINESS (“SDVOSB”)

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Diana Plue, Esq. Sheats & Bailey, PLLC

The United States government has promoted veteran owned businesses as essential for the U.S. economy.  Each year the federal government and NYS awards a portion of contracting dollars on federal projects to certified veteran and service-disabled veteran owned small businesses.

The federal government had two programs that provided federal agencies authority to set aside government contracts for exclusive competition among veteran owned small businesses.  Those programs were 1) A self-certification program under the Federal System for Award Management (SAM.gov) that gave access to non-VA government contracts set aside exclusively for SDVOSBs and VOSBs; and 2) the Veterans First Contracting Program, which required VOSBs and SDVOSBs, who wanted to bid on VA government contracts set aside for veteran owned businesses, to be certified by the VA’s Center for Verification and Evaluation (“CVE”).   

As of January 1, 2023, there will no longer be two separate programs. There will no longer be a self-certification program under the Federal System for Award Management and the CVE will no longer be certifying businesses as VOSB or SDVOSB.  Instead, starting January 1, 2023, all veteran owned small businesses will be required to apply for and be certified as a VOSB or SDVOSB by the Small Business Administration (“SBA”).

What does this mean for businesses currently certified by the CVE and for businesses currently self-certified? For businesses currently certified by the CVE they can continue to bid on VA and other government veteran set aside contracts until the end of their three-year approval term, at which time they would then need to recertify with the SBA. 

A self-certified VOSB or SDVOSB must apply for certification with the SBA by December 31, 2023. A self-certified SDVOSB that applies for certification with the SBA within this period may continue to compete for non-VA veteran set-aside contracts until the SBA has acted upon the application for certification. 

To be certified by SBA as a SDVOSB or VOSB the following criteria must be met:

  1. At least 51% ownership by one or more veterans or service-disabled veterans.
  2. The service-disabled veteran owners must have a service-connected disability.
  3. Veteran or service-disabled veteran ownership must be real, substantial, and continuous. The Veteran or Service-disabled veteran owners must have the authority to independently control the day-to-day operations of the business and make long-term decisions for the business and must run the business.
  4. Must be a small business according to SBA’s size standards.
  5. The veteran or service-disabled veteran owners must share in the profits equal to their ownership interest.
  6. The veteran or service-disabled veteran owner must hold the highest officer position in the company.

In addition to Federal SDVOSB certification a business can also apply for New York State SDVOSB certification. NYS has its own SDVOSB program ran by the Office of General Services.  NYS has legislated that 6% of state contracts be directed to NYS certified SDVOSB companies. The requirements for certification under the NYS SDVOSB program are similar to the Federal Program requirements but there are some differences as follows: 1) NYS defines small business as having 300 or less employees; 2) NYS requires the SDVOSB be located within NYS or have significant business presence in NYS; and 3) NYS requires the business to be operating for one year prior to application.

Before certifying as a VOSB and SDVOSB it is imperative that a business understands the control and ownership requirements of VOSB and SDVOSB certification. The business must be unconditionally owned and controlled by a veteran or service-disabled veteran. This unconditional control must be reflected in the business’ controlling documents and everyday operation of the business.

Procuring contracts that are set aside for VOSB or SDVOSB when the business is not unconditionally owned and controlled by a veteran is a violation of the False Claims Act and can have dire consequences such as prison time, large civil fines up to triple the profit earned on improperly gained contracts as well as debarment for five years from future federal contracting opportunities.

The process for VOSB and SDVOSB certification has many nuances. The attorneys at Sheats & Bailey, PLLC are experienced with these processes, and always ready to lend a hand to applicants filing for certification or businesses facing False Claim Act charges and debarment.  For more information or assistance contact Diana Plue, Esq. Sheats & Bailey, PLLC, Tel: (315) 676-7314, www.TheConstructionLaw.com.

The information provided in this article is not intended to serve as specific legal advice for any particular situation.  Competent legal and experienced counsel should be consulted.

Move Along, Inc.: Enhancing Abilities for All

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By: Liz Landry

Ten years ago, Mike Smithson suffered a spinal stroke and became an incomplete paraplegic, only able to walk and stand up with the help of assistive equipment. As a Navy veteran, retired air-traffic controller, husband and father, the following years were very difficult and involved re-learning his entire way of life.

In 2016, Mike attended an event hosted by the VA hospital and a not-for-profit organization called Move Along, Inc. There, he saw other disabled veterans playing sports, being active and genuinely enjoying life. He was so inspired by the participants that he became involved with Move Along and learned how to play adaptive sports himself, re-capturing his passion for life with every new activity he experienced.

Fast-forward to 2022 and Mike is now the newly elected board president of Move Along, working to achieve the organization’s goal of helping many more physically limited people re-gain enjoyment of life through adaptive sports and human connections.

In operation for over 20 years, Move Along has its roots in the still-active wheelchair basketball and sled hockey teams, the Flyers, which began in 1979. Move Along’s mission is to provide and promote inclusive adaptive sport and recreation opportunities for people with disabilities and allies.

The organization aims to make a difference for disabled people of every age and from every walk of life: veterans, stroke victims, amputees, the elderly, those born with cerebral palsy, spina bifida and other congenital disorders, and the list goes on.

The main goal of Move Along is to make adaptive equipment as available as possible to everyone in the community. Move Along owns many types of devices that are adapted for use by people with varying levels of physical abilities. Recumbent chairs, hand cycles, tennis chairs, wheelchairs for wheelchair basketball, sleds for sled hockey, kayaks equipped with pontoons, and many more, are all available for borrow or rent. Additionally, the organization sponsors and coordinates several events and sporting activities, such as wheelchair basketball and sled hockey tournaments, as well as stroke victim support group meetings, to name a few.

As the organization evolves, another of Mike’s initiatives for Move Along is to build partnerships with other like-minded organizations and increase educational awareness about interacting with disabled people. “We want able-bodied people to engage with us and not ignore us,” Mike explained.

People with physical disabilities often feel marginalized and disconnected from the wider communities they live in. When these individuals get the chance to actively participate in sports and other recreational events, their spirits are uplifted and their excitement is unmistakable.

“We want to reach people to tell them they should not be alone, they should not be looking out the window at their friends riding their bikes – they should be able to get out and play. I know how life-changing it can be,” Mike said.

As a 501(c)(3) non-profit, Move Along accepts donations to help reach its goals and continue to provide adaptive equipment for the community. All are welcome to get involved and help live out the organization’s mission.

To learn more about Move Along and how you can help or lead others to utilize their services you may visit their website at www.MoveAlongInc.org or call 315-350-1726.

Wilkins Mechanical: ‘I accept this challenge’

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By Tami S. Scott

When Susan Heffernan was presented with a chance for change, she grabbed it. It wasn’t part of her plan though it certainly served its purpose.

Heffernan had just enrolled at the Whitman School of Business at Syracuse University to further her education. She had been working as an accountant but felt an inner tug to do something different. Earning a master’s degree in her field was a sensible, safe route to start.

One phone call changed everything.

She learned through a friend that the owners of Wilkins Mechanical were looking to retire and sell their business. Her friend, who was aware of her current discontent, encouraged her to inquire. And so, she did.

“The broker asked if I’d ever considered owning my own business and I said ‘well, not consciously,’” Heffernan said, noting that for years she always worked hand-in-hand with business owners. “I guess you could say in a way, I’ve always been in training for this very moment, it didn’t take long for me to realize that this was the right path to take, so I gladly accepted the challenge and the process began.”

On Dec. 30, 2021, Heffernan became a business owner. For 11 months leading up to that moment, she embraced every occasion to learn from the people who built it.

“I worked alongside the previous owners for a few months with the intent of hitting the ground running a little faster upon closing,” Heffernan said. “That experience certainly helped me gain some insight on what challenges they faced and what I might expect.” 

Heffernan credits her mom and grandmother — her biggest heroes — for instilling the strength to take challenges and leaps of faith because, “if you don’t you never really know what you are capable of, and without risk, there’s no reward, right?”

Looking back, Heffernan said never once did she feel like she couldn’t do it. “I had the attitude of ‘yes, you can do this.’ The experiences I’ve gained over the years have prepared me for this.’”

Heffernan is in the process of working on obtaining her WBE certification, which she hopes to achieve by the end of 2023. “Through research, webinars, and speaking with other certified WBE business owners, I know the process is quite extensive,” she said.

Challenges and rewards

When asked what are the challenges and rewards of this new venture, Heffernan responded by saying that everything is rewarding and challenging all at once.

“They feed each other,” she said. “It’s exciting to be faced with a challenge or obstacle, and finding the solution or resolution to those situations are the reward.”

Before pursuing a shift in her career, Heffernan worked in finance for almost ten years at Martin-Zombek Construction. “We were all encouraged to “think like a business owner,” “think like an entrepreneur,” she said. “At that time, it was practice; now, it’s the real deal.”

Stopping the “I’m an employee” thought process was one of Heffernan’s biggest challenges. Her background at Martin-Zombek, however, prepared her well for the new path she walks today.

“I’m grateful to have had the experience at Martin-Zombek,” she said.

Though Heffernan is the new leader of this female-owned business, she’s mindful of each team member’s purpose within the establishment.

“We all have a very important job to do here and none of us can do it [alone],” she said. “The kind of culture I’m trying to create and build off of [is] the foundation that the Wilkins’ [had] so tirelessly built. We’ve got a solid crew, in the field and in the office.”

Aside from the employee-to-employer transition, Heffernan is also conscientious of continuous learning and the value of networking. The Construction Financial Management Association (CFMA) and the Syracuse Builders Exchange (SBE) — had both served as substantial resources for her in the past. She plans to engage with each again.

“[CFMA] and [SBE] were huge for networking and were resources when I was in my previous position in construction,” she said. “I miss that education because [not only] would I learn something new, but it also validated what I knew [already]. That’s how I can be most helpful to my team, by making sure I’m continually learning and knowing  the best way to account for all the hard work my team is doing.”

Though it’s been less than a year, the rewards so far, she said, are seeing the teams come together and watching the business develop.

A little history

Wilkins Mechanical Inc. was formally incorporated in 1997 and family-owned for 41 years. That’s a history that would make anyone who succeeds the founders feel both secure in their acquisition and apprehensive about filling their shoes.

“Many people dislike change,” said Heffernan. “There are times when it’s even uncomfortable for me. So, I understood there was going to be some apprehension [and] potentially some resistance.”

Heffernan noted how oftentimes when a new owner takes over, they decide to build their business from scratch. “It makes sense that there would be some concern,” she said, “but that was definitely not my plan.”

In fact, the only changes she sees on the horizon are newer technology and more staff. For herself, Heffernan implemented an accounting software program within the first six months to keep organized in job costing and project tracking. Her next focus will be organic expansion — growing the business in a way that makes sense.

“I hope to increase employment over the next few years,” she said. “New York State has been a very good customer; we have had success in bidding OGS, DASNY and SUNY projects. ”

Heffernan looks forward to having internal conversations with employees on exploring other gainful avenues, too.

What should their customers know?

Sometimes change can shake up customers’ confidence if they’re uncertain about what to expect. At Wilkins Mechanical, Heffernan exudes a commitment to excellence.

“I carry the same values, work ethic, and pride that the former owners had,” she said. ”I respect that. I want to continue to preserve the reputation that the previous owners worked so hard to build — that’s my goal.”

Does that mean there won’t be any “oh shoot,” “oh darn,” or “I’m sorry” moments? Of course, there might be, she said, because learning curves are a natural — and healthy — part of a new process, and show humility. Heffernan advocates for customer conversations to bring her up to speed on current happenings.

“I appreciate our customers and I am thankful for their patience in our growth,” Heffernan said. Our customers have been wonderful to work with. I’ve very much enjoyed getting to know them.”

In essence, Heffernan’s view on success for everyone is about collaboration. “We’re very prideful in the work that we do because we do a knockout job. We’re welders, we’re pipefitters and nobody can weld as good as we can,” she said. At the same time, feedback is critical, too. “If our client is unhappy with a certain situation, we entertain that. We’re open to that conversation.”

“I see everything as a team,” she added. “Everybody needs support, whether it’s on a project from a project manager to the foreman to the client’s project manager — we all need to work together and that’s the kind of culture and philosophy that I’m trying to build.”

Heffernan may not have ever consciously thought about owning a business, but her experience, philosophies, and can-do attitude, together with team-building principles, appears to have put her on the path she had been seeking from the start.

Breakout Box or Sidebar

Wilkins Mechanical Apprenticeship Program

The Wilkins Mechanical Apprenticeship Program is accredited through the National Center for Construction Education & Research (NCCER), which is recognized by the New York State Department of Labor.

“We encourage anyone, at any age, to join our organization and learn the plumbing, pipefitting, and steam-fitting trade,” Heffernan said.

The typical program is five years. The work processes that an individual is trained on and the minimum required hours are set by the DOL. A newly hired individual who enters the program will “test in,” which will determine their knowledge and skills to influence their entry level.