Harnessing California Workplace Violence law to tame, not inflame, social inflation

Californian companies should by now have filed detailed workplace violence prevention plans to comply with the state’s ground-breaking Workplace Violence Prevention legislation.

With a few exceptions, it required companies to make workplace violence risk assessments and file concrete plans to mitigate exposures by July 1, all to be overseen by their workers’ comp providers.

The first sector-agnostic law of its kind in the US reflects gathering nationwide momentum to better protect employees and visitors to workplaces in the wake of a steady flow of violent incidents that sadly shows no signs of abating. Whether it will have the desired effect or provide more ammunition for the plaintiffs’ bar is now in our hands.

Insureds have had nine months to prepare since the bill was signed into law, and awareness has gradually spread from HR and compliance departments to the wider organisation. During the lead-in, workers’ comp insurers have burnished their risk management credentials, offering advice and guidance on best practice via webinars, in-person meetings, and training materials. From the filing deadline they have six months to assess their insureds’ plans and provide written feedback.

So far, so good but in reality, a significant proportion of companies appear to have adopted a tick-box approach to legislation that was carefully crafted to get businesses thinking deeply about exposures. From there were to come tailor-made plans that address companies’ specific situations and are communicated to and understood by all employees.

Smaller businesses may feel they lacked the resources to give the new law proper attention and had more pressing issues to deal with. But even with large companies, particularly high-risk manufacturing and distribution groups, culture in some cases is holding them back.

There are notable exceptions, such a small real-estate broker I know whose human resources director went over and above to fulfil its new obligations and filed its workplace violence prevention plan more than a month ahead of the deadline. However, it’s fair to say that across the state, genuine engagement seems to have been patchy.

For insurers, this matters. Liability classes have not yet woken up to what may be to come should insureds not fully engage with the new rules, but they are first in the firing line.The Californian lawyers that I’ve spoken to have made crystal clear that they plan to leverage the legislation in the event of incidents to target the casualty sector.

Worryingly for insurers, these incidents may not even involve actual violence – simply the threat of it under the legislation is grist to the mill for claimants’ attorneys.

It’s important to note also that other states are contemplating similar legislation to California, and New York has just passed a new law to protect retail workers.

The casualty sector is first in line because of the trend for ever-higher jury awards; workers’ comp claims are, by contrast, capped by regulation and not designed to enrich employees beyond their wildest dreams.

With social inflation a perennial – and growing – concern among P&C insurers the industry is now standing at a crossroads. The California legislation sets a powerful new standard for workplace violence prevention by mandating a set of tools that could make workplaces safer for everyone working there or just passing through.

As such, proper implementation of insureds’ new obligations, including reviews and record keeping, could help tame social inflation if businesses, and indeed workers’ comp insurers, fulfil their legal duties and can demonstrate they have done so.

It could, however, go the other way. Since the sky is proving to be the limit in terms of compensation payouts, this, and similar legislation in the pipeline elsewhere, could be the catalyst for an escalation of social inflation worries into a full-blown crisis. Insurers should use every tool at their disposal to avoid this and embrace their enhanced role.

In this way they can help make workplaces safer and, most importantly, save lives.

By Yoni Sherizen, CEO and co-founder, Gabriel Protects.