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In the challenging landscape of transportation insurance, delivering value isn't just about finding coverage—it's about building relationships and leveraging expertise to create tailored solutions. When a devastating truck fire threatens to derail insurance costs, most companies brace for skyrocketing premiums. But for one Missouri-based transportation company, this potential crisis became a testament to the power of strategic insurance partnerships. Transportation Consultant, Carly Hermann and Account Administrator, Deanna Gudenkauf partnered together with their client and turned what could have been a financial setback into an unexpected win.   Understanding the Client's Needs At the beginning of our partnership, the company consisted of 6 trucks and 16 trailers, specializing in long-haul refrigerated transport. Like most motor carriers at this time, pricing is a major concern with freight rates being down and insurance pricing rapidly on the rise. Our team prioritized finding exceptional reefer coverage without limitations on mechanical breakdown or driver error, while avoiding exclusions that could affect hard liquor transport. The client also emphasized the importance of efficient communication, rapid certificate processing, instant cargo limit updates online, and comprehensive documentation for shipper contract requirements.   Navigating Renewal Challenges After working together for nearly four months, an unexpected claim occurred that created challenges for both the motor carrier and our agency. A truck fire resulted in a total loss, reducing the company's operational fleet and raising concerns about future renewal rates in an already challenging marketplace. Despite this significant loss during a policy year—a $65,000 claim resulting in a 74% loss ratio—the carrier's renewal offer came in at $93,27 3. While this increase fell below the industry average, when considering the complete pricing picture, motor carriers face the frustration of finding an extra $6,000 . Creating a Strategic Solution Our approach combined several key elements to address these challenges: Comprehensive market exploration to identify optimal coverage options Strategic separation of cargo coverage to maximize cost efficiency Leveraging strong carrier relationships to negotiate better terms Collaborative teamwork between producer and account administration Three months before renewal, we developed a comprehensive plan. This included identifying promising markets, preparing the carrier's narrative, and building a compelling case for why they deserved better terms than their data might suggest. Through careful negotiation and close collaboration with the client on expectations, we achieved a breakthrough solution. The final package delivered premium savings of $16,488, reducing the total premium to $76,784.43.   "Everyone has their own perception of price savings," Carly notes, "but to be able to come in below the current pricing and put money back in a client's pocket, it's the best feeling as an agent."   Looking Forward This success story exemplifies our commitment to delivering value beyond basic insurance coverage. By working closely with motor carriers to effectively tell their story, leveraging market expertise, maintaining strong carrier relationships, and providing dedicated customer service, we continue to demonstrate our value as a trusted partner in transportation insurance.   The most rewarding aspect of this renewal wasn't just the significant premium savings—it was proving that even in challenging circumstances, with the right approach and team, we can exceed client expectations and strengthen long-term partnerships.   Are you interested in learning more about how we can help optimize your transportation insurance program? Contact our team today to discuss your specific needs.

Discover how strategic claims advocacy turned an initial water damage assessment into significant additional coverage for proper remediation. The Situation A manufacturing company experienced extensive water damage from a burst underground fire suppression system. The initial insurance carrier assessment threatened to limit coverage through an incorrect damage classification, potentially leaving the client with inadequate remediation coverage. Why They Needed Change The initial Category 2 classification, according to Institute of Inspection, Cleaning and Restoration Certification (IICRC) standards, would have severely limited the scope of remediation to basic water extraction, surface cleaning, drying and dehumidification, and sanitization. This level of remediation was insufficient for the actual damage, which required complete removal and replacement of flooring systems and affected building finishings. Key Wins $124,767 Settlement Increase Increased the total settlement from $498K to $623K through expert advocacy. 25% Increased Insurance Payout Locked in an additional 25% insurance settlement through a successful classification challenge. Complete Remediation Secured approval for a comprehensive Category 3 restoration classification. The Cottingham & Butler Approach  1. Comprehensive Damage Assessment Our process began with a thorough evaluation of the water damage and the initial classification. The analysis soon identified: - True extent of contamination - Long-term remediation requirements - Insufficiency of settlement offer compared to actual remediation needs   2. Strategic Classification Challenge Based on IIRC’s water categorizations, we challenged the original Category 2 classification with the supporting evidence of: - Black water–the highest level of contamination - Harmful pathogens and toxins - Professional water damage removal needs   3. Enhanced Remediation Implementation Approval for a Category 3 restoration classification was secured, along with the revised estimate from the insurance company, allowing for the following remediation: - Complete removal of affected flooring - Thorough cleaning and sanitization - New flooring system installation - Replacement of affected building finishes

FOR IMMEDIATE RELEASE January 10, 2025 DUBUQUE, IA - Cottingham & Butler, the 4th largest privately and independently held insurance broker in the United States, announced the acquisition of Perspective Consulting Partners, an employee benefits firm specializing in public sector and educational institutions.   This strategic acquisition strengthens Cottingham & Butler's presence in the public and education sectors while expanding its geographic footprint in Iowa. Perspective Consulting Partners' team brings deep expertise in public sector and educational institution benefits, complementing Cottingham & Butler's comprehensive employee benefits solutions.   "This acquisition aligns perfectly with our growth strategy and enhances our ability to serve public sectors and educational institutions," said Nicole Pfeiffer, Senior Vice President of Employee Benefits, Cottingham & Butler. "Perspective's specialized expertise combined with our resources and innovative solutions will create great value for clients."   The Perspective team, led by Stacy Wanderscheid, will join Cottingham & Butler's Employee Benefits Practice. "Joining Cottingham & Butler allows us to provide our clients with enhanced resources while maintaining our commitment to exceptional service," Wanderscheid said. “Our clients will benefit from expanded resources that will help control costs, streamline administration, and create exceptional employee experiences.” About Cottingham & Butler | Founded in 1887, Cottingham & Butler is a fourth-generation, family-owned business providing innovative insurance and risk management solutions to clients nationwide. As the 4th largest privately held insurance broker in the U.S., the company brings industry-leading resources and expertise to help organizations control costs and protect assets.   Contact:  Kassy Herrig AVP, Marketing – Cottingham & Butler 563-587-5605 kherrig@cottinghambutler.com

Navigating the world of transportation compliance can feel like driving through a maze of regulations and requirements. In this Motor Carrier Safety webinar, we explored the critical aspects of FMCSA compliance and audit preparation for transportation companies. Key points of discussion included understanding the comprehensive audit process, company credential requirements under Parts 387 and 390, commercial license standards under Part 383, and driver qualification requirements under Part 391. We also covered the distinction between regulatory requirements and best practices, providing clarity on common misconceptions that many companies face during compliance reviews. Key Takeaways Understanding the Audit Process Allow us to introduce the investigation (audit) process, various audit factors, and help you understand the scoring system and how you are rated. It is much easier to be prepared for an investigation if you always stay prepared.  Knowledge is power. This webinar helped participants understand Parts 387 and 390 Company Credentials and Requirements, Part 383 Commercial License Standards, and Part 391 Qualification of Drivers of the Compliance Review process.   Mitigation Strategies and Continuous Improvement The Compliance Review process can be complex; however, it can be navigated if you have proper guidance and understanding of the regulations that apply to you and your organization. Often, best practices are confused with regulatory requirements.  This webinar assisted participants with knowing the difference between the two. Regularly reviewing your records and documentation will ensure that you are providing the best data to represent your Company’s safety standards and protocols.   Additional Resources Again, being prepared is invaluable and having accurate resources to help you navigate the FMCSA regulatory world can allow you to better understand the process. Click here to download the presentation.

Imagine you paid premiums for years toward insurance you assumed you had.  The employer collected your premiums via payroll deduction and remitted the amount to the insurance company, who accepted the payments. Now imagine that you’ve experienced an event that means you need to utilize the insurance you have paid for all these years, only to learn that you were ineligible to receive any payments after submitting a claim. Finally, imagine how angry you may feel. If you’re reading this, you aren’t likely the disgruntled employee in this scenario.  You probably have some authority or working knowledge of your company’s employee benefit plans and you may be asking yourself this question: who’s at fault?  What happened in the Sun Life Settlement? Unfortunately, the scenario described above really happened and happens more frequently than most of us care to think about. For life insurance company, Sun Life, a class action lawsuit was filed against them on behalf of many participants who paid premiums but were denied a right to their claim because they were declared ineligible. Here is what prompted the lawsuit. A participant in a group-sponsored life insurance plan filed a life insurance claim for her adult son who had sadly passed away. Unfortunately, because of his age, he was no longer eligible for the coverage as a dependent child despite the employer having continued to deduct premiums for the coverage. The employee then filed this lawsuit on behalf of a class of similarly situated employees. Sun Life agreed to settle these claims because they thought it better for all parties not to undergo time-consuming and costly litigation. While lawsuits are not common, the situation involves an industry-wide issue related to ERISA group plans where employers commonly serve as the plan administrators, enroll their employees for coverage, maintain their employees’ eligibility information and deduct premiums from their employees’ payroll. Insurers are not generally provided the ongoing, detailed enrollment information until a claim is made; upon which time the insurer will check to make sure the recipient is eligible before paying the claim. If an employer collects payment and an insurer denies the claim due to ineligibility, who is responsible – the employer or the insurance company? Well, given the choice between suing a small or medium-sized company or a behemoth insurance company, most plaintiffs’ attorneys will steer their clients toward the deeper pockets. However, that doesn’t mean the employer bears no responsibility nor that employer could not be joined as a party later in the suit if finger-pointing proves to be the best defense. What should employer plan sponsors do? At the end of the day, an employer is responsible for managing the eligibility rules of its benefits plans. It may be relatively easy and straightforward to know that a terminated employee is no longer eligible to participate in your medical plan (except through COBRA continuation coverage) but non-medical benefits are sometimes forgotten.  It is reasonable to imagine a scenario where an employee doesn’t know the dependent eligibility rules of these plans or forget about them and continues to pay the premiums on a dependent who has long exceeded the age limit.  As an employer sponsoring an ERISA plan, you have a fiduciary obligation to make sure your employee’s money is spent for their benefit. This includes making sure money is not collected for coverage which the employee or dependent is ineligible.  We suggest employers review their eligibility rules on an annual basis, following enrollment, to ensure employees and dependents continue to be eligible for elected benefits. Employers who are list billed by the insurance carrier should still review eligibility to make sure premiums collected from employees are accurate. This review should look at a range of eligibility rules for all benefits before payroll deductions begin, including (but not limited to): Dependent child life insurance for age limits, student status and/or disability provisions; Spouse dependents with all coverages to ensure marital status; Sending proper notices regarding conversion rights when dependents are no longer eligible for coverage; Life insurance for amounts above guaranteed issue limits to ensure that evidence of insurability (EOI) has been received and approved by your insurance provider; and And any other coverages that require evidence of insurability. Additionally, it is important to confirm the rules of when employees lose eligibility for all benefit plans if they cease being actively at work for leaves (other than FMLA) including workers compensation and layoff. What should you do if you receive a Settlement Notice from Sun Life? Read the contents of the packet and don’t throw it away!  The notice provided by the court-appointed settlement administrator will include specific instructions to employees who are deemed part of the class. The notice will also include specific instructions for you, the employer. If you have employees who are deemed part of the class, you may need to send a court-approved notice to your affected employees (past and present). If an employer sends the notice to their employees, the proposed settlement includes a release for such employers from any claims an employee may have relating to this matter.  If you use a TPA to help you administer this plan, you should notify your TPA to coordinate a communication plan with any employees deemed part of the settlement class.  Please reach out to your C&B Team to help you determine your specific obligations if you receive a Sun Life Settlement Notice. If you would like to learn more about how to check the eligibility rules of your benefits plans or conduct an eligibility audit, please contact your C&B Team.

At Cottingham & Butler, we understand the critical importance of OSHA compliance and its impact on your business. Our team helps employers navigate the complex world of workplace safety citations, penalties, and compliance requirements. From addressing minor violations to managing serious safety concerns, we work alongside you to develop effective safety programs that protect both your employees and your bottom line. Let our risk management experts help you create a safer workplace while avoiding costly OSHA penalties. An employer receives a written citation when it violates OSHA standards or regulations. The citation will describe the particular nature of the violation and will include a reference to the provision of the chapter, standard, rule, regulation or order the employer violated.   In addition, the citation will provide a reasonable amount of time for the employer to correct the problem. When the violation does not pose a direct or immediate threat to safety or health (de minimis violation), OSHA may issue a notice or warning instead of a citation.   An employer that receives a citation must post a copy of it at or near the place where the violation occurred. The notice must remain on display for three days or until the violation is corrected, whichever is longer. Penalties may be adjusted depending on the gravity of the violation and the employer’s size, history of previous violations and ability to show a good faith effort to comply with OSHA requirements. Annual Adjustments Current laws allow OSHA to adjust the maximum penalty amounts every year to account for the cost of inflation, as shown by the consumer price index (CPI). If OSHA plans to adjust penalty amounts, it must signal its intention by Jan. 15 of each year. Links and Resources OSHA enforcement website OSHA penalties website OSHA penalty adjustment rule Current Penalties Below is a list of potential citations employers may receive and a range of corresponding penalties for these citations. De minimis violation —Warning Other-than-serious violation —Up to $16,550 per violation Serious violation (a violation where there is a substantial probability that death or serious physical harm could result from an employer’s practice, method, operation or process. An employer is excused if it could not reasonably know of the presence of the violation)—Up to $16,550 per violation Willful violation (a violation is willful when committed intentionally and knowingly. The employer must be aware that a hazardous condition exists, know that the condition violates an OSHA standard or other obligation, and make no reasonable effort to eliminate it)—Between $11,823 and $165,514 per violation Repeated violation (a violation is repeated when it is substantially similar to a violation that was already present in a previous citation)—Up to $165,514 per violation Willful violation resulting in death of employee —Up to $10,000 and/or imprisonment for up to six months with penalties potentially doubling for a second or higher conviction Unabated violation —Up to $16,550 per day until the violation is corrected Making false statements, representations or certifications —Up to $10,000 and/or imprisonment for up to six months Violation of posting requirements —Up to $16,550 per violation Providing unauthorized advance notice of inspection —Up to $1,000, imprisonment for up to six months or both

At Cottingham & Butler, we understand the evolving risks facing corporate leaders as third-party litigation funding reshapes the D&O insurance landscape. Our experienced risk advisors help organizations navigate these challenges by providing comprehensive coverage solutions that protect both individual leaders and their organizations. We work closely with you to develop tailored insurance programs that address the increasing costs and complexities of today's corporate litigation environment. Third-party litigation funding (TPLF) is a significant trend in the legal landscape where external investors finance legal cases in exchange for a portion of any settlements or awards. These investors, often hedge funds or private equity firms, provide nonrecourse loans, meaning they are repaid only if the case succeeds. TPLF covers legal fees and other expenses, enabling plaintiffs to pursue otherwise unaffordable cases.   While TPLF offers financial resources for plaintiffs, it introduces important considerations for the insurance sector, particularly directors and officers liability (D&O) insurance. This coverage protects executives and board members from personal liability for business decisions and is crucial for attracting and retaining top leadership. It also covers the legal fees and other costs the organization may incur as a result of such suits.   Litigation funders often target large, complex corporate cases, such as shareholder derivative actions and breach of fiduciary duty claims, which typically fall under D&O coverage. TPLF can extend case durations and incentivize plaintiffs to seek larger settlements, raising costs for D&O insurers, who may respond by adjusting premiums or modifying coverage.   Additionally, TPLF contributes to social inflation, which describes the rising costs of insurance claims beyond general economic inflation and is driven by larger jury awards and evolving legal standards. Plaintiffs with funded legal expenses are often encouraged to hold out for higher payouts, further impacting litigation costs and premiums.   A key challenge for D&O insurers lies in the lack of transparency around TPLF arrangements. In many jurisdictions, there is no requirement to disclose third-party funding, leaving insurers and defendants unaware of external financial backing. This opacity complicates risk assessment and policy pricing, making it harder to gauge legal risks.   Overall, TPLF significantly impacts the D&O insurance market. While it provides critical support to plaintiffs lacking resources, it also drives up litigation costs for insurers. To address these challenges, D&O insurers may increase premiums, refine coverage terms or raise deductibles to manage their exposures. Emphasizing risk management and encouraging policyholders to reduce claim likelihood are also key strategies. Insurers may advocate for regulatory reforms to enhance transparency while actively addressing emerging risks. These measures reflect the industry’s commitment to adapting in a complex legal environment shaped by TPLF.   Contact our team to learn how we can help you navigate these challenges. The ABCs of D&O Insuring Agreements D&O insurance policies typically include three standard insuring agreements—Sides A, B and C—detailing the scope of coverage and the insurer’s promise to indemnify policyholders against covered losses:   Side A (D&O liability coverage)—Side A protects individual directors and officers against losses when the organization cannot indemnify them. This coverage safeguards personal assets and is crucial for attracting qualified board members. Side B (corporate reimbursement coverage)— Also known as corporate reimbursement coverage, Side B reimburses the organization for defense expenses or indemnification costs incurred on behalf of its directors and officers. This provides balance sheet protection by covering legal costs the company advances. Side C (entity coverage)—Side C offers protection for the organization itself. For public companies, this coverage is typically limited to securities claims, reflecting the higher risk of shareholder lawsuits. For privately held companies, it generally extends to a broader range of claims stemming from wrongful acts by the organization or its directors and officers. The Importance of Corporate Recordkeeping in Boards of Directors Corporate recordkeeping is crucial for preserving a company’s history, especially concerning financial and business decisions. Despite its significance, many companies fail to create and maintain accurate records. Effective recordkeeping is not just a formality but essential for managing D&O risks. For corporate executives on boards of directors, precise documentation of key decisions and their contexts aids future decision-making and provides a strong defense in litigation.   Meeting minutes are a key element of D&O liability protection. Decisions made during board of directors meetings should be thoroughly documented, including details such as attendees, voting outcomes and supporting materials. These minutes serve as vital evidence if decisions are later contested by shareholders, regulators or auditors. Directors and officers should assume that meeting minutes could be subpoenaed in legal actions, emphasizing the importance of accuracy and detail. If a director is absent, they should review the minutes and formally document any disagreements in writing to ensure their concerns are recorded.   In addition to board meeting minutes, corporate recordkeeping encompasses various documents, including articles of incorporation, bylaws, resolutions and shareholder communications. These records are important not only for legal defense but also for facilitating smoother future business decisions.   Efficient organization is key to maintaining accessibility and complying with federal and state laws. Digitizing documents can save physical storage space and enable controlled access to sensitive materials, such as employee records. Public companies must adhere to the Sarbanes-Oxley Act (SOX) of 2002, which mandates specific record retention periods and prohibits the destruction of documents relevant to legal proceedings. While SOX primarily applies to publicly traded companies, its principles can guide private and nonprofit organizations in adopting strong recordkeeping practices.   By implementing comprehensive recordkeeping policies and ensuring compliance with retention regulations, companies can mitigate D&O liabilities and reduce the risk of costly lawsuits.   Contact us today for more risk management guidance.

Brett Phillips brings a unique perspective to the trucking industry. After starting his career in public accounting, a consulting role with a trucking client in 2004 led him down an unexpected path. What began as financial advisory work evolved into a decade-long position as an outside CFO, eventually leading to his full-time commitment as CFO of The 1975 Transportation Group in 2014. His journey from finance professional to trucking executive has given him valuable insights into both the operational and financial challenges facing transportation companies today. Photos provided by The 1975 Transportation Group. Written by Brett Philips, CEO of The 1975 Transportation Group As CFO turned CEO of The 1975 Transportation Group, I've seen firsthand how the right insurance partnership can transform operations. Our journey from traditional insurance to a Cottingham & Butler captive program reveals valuable lessons for the trucking industry.   The Traditional Insurance Challenge In the standard market, our annual renewals were a constant source of frustration. Despite strong safety practices and positive loss history, we faced delayed pricing decisions that threatened our operations. Premium negotiations often concluded just days before expiration, jeopardizing our ability to secure freight opportunities and maintain proper documentation for our trucks. This was our experience until we joined a Cottingham & Butler Captive.   The Captive Solution Upon joining the captive 6 years ago, we achieved great success. We've experienced: ·       Stable renewals with increases capped at 4% in all but one year ·       Equity positions in three policy years, leading to dividend opportunities ·       Active participation in claims management, from reserve setting to settlement negotiations ·       Proactive claims services that effectively reduce exposure   A Long-Term Partnership Success in a captive model requires shifting from an annual rate-shopping mindset to building lasting partnerships. While challenges exist, particularly around collateral requirements, the benefits of premium stability and potential returns that a captive provides make it worthwhile for companies committed to safety excellence.   The results speak for themselves: we've maintained a positive equity position and received cash dividends that would have been insurance company profits in the standard market. More importantly, we've gained a true partner in managing our risk and safety programs, with renewal pricing now available 60-90 days in advance – a dramatic improvement from our previous experience.   For trucking companies facing similar challenges, our experience demonstrates how the right insurance partnership can do more than manage risk – it can drive sustainable growth and operational excellence. Contact your Cottingham & Butler captive expert to get similar results for your business!

In today's economic climate, businesses of all sizes are grappling with rising healthcare costs. However, innovative solutions are emerging that benefit both employers and employees. What many organizations don't realize is that a small portion of their workforce—just 5% of members—typically accounts for 75% of their total healthcare spending. This insight opens the door to strategic approaches that can significantly reduce costs while ensuring employees receive the care they need. Hidden Opportunities in Healthcare Coverage The key to managing healthcare costs isn't about reducing benefits—it's about finding smarter coverage options that better match each employee's specific situation. Here are some real-world examples of how companies are achieving remarkable savings: The Medicare Advantage When a company discovered their 67-year-old employee was struggling with high healthcare costs, they explored Medicare as an alternative. Thanks to recent Medicare improvements, including a $2,000 out-of-pocket maximum on prescription drugs and a $35 cap on insulin, the employee saved over $6,500 in annual out-of-pocket expenses. This change not only benefited the employee but also prevented a 10% increase in the employer's renewal rates. Finding Better Options for COBRA Recipients COBRA coverage, while valuable, isn't always the most cost-effective solution. In one case, a COBRA participant was paying $800 monthly for coverage, significantly impacting the company's renewal rates. Through a careful review of available options, they found an individual marketplace plan that covered the same doctors, hospitals, and prescriptions—saving the participant $4,000 annually while simultaneously reducing costs for the employer. Creative Solutions for Family Coverage A mid-sized organization with 200 employees faced a common challenge: high costs due to extensive dependent coverage. Their innovative solution? They introduced an incentive program that reimbursed 100% of healthcare deductibles, copays, and out-of-pocket costs for employees and spouses who opted to join their spouse's employer plan instead. The results were impressive: 20% of families switched plans, leading to annual savings of nearly $250,000. This approach created a win-win situation—employees received comprehensive coverage with no out-of-pocket costs, while the company significantly reduced its healthcare spending. The Path Forward These success stories highlight a crucial point: managing healthcare costs doesn't require sacrificing quality of care. Instead, it's about: 1. Understanding that one size doesn't fit all when it comes to healthcare coverage 2. Educating employees about alternative options that might better suit their needs 3. Creating innovative incentive programs that benefit both the organization and its employees 4. Taking a proactive approach to benefits management Smart healthcare solutions aren't just about cutting costs—they're about finding the right fit for each situation. By thinking creatively and exploring all available options, organizations can create substantial savings while ensuring their employees have access to the healthcare coverage they need. Remember: The most effective healthcare solutions often come from looking beyond traditional approaches and being willing to explore innovative alternatives that benefit everyone involved.

Major Changes The landscape of trucking industry contracting practices may be on the verge of significant change, following new recommendations from the Federal Motor Carrier Safety Administration's (FMCSA) Truck Leasing Task Force (TLTF). In a recently released report, the task force has taken a strong stance against Lease-Purchase (LP) programs, recommending their outright prohibition based on findings of systematic issues affecting independent contractors. Understanding the Report's Key Findings The TLTF's investigation revealed concerning patterns in current LP programs. The task force found these arrangements often result in significant financial hardship for drivers, with programs frequently lacking equity potential and proper vetting processes. Perhaps most troublingly, the investigation uncovered that these issues weren't isolated incidents but rather systematic problems across the industry. The report highlighted several critical shortcomings in current LP programs: Insufficient disclosure requirements Poor program vetting processes Limited success rates for participants Lack of regulatory oversight Inadequate remedies for affected contractors Looking Forward: Recommended Changes The task force's recommendations are comprehensive, focusing on four main areas: First, they advocate for complete prohibition of current LP program structures. Second, they call for increased oversight mechanisms to prevent exploitative practices. Third, they recommend implementing both federal and state enforcement measures. Finally, they emphasize the need for enhanced protections and educational resources, including mandatory disclosures and specific contract provisions. What This Means for the Industry While these findings represent a significant development, it's important to understand that this report is currently in its initial stages. Implementation of any recommendations would require navigation through multiple legislative and regulatory processes. One potential outcome could be the integration of new oversight measures into existing frameworks, similar to the Federal Truth in Leasing regulations (49 CFR 376.12). Industry Best Practices Moving Forward For motor carriers, this report serves as a crucial reminder to evaluate their contractor relationships carefully. Progressive companies are already implementing more robust vetting processes and transparent contractual arrangements. This includes utilizing comprehensive evaluation tools and risk assessment frameworks to ensure compliance and fairness in their independent contractor programs. The report's findings underscore the importance of proactive risk management and program evaluation. Motor carriers would be wise to begin reviewing their current practices and implementing stronger oversight measures, rather than waiting for potential regulatory changes. Conclusion While the TLTF's recommendations are still in their early stages, they signal a potential shift in how the industry approaches contractor relationships. Forward-thinking companies will use this as an opportunity to evaluate and enhance their programs, ensuring they're well-positioned for any future regulatory changes while maintaining positive relationships with their independent contractors. The trucking industry stands at a crossroads, and how companies respond to these developments could shape their success in the years to come. Staying informed and proactive in addressing these concerns will be crucial for maintaining competitive advantage while ensuring fair treatment of independent contractors.

The IRS has issue d Revenue Ruling 2025-4 , pro viding long-awaited guidance on the federal tax treatment of contributions and benefits under state paid family and medical leave (PFML) programs. The ruling addresses how federal income and employment tax rules apply to the programs and includes guidance on related reporting requirements. The guidance was issued Jan. 15, 2025. The ruling is effective for payments made on or after Jan. 1, 2025, but transitional relief applies for payments during 2025. Currently, 13 states and the District of Columbia have enacted mandatory PFML programs. The ruling does not address state PFML programs that are voluntary. Action Steps Employers should study the revenue ruling so they are prepared to comply with federal tax requirements for PFML contributions and payments. In particular, employers should act to ensure that their payroll and W-2 form practices meet withholding and reporting requirements detailed in the guidance. The IRS is soliciting comments on additional situations and aspects of state PFML that are not covered in the revenue ruling. Employers may submit their written comments by April 15, 2025. State Mandatory PFML Programs In recent years, mandatory PFML programs have been enacted across the country, with 13 states and the District of Columbia having put in place PFML mandates to date. Additional states have established voluntary PFML programs, but the revenue ruling explicitly exempts these programs from its coverage. State PFML programs vary on features like employee eligibility requirements, covered employers, length of benefit coverage, amount of compensation, qualifying reasons for leave and job protections. Many state PFML laws also allow employers to meet their PFML obligations through an approved private PFML plan. The IRS guidance discusses the rules it articulates in the context of a particular state PFML program (“State X”), whose described features are fairly standard, including funding from both employer contributions and employee payroll withholding at a set rate based on a percentage of employee wages, remitted to a state-administered fund. The revenue ruling does not apply to private plans. Federal Tax Treatment of PFML Contributions and Benefits Employer Contributions In general, according to the revenue ruling, employers may deduct their mandatory contributions to PFML programs as an excise tax. These amounts are not included in the federal gross income of the employee under IRS Code § 61. State PFML laws often allow employers to voluntarily pay part or all of their employees’ required contributions to the program. The ruling terms this an “employer pick-up” and allows the employer to deduct the payment as a business expense. The payments are treated as additional compensation to the employee under § 61 and included in wages for federal employment tax purposes. In addition, the employer must report the pick-up on the employee’s Form W-2. However, the employee may deduct the employer pick-up as state income tax, but only if the employee itemizes their deductions and only up to the state and local income tax (SALT) deduction limit. Employee Contributions Employees may similarly deduct the PFML contributions that are withheld from their pay by their employer as an income tax payment, but again only if they itemize their tax deductions and only up to the SALT limit. Even though these amounts are withheld from the employee’s wages, they are included in the employee’s gross income, and the employer must report the contributions on the employee’s Form W-2. Benefit Payments Generally, state paid family leave (as opposed to medical leave) payments must be included in employees’ gross income. However, these amounts are not wages subject to federal employment taxes. Nonetheless, states must file with the IRS and provide employees with a Form 1099 for any paid family leave payments of $600 or more in a taxable year. State medical leave payments are treated differently in the revenue ruling. For these benefits, only the portion of the payments attributable to the employer’s contribution is included in the employee’s gross income. This portion is also subject to both the employer’s and employee’s shares of Social Security and Medicare taxes. The amount of the medical leave payment attributable to the employee’s portion of contributions is excluded from the employee’s gross income and is not subject to Social Security or Medicare taxes. Tax Requirement Tables The revenue ruling included the two tables below detailing the tax requirements of contributions and payments under state PFML programs. Table 1. Summary of the Federal Income Tax Consequences of Contributions to State PFML Programs Types of Contributions Consequence to Employer Consequence to Employee Employer contribution Employer may deduct the employer contribution as an excise tax under § 164 of the IRS Code. Employee does not include the employer contribution in employee’s federal gross income. Employee contribution Employer must include the employee contribution as wages on employee’s Form W-2. Employee contribution is included in employee’s federal gross income as wages. Employee may deduct the employee contribution as state income tax under § 164 if employee itemizes deductions on employee’s federal income tax return, but only to the extent the deduction for state tax paid does not exceed the SALT deduction limitation provided under § 164(b)(6). Employer pick-up of employee contributions Employer may deduct the employer pick-up payment that employer pays from employer’s funds as an ordinary and necessary business expense under § 162. Employer must include the employer voluntary payment as wages on employee’s Form W-2. The employer pick-up is additional compensation to employee and is included in employee’s federal gross income as wages. Employee may deduct the employer pick-up of the employee contribution as state income tax under § 164 if employee itemizes deductions on employee’s federal income tax return, but only to the extent the deduction for state tax paid does not exceed the SALT deduction limitation provided under§ 164(b)(6). Table 2. Summary of the Federal Income Tax Consequences of Family and Medical Leave Benefits Paid by State PFML Programs Type of Benefits Amount Attributable to Employer Contribution Amount Attributable to Employee Contribution Family leave benefits Employee must include the amount attributable to the employer contribution in employee’s federal gross income (employer contribution not previously included in employee’s federal gross income). This amount is not wages. State must file with the IRS and furnish employee a Form 1099 to report these payments. Employee must include the amount attributable to the employee contribution, as well as to any employer pick-up of the employee contribution, in employee’s federal gross income. This amount is not wages. State must file with the IRS and furnish employee a Form 1099 to report these payments. Medical leave benefits Employee must include the amount attributable to the employer contribution in employee’s federal gross income (employer contribution not previously included in employee’s federal gross income) except as otherwise provided in § 105. This amount is wages. The sick pay reporting rules apply to the medical leave benefits attributable to employer contributions. These payments are third-party payments (by a party that is not an agent of the employer) of sick pay. The amount attributable to the employee contribution, as well as to any employer pick-up of the employee contribution, is excluded from employee’s federal gross income. Effective Dates The revenue ruling states that it is effective for payments made on or after Jan. 1, 2025; however, the ruling provides the transition relief detailed below for payments made during calendar year 2025: Medical leave benefit payments made in 2025 attributable to an employer’s contribution —States and employers are not required to follow the income tax withholding and reporting requirements applicable to third-party sick pay. Neither the state nor the employer will be liable for any associated penalties under Code § 6721 for failure to file a correct information return or under § 6722 for failure to furnish a correct payee statement to the payee. Medical leave benefit payments made in 2025 attributable to an employer’s contribution —States and employers are not required to comply with § 32.1 and related Code sections (as well as similar requirements under § 3306) during the calendar year or to withhold and pay associated taxes; consequently, associated penalties will not apply. Employer pick-up payments made during calendar year 2025 —Employers are not required to treat amounts they voluntarily pay for any part of an employee’s required PFML contribution as wages for federal employment tax purposes under §§ 3121(a), 3306(b) and 3401(a). Comments Requested The IRS is soliciting comments on additional situations and aspects of state PFML programs that are not cover ed in Revenue Ruling 2025-4. The comments may be submitted electronically via the federal e-rulemaking portal at https://www.regulations.gov . Comments may also be submitted by mail to the following address: Internal Revenue Service, CC:PA:LPD:PR ( Revenue Ruling 2025-4  PDF ), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044. Comments should be submitted in writing on or before April 15, 2025.

Each year, group health plan sponsors are required to complete an online disclosure form with the Centers for Medicare & Medicaid Services (CMS), indicating whether the plan’s prescription drug coverage is creditable or non-creditable. This disclosure requirement applies when an employer-sponsored group health plan provides prescription drug coverage to individuals who are eligible for coverage under Medicare Part D. CMS Disclosure Deadline The plan sponsor must complete the online disclosure within 60 days after the beginning of the plan year . For calendar year health plans, the deadline for the annual online disclosure is March 1, 2025 . In addition to the annual disclosure requirement, the disclosure to CMS must be made whenever any change occurs that affects whether the coverage is creditable. More specifically, within 30 days after any change in the plan’s creditable coverage status or after the termination of a plan’s prescription drug coverage. Online Disclosure Method Plan sponsors are required to use the online disclosure form on the CMS creditable coverage website. This is the sole method for compliance with the disclosure requirement unless the entity does not have internet access. The disclosure form lists the required data fields that must be completed in order to generate the disclosure notice to CMS, such as types of coverage, number of options offered, creditable coverage status, period covered by the disclosure notice, number of Part D-eligible individuals covered, date the creditable coverage disclosure notice is provided to Part D-eligible individuals, and change in creditable coverage status. Important Dates March 1, 2025 The deadline for sponsors of calendar year plans to complete an online disclosure form with CMS. Oct. 15, 2025 Group health plan sponsors must provide creditable coverage disclosures to Medicare-eligible individuals before this date. Action Steps To determine whether the CMS reporting requirement applies, employers should verify whether their group health plans cover any Medicare-eligible individuals (including active employees, disabled employees, COBRA participants, retirees, and their covered spouses and dependents) at the start of each plan year. Please reach out to your Cottingham & Butler team member for guidance on how to complete the disclosure for your plan. CMS has also provided instructions on how to complete the form.  For additional information, please visit CMS’ creditable coverage website , which includes links to the online disclosure form and related instructions.