California's SB553 – what should insureds know?

The California Workplace Violence Prevention Act, also known as SB553, overhauls labor and workplace laws across the state. Are US businesses prepared for the new mandate?

Signed into law last September, the law went into effect on July 1 and requires nearly all businesses operating in the state to develop comprehensive violence prevention programs. The bill aims to protect workers and establish stronger regulations for employers to deal with workplace threats.

Employers in all industries (except health care) with 10 or more employees in California must expand their injury prevention program by establishing and implementing a written workplace violence prevention plan, providing employee training on workplace violence, record keeping and reporting, and assigning designated improvement roles. and use this program.

Organizations with fewer than 10 employees that have publicly accessible workplaces (such as retail stores) also need to comply with SB553.

“Labor law amendments now require all employers to have a workplace violence prevention plan,” explains Lucy Straker (pictured right), leader of the US focus group – political violence and the protection of lethal weapons at Beazley. “The law affects many businesses throughout California, or with exposure to California.”

Compliance with SB553 goes beyond documents and requires a multifaceted, cultural approach to workplace violence prevention. Failure to comply also has negative consequences.

“It's not just about prevention, but also about response and coverage,” said James Rizzo (pictured left), product leader – US D&O, Beazley.

SB553 California – employer compliance measures

One of the first hurdles for most businesses is awareness. Straker noted a large gap in knowledge among industry professionals. He said that at a recent webinar hosted by Beazley, nearly half of the attendees were unaware of SB553 and its implications, highlighting the urgency of education for brokers and insurers.

“Among the existing insurance brokers [at the webinar], some were exposed to California, and some were not. Although the focus was on SB553, 45% of the attendees were unaware of the law and its impact,” said Straker. “In the beginning, many are still in denial or don't know the requirements, which leads them to participate in order to participate.”

According to Beazley experts, compliance with SB553 involves several key components.

First, businesses must conduct a thorough risk assessment, which means identifying potential hazards and defects in the workplace. Second, businesses must form a multi-disciplinary team, which is an important step in creating an effective workplace violence prevention program. This team should include representatives from various departments, such as security, facilities, personnel and legal.

Staff training is one of the cornerstones of compliance with SB553. According to Rizzo, it's not enough for employers to have a plan on paper; employees must have extensive knowledge in identifying and responding to potential threats. Regular training sessions and exercises can help ensure that employees are prepared for a variety of situations.

“At the very least, I think they should be able to identify threats and know how to respond if there is a problem,” Rizzo said.

Documentation and reporting are also important under SB553. Businesses must keep detailed records of all incidents of workplace violence, no matter how minor. This includes keeping a record of violent incidents and documenting all measures taken to reduce risk and respond to incidents.

According to Straker, comprehensive documentation not only facilitates compliance but also provides an important resource for continuous improvement.

“The system has to be there all the time, it's all-encompassing, it has to deal with all areas of the business, and it has to be implemented from top to bottom,” he told Insurance Business.

SB553 compliance challenges for small businesses

Companies do not need to be headquartered in California to fall under SB553 as long as they have a presence or exposure there.

However, there are exemptions that exist, such as health care facilities, law enforcement, correctional facilities, and small businesses with fewer than 10 employees that are not open to the public. Telework arrangements, where the employer does not look after the premises, are also exempt.

Under California's Workplace Violence Prevention Act, companies must make sure they put all the basics in place, from risk assessments and employee training to keeping a log of incidents of violence. These broad requirements aim to create safer workplaces but also create significant implementation challenges, especially for small businesses.

“Many companies will be starting to implement these plans. These challenges can be greater for small organizations than for large companies with established risk management structures,” said Rizzo. “However, small and large operators will be held to the same standards, making compliance a greater burden for small operators.”

Insurance consequences of failure to comply with SB553

In addition to regulatory penalties, non-compliance can lead to serious legal and reputational consequences. Businesses may face lawsuits for failing to monitor, control, or prevent workplace violence.

For publicly traded companies, violent incidents can lead to stock declines and securities class action lawsuits, further emphasizing the need for strong preventive measures.

Finally, insurance coverage is another important consideration for businesses under SB553. Straker noted that non-compliance could impact the company's ability to secure or maintain insurance.

“When businesses purchase workplace violence insurance and don't take the necessary steps to comply with SB553, how does that look to the policyholder?” asked Straker.

“It is possible that insurance providers may not provide coverage if businesses do not take steps to comply with SB553.”

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