Airborne embers

Tri Phan

How wildfires, urban conflagrations spread and impact property

Ways that wildfires spread and cause damage to property:

  1. Direct flames: Actual flame coming into direct contact with a building/combustible material. (Smith, 2009)
  2. *Airborne embers: Flaming airborne embers can travel more than a mile from an active wildfire. More than half of wildland interface home ignitions are from flaming embers landing on roofs/objects. (Smith, 2009)
  3. Radiant heat: A wildfire can raise the temperature of nearby combustible materials to the point of ignition. (Smith, 2009)

*An adjacent forest could not burn, while a home does.

Recommended actions:

Consider radiant heat, ember cast

  1. Create a wildfire evacuation plan and train employees/inhabitants/family members how to use fire extinguishers
  2. Review and distribute a disaster communication plan
  3. Create and maintain a supply list
  4. Plan how property owners can restore critical operations during unplanned disruption in services
  5. Protect property by creating cleared zones that provide less fuel sources for the fire to spread
  6. Clean off the roof and gutters to minimize the risk of ignition
  7. Back up data to the internet cloud or an offsite drive
  8. Review Insurance coverage

First Published May 12, 2023 by Tri Phan, CPCU, ARM

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Written 2023 – 2025 by

Tri Phan, CPCU, ARM

Edited by Kyle Langan

References – APA

Myslivy, Jennifer. (2022, July 14) “BLM AND MAVERIK PARTNER TO PREVENT WILDFIRES.” <https://www.blm.gov/blog/2022-07-14/blm-and-maverik-partner-prevent-wildfires>

Smith, Ed, Sistare, Sonya. (2009) “Be Ember Aware!”. University of Nevada, Reno. <https://naes.agnt.unr.edu/PMS/Pubs/1510_2005_89.pdf>

 

Darkness at Midday

Tri Phan, CPCU, ARM, Kyle Langan

2025

Traits of wildfires, urban conflagrations

Uncertainty

When will the next wildfire in California happen?

Gains from stressors

A spark, a bolt of lightning, a gust of wind, a heat wave

Can cause chaos

Loss of life, property

Can cause disorder, turmoil

Response may be uncoordinated.

Variability

Temperature; heat so intense in spots that it changes the chemistry of the soil to the point where trees do not regenerate. [1]

Imperfect, incomplete knowledge

Precise locations of future wildfire starting points and ensuing paths

Randomness

Wind, heat, humidity levels

Chance

The likelihood of a wildfire is unknown. Preventing forest fires from taking place ‘to be safe’ worsens the big one. [2]

Time

Wildfires may benefit from time, and get stronger with a passing day. Ex: 1950 blaze in British Columbia burned for 222 days. [3]

Volatility

Example: California has hot, dry winds; when these winds are combined with loaded fuels, the culmination is an environment that resembles Australia’s bushfire-prone landscape. In CA, winters with deep snowpacks can grow the total amount of combustible material, also known as fuel load. [4] Winters’ precipitation may be fun for skiers and snowboarders in Mammoth, who probably remember the 2022-2023 season vividly. However, these snow-water content levels can act as ammunition for intense vegetation growth during the springs and summers, resulting in more fuel for fires later. Santa Ana Wind Season: October to February. Diablo Wind Season runs similar course: ~ Fall to Spring.

Ember Awareness

Direct flames: Actual flame coming into direct contact with a building/combustible material. (Smith, 2009)

*Airborne embers: Flaming airborne embers can travel more than a mile from an active wildfire. More than half of wildland interface home ignitions are from flaming embers landing on roofs/objects. (Smith, 2009)

Radiant heat: A wildfire can raise the temperature of nearby combustible materials to the point of ignition. (Smith, 2009)

*An adjacent forest could not burn, while a home does.

Recommended Actions:

#1 Create a wildfire evacuation plan and train employees/inhabitants/family members how to use fire extinguishers

#2 Review and distribute a disaster communication plan

#3 Create and maintain a supply list

#4 Plan how property owners can restore critical operations during unplanned disruption in services

#5 Protect property by creating cleared zones that provide less fuel sources for the fire to spread

#6 Clean off the roof and gutters to minimize the risk of ignition

#7 Back up data to the internet cloud or an offsite drive

#8 Review Insurance coverage

First Published May 12, 2023 by Tri Phan, CPCU, ARM

LAFD Perspective

In California, The Station Fire on the slopes of Mount Wilson one of many examples — there are more areas prone to fire in Southern California than not. A exhaustive list of fire-prone areas would be redundant. Chances are that if you are near an area prone to wildfires, you already know it. But what to do in the event of a wildfire? To gain perspective, I interviewed Blake Robbins, of the LAFD — he spent 16 years as a firefighter paramedic. He fought The Station Fire. Currently, he is Fire Marshall for LAX.

Blake saw the beginning and end of life, as 911 emergencies integrate LA firefighters with EMT/Paramedic operations: LAFD’s responses may range from wildfires to delivering babies to responses of overdoses.

We already agreed that a list of fire prone areas in the Los Angeles area is redundant, though Mr. Robbins still kindly cycled through areas needing mitigation: Ventura, Elysian Park, Griffith Park, Trabuco Canyon, Laguna Canyon. He highlighted Ventura first but noted that Elysian and Griffith parks experience the highest frequency he saw.

Don’t be optimistic

Blake put it simply: In the event of a wildfire, don’t sit in place and don’t be optimistic. He also noted the following: Listen to evacuation orders; have an exit plan (strategy to GO without second guesses); then have a backup plan; finally, winds can change.*

*uncertainty, randomness

Communication: “Red Flag Warning”

National Weather Services’ Red Flag Warnings indicate warm temperatures, very low humidities, and stronger winds, that can combine to produce an increased risk of fire danger.

Wildfire Zones in Western U.S.

The interior Northwest, northern Rockies and Alaska can all face wildfire potential; these areas need strategic preparation. [5]

Some thought Alberta’s blaze was the “result of an atomic war,” or “the end of the world”

Ed Struzik told a story of a Western Canada wildfire so monstrous that the “thickness of the smoke led some people in Ontario to believe that an atomic bomb had exploded and that the western world was at war.” [6] Toronto had to turn on street lights at noon; Buffalo, Pittsburgh, Cleveland, Fort Erie and New York turned lights on at baseball stadiums to illuminate mid-afternoon ball games in the Summer of 1950. [7]

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Written 2023 – 2025 by

Tri Phan, CPCU, ARM

Kyle Langan

References

APA

Myslivy, Jennifer. (2022, July 14) “BLM AND MAVERIK PARTNER TO PREVENT WILDFIRES.” <https://www.blm.gov/blog/2022-07-14/blm-and-maverik-partner-prevent-wildfires>

Smith, Ed, Sistare, Sonya. (2009) “Be Ember Aware!”. University of Nevada, Reno. <https://naes.agnt.unr.edu/PMS/Pubs/1510_2005_89.pdf>

Chicago

[1, 3, 6-7]

Struzik, Ed. (2011, May 22). “1950 monster fire burned its way into history.” edmontonjournal.com

[2]

Taleb, N. N. (2012). Antifragile. Random House.

[4]

Term of the week: Fuel load. interfire.org. (n.d.). Retrieved from https://www.interfire.org/

[5]

Lada, B. (2023, April 12). AccuWeather’s 2023 US wildfire forecast. Retrieved from https://www.accuweather.com/en/weather-forecasts/accuweathers-2023-us-wildfire-forecast/1510132ntonjournal.com

Cover My Ride(Auto Insurance)

Learning from structure fires

This West Warwick, Rhode Island tragedy was one of the deadliest nightclub fires of all time. For concert venue hosts, this was an example of what not to do.

Reaction

What to do? Overreact — so as to innovate fire safety measures

  • Install a properly functioning sprinkler system.
  • The level of safety provided is not the result of any single safety system or feature, but rather is achieved through the combination of multiple safeguards that are provided.
  • NFPA code provisions mandate that a considerable number of safety systems and features be present in order to keep everyone safe should an unwanted fire occur.

What not to do?

  • The building that hosted The Station was not protected with any sprinkler system.
  • Fires in assembly occupancies have shown to be some of the most deadly — when the proper features, systems and construction materials were not present.
  • One single entrance/exit for a large number of people in one main space.

Safety Tips

Download the safety tip sheet.

Before you enter

  • Take a good look. Does the building appear to be in a condition that makes you feel comfortable? Is the main entrance wide and does it open outward to allow easy exit? Is the outside area clear of materials stored against the building or blocking exits?
  • Have a communication plan. Identify a relative or friend to contact in case of emergency and you are separated from family or friends.
  • Plan a meeting place. Pick a meeting place outside to meet family or friends with whom you are attending the function. If there is an emergency, be sure to meet them there.

When you enter

  • Locate exits immediately. When you enter a building you should look for all available exits. Some exits may be in front and some in back of you. Be prepared to use your closest exit. You may not be able to use the main exit.
  • Check for clear exit paths. Make sure aisles are wide enough and not obstructed by chairs or furniture. Check to make sure your exit door is not blocked or chained. If there are not at least two exits or exit paths are blocked, report the violation to management and leave the building if it is not immediately addressed. Call the local fire marshal to register a complaint.
  • Do you feel safe? Does the building appear to be overcrowded? Are there fire sources such as candles burning, cigarettes or cigars burning, pyrotechnics, or other heat sources that may make you feel unsafe? Are there safety systems in place such as alternative exits, sprinklers, and smoke alarms? Ask the management for clarification on your concerns. If you do not feel safe in the building, leave immediately.

During an emergency

  • React immediately. If an alarm sounds, you see smoke or fire, or other unusual disturbance immediately exit the building in an orderly fashion.
  • Get out, stay out! Once you have escaped, stay out. Under no circumstances should you ever go back into a burning building. Let trained firefighters conduct rescue operations.

Cited directly from nfpa.org

https://www.nfpa.org/about-nfpa: National Fire Protection Association (NFPA) has been helping to solve some of the planet’s toughest safety problems for more than 125 years. To remain relevant for over a century as a knowledge and information organization, we’ve continually evolved our scope of expertise—from fire prevention, wildfire preparedness, and electrical safety to hazardous materials, community risk reduction, and public safety.

The 10 deadliest nightclub fires in world history

  • Cocoanut Grove nightclub, Boston, MA
    • November 28, 1942
    • Deaths: 492
  • Disco/dance hall, Luoyang, China.
    • December 25, 2000
    • Deaths: 309
  • KISS nightclub, Santa Maria, Brazil
    • January 27, 2013
    • Deaths: 242
  • Rhythm Club dance hall, Natchez, MS
    • April 23, 1940
    • Deaths: 207
  • Cromagnon Republic club, Buenos Aires, Argentina
    • December 30, 2004
    • Deaths: 194
  • Beverly Hills Supper Club, Southgate, KY
    • May 28, 1977
    • Deaths: 165
  • Ozone Disco Club, Quezon City, Philippines
    • March 18, 1996
    • Deaths: 160
  • Lame Horse Nightclub, Perm, Russia
    • December 5, 2009
    • Deaths: 154
  • Club Cinq, St. Laurent du Pont, France
    • November 20, 1971
    • Deaths: 143
  • The Station nightclub, W. Warwick, RI
    • February 20, 2003
    • Deaths: 100

NFPA files on major fire incidents. <https://www.nfpa.org/education-and-research/building-and-life-safety/nightclubs-assembly-occupancies#deadliest-fires>

“Disclaimer: Death tolls are based on information in NFPA’s records. Please contact us at research@nfpa.org to provide any updated information.

Speed Queen Tragedy

This essay’s purpose is for an example of interventionism and the ultimate iatrogenic/cost. I learned about the S.S. Eastland from Mark Spitznagel and I give full credit to my education of the incident to eastlandmemorial.org. However, this is not merely a summary of the incident, but specifically highlighting only the interventionism and the resulting cost. The lesson from this is to prioritize risks in a “what to avoid” way, which can be conducted through a CRO or risk champion’s “what-if analysis.”

Early indications

July 17, 1904

Near catastrophe occurred with 3,000 passengers aboard. The S.S. Eastland began listing to port by 12 to 15 degrees. The water ballast was adjusted to correct the list, but then a worse list to starboard occurred, estimated to reach 20 to 25 degrees. The main deck flooded with approximately 18 in. (46 cm) of water.

    • If the ship had capsized, she would have continued over until she rested keel up in the water. The loss of life would have been devastating.
    • This incident occurred in full view of South Haven and the public was alarmed

July 1, 1912

Another severe listing of approximately 25 degrees while loading passengers in Cleveland.

1914:

Final Warning A.A. Schantz (general manager of the Detroit and Cleveland Navigation Company)

He is well known for his prophetic remarks during the La Follette Seaman’s Act testimony in which he petitioned against increasing lifeboat requirements for Great Lakes vessels. He stated that the additional weight requirements would cause many Great Lakes vessels to become top heavy and prone to capsizing. (eastlandmemorial.org).

Iatrogenic modifications

During the winter, the St. Joseph-Chicago Steamship Company decided to outfit the Eastland with 6 additional life rafts and 3 additional lifeboats in June 1915 while the ship was in for other repairs.

Other than the lifesaving equipment, the modifications performed on the Eastland for the 1915 season also included the rearrangement of certain compartments for usability, and the replacement of decking with tons of concrete in the ‘tween deck dining room and the main deck near the aft gangways. This modification in particular reduced the metacentric height of the ship.

One can naturally deduct that was inspired by the events of the Titanic. But it was not just inspired, it was regulated by The federal Seamen’s Act which been passed in 1915 following the RMS Titanic disaster three years earlier. The rules-based regulation required retrofitting of a complete set of lifeboats on Eastland. This additional weight may have made Eastland more dangerous by making her even more top-heavy

S.S. Eastland’s “top-heavy condition was now amplified and precarious at best when fully loaded.”

Disaster strikes

On Saturday, July 24, 1915, the passenger ship Eastland was docked in downtown Chicago on the Chicago River preparing to depart for a Lake Michigan cruise to Michigan City, Indiana for a Western Electric employee picnic. Soon after 2,500 passengers boarded the ship it began to list. First to starboard, then to port while still moored to the wharf. The Eastland rolled onto its side, spilling passengers into the river and trapping others underwater in the interior cabins, mostly women and children. The disaster claimed 844+ lives. This tragedy remains relatively obscure in American history, even though it resulted in the largest death toll of any single disaster occurring in the continental United States in the twentieth century.

The majority of those preparing to board the ships were actual employees of Western Electric. Because the company picnic was an important social event, a great many of the employees in attendance were young, single adults in their late teens or early 20’s.

At 6:53, the ship began to list again,  port list resumed at 7:20, at which time water began coming into the ship through the gangway openings on the port side. Even so, no great panic occurred among the passengers. In fact, some began to make fun of the manner in which the ship was swaying and leaning.

By 7:23, the list had become so severe that the crew directed passengers, many of whom were on the ship’s upper decks, to move to the starboard side. However, by 7:27, the list had reached an angle of 25 to 30 degrees. More water began to flow into the ship from openings in the port side, as chairs, picnic baskets, bottles, and all sorts of items began to slide across the decks.

At 7:28, the list had reached 45 degrees. At this point, many of the crew began to realize the seriousness of the situation. Many more passengers were now on the port side of the ship, securing bench seating for their families and settling in for the trip. The furnishings, piano, dishes, iceboxes, lemonade stand and appliances fell over with loud crashes and slid across the decks. The passengers began to panic. Many began to crawl out of gangways or other openings on the starboard side as the Eastland gently continued to list to port until it finally settled on its port side at 7:30.

Some passengers who had pulled themselves to safety were fortunate to find themselves standing on the starboard hull of the Eastland. Others who were not so lucky were trying to stay afloat in the currents of the river. Others were trapped within or under the Eastland. One eyewitness described the scene:

“I shall never be able to forget what I saw. People were struggling in the water, clustered so thickly that they literally covered the surface of the river. A few were swimming; the rest were floundering about, some clinging to a life raft that had floated free, others clutching at anything that they could reach–at bits of wood, at each other, grabbing each other, pulling each other down, and screaming! The screaming was the most horrible of all.”

THE RESCUE
Other boats in the area and people nearby began helping with rescue operations immediately. Workers used cutting torches to cut holes in the side of the hull to pull out survivors as well as dead. The screams coming from those inside the ship were disturbing the onlookers. By the time the holes were cut in the hull, many who had been alive at the time the ship rolled had since drowned. A great effort was expended to remove the dead from inside the ship as divers had to go underwater within the hull to retrieve bodies.

841 passengers, 2 from the Eastland’s crew, and 1 died in the rescue effort. Although the Titanic, which sank over three years prior in 1912, had a higher total death toll of 1,523, the Titanic actually had a lower death toll of passengers than the Eastland as crew deaths of the Titanic totaled 694.

Anecdote

Rumors of past instability still followed the Eastland. As a result, The Eastland Navigation Company placed a half-page newspaper advertisement in the Cleveland Plain Dealer and the Cleveland Leader on August 9, 1910. The ad read, in part: “. . .there are thousands of people who know absolutely nothing about boats, the rules and regulations for their running, and inspection and licensing of the same by the U. S. Government. In the hope of influencing this class of people there have been but into circulations stories to the effect that the Steamer Eastland is not safe.” The ad also offered a five thousand dollar reward to anyone who could “bring forth a naval engineer, a marine architect, a shipbuilder, or any one qualified to pass on the merits of a ship who will say that the Steamer Eastland is not a seaworthy ship, or that she would not ride out any storm or weather any condition that can arise on either lake or ocean.” There is no record showing that anyone ever came forward to claim the reward.

References

The Eastland. Eastland Memorial Society. https://web.archive.org/web/20090122125939/http://www.eastlandmemorial.org/eastland2.shtml

Eastland disaster. Eastland Disaster – Eastland Disaster. (n.d.). https://eastlanddisaster.org/history/eastland-disaster

AccuWeather insight: Southern Californian vs. Australian Wildland Fires

Monitoring stressors for regions with low humidity

Kyle Langan, 2025

Stressor: Dry winds

Example Scenario: A storm develops offshore from Southern California, paired with high pressure centered over the West. This can bring high-velocity winds, which may pose fire risk even in the most urban areas of L.A. [1]

Stressor: Gusty conditions paired with low humidity levels

Santa Ana Season starts in October, on average, and goes through January, sometimes getting into the start of February. [2] Even in winter time, CA can remain dry, windy, and sometimes hot. On their SoundCloud podcast, Paul Pastelok and Joe Lundberg provide continuous guidance for concern of winds lining up for an offshore presence. [3]

Storms off the Pacific Coast can determine magnitude and timing of winds according to Pastelok. [4] AccuWeather uses Local StormMax™ for wind events, set at 100 mph, for example.

Combustible material

Scenario: California sees record-breaking snow water contents. This precipitation delays the onset of wildfire season, and increases the total amount of combustible material, fuel load. The precipitation leads to intense growth, then is followed by severe drought. What does this set up for?

Lightning can naturally ignite fires (ex: August 2020 California lightning siege. Santa Ana Winds can then fan flames of blazes and cause them to evolve rapidly into massive wildfires. However, nearly 90% of fires are caused by humans in some way (ex: electricity power lines), and due to this fact, predicting wildfire tolls and acreage is very difficult. [8]

The January 2025 conditions in California resembled the conditions leading up to the 1980 South Australian bushfires: Late February 1980 saw a virtually rainless summer, parlayed with a very wet spring in 1979 prior to the drought conditions. Then 3 years later, February 16th, 1983 was an absolute disaster in South Australia — half a million acres or 2,080 kmburned, killing 75 people. [9]

Areas that need strategic preparation

Western Canada.

The interior Northwest and the northern Rockies face wildfire risk: Washington, Oregon, Idaho, Montana, Northern California and northern Nevada may confront exposures because fires are always reasonably expected in times like June or the first half of July. However, this “region’s peak of wildfire activity” is usually July into early September.” [10] Many of these areas likely already have scheduled “prescribed burns,” or intentional power outages, especially in conditions of severe drought and extreme weather like Australia can experience.

New Jersey forests.

The Florida Peninsula can experience brush fires in the spring with any drier-than-average conditions. [11]

Alaska has led the country in wildfire activity in past years, with nearly twice the amount of land in Delaware burned in 2022 from wildfires. However, a fire season is more defined on the impact to the public and not by the acreage burned, according to Pastelok. “There is no better example of this sentiment than the 2018 wildfire season when the Camp Fire raged in California. The blaze scorched 153,336 acres and burned the city of Paradise, California, to the ground, killing 85 people to become the deadliest wildfire in the U.S. in 100 years. It also destroyed more than 18,000 structures and forced 52,000 people from their homes.” [13]

References

Danielle, M. (2025, January 13). Death toll climbs to 24 and thousands of structures destroyed in California wildfires. Palisades Fire in California rages out of control. https://www.accuweather.com/en/weather-news/palisades-fire-in-california-rages-out-of-control/1731028

Glenny, A. (2025, January 13). Intense Santa Ana winds to resume early this week around Los Angeles. https://www.accuweather.com/en/weather-forecasts/intense-santa-ana-winds-to-resume-early-this-week-around-los-angeles/1732922

[1-3]

Going Long With Paul and Joe

[2, 6-8]

Lada, B. (2023, April 12). AccuWeather’s 2023 US wildfire forecast. Retrieved from https://www.accuweather.com/en/weather-forecasts/accuweathers-2023-us-wildfire-forecast

[9]

“About Ash Wednesday”Country Fire Authority Victoria, Australia. Archived from the original on 23 March 2008.

Bureau of Meteorology“Climate Education: Ash Wednesday, February 1983”. Australian Government. Archived from the original on 8 August 2013. 

[10-11]

Term of the week: Fuel load. interfire.org. Retrieved from https://www.interfire.org/

Improving auto risk mitigation on dangerous roads

Kyle Langan, 2025

Auto risk mitigation in the birthplace of America

Will Philadelphia innovate? The city’s incomplete Litter Index survey for 6 years in a row does not seem like innovation (credit to a story I read,

Dangerous conditions for pedestrians

Broad St at Cherry St in Philadelphia looked like a dangerous game of real-life Frogger the last time I saw. Center city Philadelphia seemed practically dangerous for pedestrians; roughly 20,000 may attend the PA Convention Center, which hosts an annual concert on the Friday and Saturday after Christmas. And no closed streets or police direction on Friday night with 20,000 marginal pedestrians? Then, police overreacted on Saturday, to their missing presence on Friday. That’s OK – we can overcompensate, overreact to errors, and that is commonly how innovation is made.

Tactical vs. Strategic mitigation

Last summer, Aaron Moselle coined Broad Street “Philly’s most dangerous roadway.” [2] It has 6-lanes: 3 going north, 3 going south, with a 25 MPH speed limit. Many drivers go 30 MPH and higher. A walking pedestrian can witness these speeds practically while on a visit to City Hall.

At half-way point of 2024: Philadelphia was on pace for 102 deaths resulting from traffic crashes, nearly half of them were pedestrians. [3]

Frequency ~ 51 pedestrian accident deaths per year in Philadelphia

How might pedestrian victims’ families feel afterward? Imagine the last time parents see their child is Christmas day, and before the New Year arrives, their child is killed by an auto collision.  The occurrence of an auto collision is quite easy to envision with 20,000 additional pedestrians in a highly concentrated circumference around the PA Convention Center. A lack of vigilance from convention center attendees can also bring concerns. Finally, an event may bring even more indirect pedestrians, e.g. individuals selling merchandise to the attendees.

The best outcome in a hypothetical auto accident results in a simple fender bender handled by two properly-insured parties, to repair their damaged autos. The worst outcome is one of the 51 annual pedestrians struck and killed by an auto in Philadelphia.

Tactically, Philadelphia may respond to the hazard with more police cars the next day. However, a strategic mitigation plan would have the surrounding area of the Convention Center proactively shut down for the entire duration of the event.

Broad Street should implement the following strategic mechanisms

Recommendations for the Broad St at Cherry St Area during large events at the PA Convention Center:

  • Lower speed limits;
    • Recommendation: 20 MPH (20% reduction)
  • More police cars focused on traffic stops for speed, reckless driving and DUI concerns;
    • Recommendation: Pinal County, AZ sets a great example for this, and documents it publicly on YouTube
  • Full streets or certain blocks get shut down for the duration of the event bringing increased pedestrians;
    • Recommendation: Downtown Miami, FL has practical experience successfully organizing this during “Miami Music Week”

The Most Important Risk Transfer?

The pace for over 100 auto-related deaths in one city per year shows why Auto Insurance remains the most important kind to purchase. Autos move, and humans operate them. This is why any owner of autos should partner with an expert to confirm adequacy of Auto Insurance, especially for a commercial fleet. For an owner of a $30 million dollar property in Malibu, they may think property insurance is most vital. But they should ask, “what if someone sues me for $100 million claiming I killed a pedestrian with my SUV?”

Conclusion: Strategic mitigation is critical

Strategic risk mitigation: Close immediately surrounding streets of a large concert venue proactively, for a defined time; communicate in advance of the event. Street signs should make drivers aware. A temporary street sign may read “SOME STREETS CLOSED; CAUTION: SLOW FOR INCREASED PEDESTRIANS.”

Example of successful risk mitigation, where pedestrians benefit from strategic efforts to reduce likelihood, consequences of accidents: Ultra Music Festival in Downtown Miami, FL

Edited January 6, 2025 by Kyle Langan

References

[1] Bradley, R. (2023, September 20). Universa’s Mark Spitznagel on making money while markets crash. Worth. https://worth.com/universas-mark-spitznagel-on-making-money-while-markets-crash/

[2, 3] Moselle, A. (2024, July 8). PPA is getting ready to install speed cameras along Philly’s most dangerous roadway. WHYY. https://whyy.org/articles/philadelphia-speed-cameras-broad-street-traffic-safety/

 

DOL Impact on Workers Compensation Insurance

Ever discovered a misclassification at the time of a work comp audit? If workers get misclassified as independent contractors, consequences will occur when they are determined as uninsured employees. Employers may face complexity in their compliance efforts. [1] When addressing work comp exposures, the criteria need to have full accuracy before the loss arises; it cannot get corrected after a loss arises with an uninsured team of employees or contractors.

Economic Reality Test, for Independent Contractor vs Employee [4]

  1. Opportunity for profit or loss depending on managerial skill
  2. Investments by the worker and the employer
  3. Permanence of the work relationship
  4. Nature and degree of control
  5. Whether the work performed is integral to the employer’s business
  6. Skill and initiative. [5]

Match these examples with #1-6 to test your knowledge

 

A. The Welders

Employee: A highly skilled welder provides welding services for a construction firm. The welder does not make any independent decisions at the job site beyond what it takes to do the work assigned.

Independent contractor: A highly skilled welder provides a specialty welding service, such as custom aluminum welding, for a variety of area construction companies. The welder uses these skills for marketing purposes, to generate new business, and to obtain work from multiple companies. The welder is not only technically skilled, but also uses and markets those skills in a manner that evidences business-like initiative. [6]

B. The Landscapers

Employee: A worker for a landscaping company performs assignments only as decided by the company for its corporate clients. The worker does not independently choose assignments, ask for additional work from other clients, advertise the landscaping services, or try to reduce costs. The worker regularly agrees to work additional hours to earn more money.

Independent contractor: In contrast, a worker provides landscaping services directly to corporate clients. The worker produces their own advertising, negotiates contracts, decides which jobs to perform and when to perform them, and decides when and whether to hire helpers to assist with the work. This worker exercises managerial skill that affects their opportunity for profit or loss. [7]

C. The Cooks

Employee: A cook has prepared meals for an entertainment venue continuously for several years. The cook prepares meals as decided by the venue, depending on the size and specifics of the event. The cook only prepares food for the entertainment venue, which has regularly scheduled events each week.

Independent contractor: A cook has prepared specialty meals occasionally for an entertainment venue over the past three years for certain events. The cook markets their meal preparation services to multiple venues and private individuals and turns down work from the entertainment venue for any reason, including because the cook is too busy with other meal preparation jobs. The cook has a sporadic or project-based nonexclusive relationship with the entertainment venue. [8]

D. The Graphic Designers

Employee: A graphic designer provides design services for a commercial design firm. The firm provides software, a computer, office space, and all the equipment and supplies for the worker. The company invests in marketing and finding clients and maintains a central office from which to manage services. The worker occasionally uses their own preferred drafting tools for certain jobs. In this scenario, the worker’s relatively minor investment in supplies is not capital in nature and does little to further a business beyond completing specific jobs.

Independent contractor: A graphic designer occasionally completes specialty design projects for the same commercial design firm. The graphic designer purchases their own design software, computer, drafting tools, and rents their own space. The graphic designer also spends money to market their services. These types of investments support an independent business and are capital in nature. [9]

E. The Nurses

Employee: A registered nurse provides nursing care for Alpha House, a nursing home. The nursing home sets the work schedule with input from staff regarding their preferences and determines the staff assignments. Alpha House’s policies prohibit nurses from working for other nursing homes while employed with Alpha House to protect its residents. In addition, the nursing staff are supervised by regular check-ins with managers, but nurses generally perform their work without direct supervision. While nurses at Alpha House work without close supervision and can express preferences for their schedule, Alpha House maintains control over when and where a nurse can work and whether a nurse can work for another nursing home.

Independent contractor: Another registered nurse provides specialty movement therapy to residents at Beta House. The nurse maintains a website and was contacted by Beta House to assist its residents. The nurse provides the movement therapy for residents on a schedule agreed upon between the nurse and the resident, without direction or supervision from Beta House, and sets the price for services on the website. In addition, the nurse provides therapy sessions to residents at Beta House as well as other nursing homes in the community at the same time. The specialized services to obtain work for multiple clients, not supervised by Beta House, sets their own prices, and has the flexibility to select a work schedule, all indicate independent contractor status. [10]

F. The Farm

Employee: A large farm grows tomatoes that it sells to distributors. The farm pays workers to pick the tomatoes during the harvest season. Because a necessary part of a tomato farm is picking the tomatoes, the tomato pickers are integral to the company’s business.

Independent contractor: Alternatively, the same farm pays an accountant to provide non-payroll accounting support, including filing its annual tax return. This accounting support is not critical, necessary, or central to the principal business of the farm (farming tomatoes), thus the accountant’s work is not integral to the business. [11]

Answer Key

A. Skill and initiative (#6)

This factor primarily looks at whether the worker uses their own specialized skills together with business planning and effort to perform the work and support or grow a business. The fact that a worker does not use specialized skills (for example, the worker relies on the employer to provide training for the job) indicates that the worker is an employee. [12]

B.  Opportunity for profit or loss (#1)

This factor primarily looks at whether a worker can earn profits or suffer losses through their own independent effort and decision making. [13]

C. Permanence of the work relationship (#3)

Nature and length: work that is sporadic or project-based with a fixed ending date (or regularly occurring fixed periods of work), where the worker may make a business decision to take on multiple different jobs indicates independent contractor status. Work that is continuous, does not have a fixed ending date, or may be the worker’s only work relationship indicates employee status. [14]

D. Investments by the worker and the employer (#2)

Does the worker make investments that are capital or entrepreneurial in nature? Investments by a worker that support the growth of a business, including by increasing the number of clients, reducing costs, extending market reach, or increasing sales, weigh in favor of independent contractor status. A lack of such capital or entrepreneurial investments weighs in favor of employee status. [15]

E. Nature and degree of control (#4)

Does the employer control hiring, firing, scheduling, prices, or pay rates, supervise the performance of the work, discipline workers; and takes actions that limit the worker’s ability to work for others? Where the potential employer maintains more control over these aspects of the work relationship, this factor weighs in favor of employee status. [16]

F. Whether the work performed is integral to the employer’s business (#5)

This factor primarily looks at whether the work is critical, necessary, or central to the potential employer’s principal business, which indicates employee status. [17]

Once the employees are determined, the following are included as payroll, as a basis for workers compensation insurance premium: [18]

  • Gross wages
  • Salaries
  • Commissions
  • All bonuses
  • Most profit sharing
  • Vacation, holiday and sick pay
  • Overtime (“straight time” portion only)
  • The market value of gifts
  • Automobile allowances (less reimbursement for documented expenses)
  • The following items are excluded from payroll when determining the basis of premium:
  • Meals or lodging (unless the classification phraseology specifically includes them or they are provided in lieu of wages)
  • Tips
  • Premium portion of overtime pay (the increase above the regular rate of pay)
  • Severance pay (except for accrued vacation, sick pay, commissions and bonuses)
  • Employer contributions to qualified insurance, stock or retirement plans
  • Stock options
  • The value of an automobile furnished to an employee
  • In addition, the following are not included as payroll for premium computation:
  • Employee discounts for merchandise
  • Residual payments for commercials
  • A uniform allowance. [19]

References

[1] – [3]

Brewer, M. E., Burnett, C., & Sharp , A. (2024, April 9). New DOL Rule Makes it Harder to Classify Workers as Independent Contractors (Plus a Quick Recap of the Key Misclassification Standards Across the US). The Employer Report. https://www.theemployerreport.com/2024/04/new-dol-rule-makes-it-harder-for-businesses-to-classify-workers-as-independent-contractors-under-the-flsa-plus-a-quick-reminder-of-the-key-misclassification-standards-across-the-us/

[4] – [17]

Employment relationship under the Fair Labor Standards Act (FLSA). DOL. (n.d.). https://www.dol.gov/agencies/whd/fact-sheets/13-flsa-employment-relationship

[18] – [19]

Payroll or remuneration. WCIRB California. (n.d.). https://www.wcirb.com/research-and-education/online-guide-workers%E2%80%99-compensation/standard-classification-system/payroll-or-remuneration

 

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