Employees vs. Independent Contractors: Rimon, P.C. and CAC Group

Hello everyone, and thank you for joining our special joint webinar with Ramone and CAC Specialty. I am Barbara DiMatteo. I am a human capital business advisor at Ramone. Ramone is a tech-enabled, highly selective global law firm known for excellence, innovation, and teamwork across 50 offices in 11 countries. Our human capital business advisors partner with employment law attorneys to help management create policies and procedures that ensure compliance and consistent handling of employee matters. This collaboration, supported by comprehensive training programs, protects organizations from legal risk, promotes fair treatment, and supports efficient business operations. Today we are fortunate to discuss two topics. The first is entitled Employees or Independent Contractors? I am joined by Tara Hama, who is an employment attorney licensed in New Jersey and Pennsylvania, and she is a partner at Ramone. The second topic is titled Utilizing Artificial Intelligence to Measure the Success of Your Human Capital and Employee Benefits Programs, and this is presented by Ralph Cepi, Executive Vice President at CAC Specialty. Brian Clay, Executive Vice President and Practice Leader at CAC Specialty, and Brian Cochran. We are confident today's information will provide valuable insight into the ways we support our clients. Before we begin, it's important to note that this webinar does not constitute legal advice nor establish attorney-client relationship. Past outcomes do not guarantee future results. With that said, let's get right into our first topic: employees or independent contractors. Now our goal is to provide you with human resources and legal perspectives. Allow me to start from a human resources side. You know, it's so tempting for employers to classify an individual as a 1099 independent contractor and a freelancer. Think of the benefit to employers. There's no cost to provide benefits. There are no payroll taxes, no Social Security tax, no Medicare tax, no unemployment insurance, no workers' comp. There's no minimum wage or overtime compliance under the Fair Labor Standards Act or any state or wage law and state wage and hour laws, and the agreement can end when the employer says so without any kinds of repercussions. And let's think about a couple of examples. You know, employers sometimes think about bringing back a laid-off employee to perform independent contractor work because it eliminates training time. That's a great value. Employers also think that hiring someone as a consultant instead of as a part-time employee is easier for everyone. An individual asks for this contractor arrangement because it benefits them. There's financial flexibility with higher potential pay, and they can start deducting legitimate business expenses. There's control over their schedule. They choose when, where, and how to work. They have a choice of clients and projects to work on. They operate as a small business. They have real flexibility in work hours. It's all about being independent from an employer's rules and regulations and about all about how and where to perform their work, and it sounds ideal. Well, we're going to talk about why it's important to properly classify employees, individuals who perform work for your company, and what the legal risks are with doing it incorrectly. Let me define a couple of terms. Freelancer is an independent contractor who offers services to multiple clients, often in a specialized field such as writing, design, programming, and consulting. Nature of work is usually project-based or ongoing on a retainer. The freelancer decides when, where, and how the work is going to be done, and the common industries are creative, technical, and professional services. Freelancer, freelancer is the next term. This describes a work style. It's self-managed, it's multi-client and service-oriented. They're paid on a 1099 basis. Now the next term is a gig worker who earns income through short-term on-demand tasks or jobs, often via online platforms or apps. The nature of this work may be very short-term, highly flexible, sometimes less specialized than freelance work, and these are often arranged through platforms like Uber and DoorDash and TaskRabbit and Fiverr. Gig emphasizes short, discrete tasks and on-demand availability instead of an ongoing client relationship. Common industries are rideshare, food delivery, small task services, and these depend on 1099 basis. Now lastly, the definition for 1099 is actually a tax category, not the type of work performed. It refers to anyone who's paid as an independent contractor who receives a Form 1099 instead of a W-2. The nature of the work here can include freelancing, gig work, and consulting. And the common industries are really across all sectors, and the unifying factor is the independent contractor status. Well, now that we have talked a little bit about these definitions, I'm going to turn it to Tara. Tara, from a legal perspective, what are some common myths that businesses often think are true related to independent contractors?

Thanks, Barbara. So, there are a number of myths that I think employers frequently believe with regard to independent contractors that are untrue or only true to a certain extent. The first is that if an individual wants to be classified as an independent contractor, that it is okay to make that arrangement simply because they have requested it, and this is not the case. So the general rule is that regardless of what the individual wants, regardless of what the company wants, the relationship itself has to meet the requirements for it to be a contractor relationship as opposed to an employment relationship. The second myth is that if an employer or a business pays an individual via 1099 as opposed to, you know, providing them with a W-2 for tax purposes, that that means that this person is a contractor simply because they've paid them with this particular tax form and in this particular way. And again, that's not necessarily the case. The relationship itself, like I said, has to meet the requirements. The third myth is that you know, if the individual makes the request, the company agrees, and they put the arrangement into a written contract that says the individual is a contractor, that that necessarily means that the relationship is a contractor relationship as opposed to an employment relationship. I've seen cases on a number of occasions where a business and an individual have an independent contractor agreement in place, but some type of dispute arises, for example, under wage and hour law or unemployment, and those agencies or the courts don't necessarily take the contract on its face. They do an analysis as to what the actual relationship is. So ultimately, it's, you know, what the day-to-day actual relationship is and whether that meets the various tests under the law, which we'll talk about later. To determine whether it is a contractor versus an employment relationship. Dovetailing on what you said before, Barbara, this has been a hot area in the legal world for a number of years at this point, especially with regard to some of the gig-type workers that you discussed previously. Some of you may be aware of the cases against some of the big rideshare companies in various jurisdictions. Those companies essentially had to lobby the various state legislatures or make settlements with different state agencies to have their workers classified as contractors with different stipulations in place. So for example, in California, there was a law passed that said some of those gig workers, the rideshare gig workers, could be classified as independent contractors. But that the companies have to provide them with certain employment-like benefits. And similar settlements have occurred in other jurisdictions as well. I use those large actions as an example because the same types of arguments can be made on a smaller scale as to why someone would be an employee versus an independent contractor. But the problem is, for most of my clients anyway, they don't have the type of lobbying, bargaining power, whatever you want to call it, to get the law changed to reach their desired results. So for most companies, you know, if you misclassify an individual, you are, you know, on the hook legally speaking for the ramifications of that. I mentioned the differing tests earlier. So there are various tests for whether an individual is a contractor versus an employee under both federal and state laws and under the various different employment laws at the federal and state level. So there are different tests under the Fair Labor Standards Act at the federal level. The IRS uses a different test, and then states use different tests for their own wage and hour laws, their own workers' compensation laws, unemployment insurance laws, and so It's kind of this patchwork that employers really need to be careful about when determining whether someone is a contractor versus an employee. One specific test that kind of gets a lot of attention is the ABC test that certain jurisdictions use to determine whether an individual is a contractor or an employee. California is kind of the jurisdiction that made this test famous, so to speak, but a lot of other jurisdictions have implemented it as well. And essentially, the ABC test is the most stringent test to determine whether an individual is a contractor or an employee. And essentially, workers are presumed to be employees unless the A part of the test is that they're free from the control and direction of the company in connection with the performance of the work. The B part of the test is that they perform work that is outside of the usual course of the business of the company. And then the C part of the test is that the person is customarily engaged in an independently established trade, occupation, or business. All three factors have to be present for an individual to be a contractor versus an employee, making it harder for companies to classify individuals as contractors. Section B or Part B of the ABC test, you know, poses particular problems for companies looking to use contractors, as it's very narrowly interpreted. And essentially, the person cannot be doing what the business does. So, it has to be something, you know, ancillary and separate from what the actual— what the actual company does. And so, that poses problems for companies at times in, when they want to classify individuals as contractors versus employees. It's just important for companies to review these relationships all the time because sometimes the relationship— relationships change over time as well. So, you know, for the first 6 months, someone may be operating as a contractor, but over time, that relationship may then shift to look more like an employment relationship. So, really important to kind of keep track of these relationships, make sure they're meeting the appropriate standards and different tests under the law. You're on mute, Barbara.

Tara, that's a lot to consider and to think about. How can an employer narrow that down to determine if an individual is an employee or a contractor?

Sure. Like I said, there are differing tests. Most of the tests, although to different degrees, focus on the control and independence that the individual has from the organization or the business. And so, we frequently look at factors like behavioral control. Is the employer directing how, when, and where the work is done? Is the employer or the company providing training? Is the employer or the company providing the tools for the individual to do the work. If the contractor is determining how, when, where they do the work using their own methods, their own equipment, you know, paying for their own expenses, those types of things, that generally weighs in favor of a contractor relationship. Again, certain tests, you know, consider different factors to differing degrees, but those are the types of things we look at when we're talking about the behavioral control that a company exhibits over an individual worker. Financial control is another one. If the company pays the individual a regular wage or salary, if they reimburse their expenses for completing the work, if they pay for their laptop or their equipment or their printer, you know, whatever type of equipment that they're using, that tends to weigh in favor of an employment relationship. However, if the contractor is paid on a, you know, project or deliverable basis, if they're responsible for their own expenses and incorporating those expenses kind of into the project price, and if they're using their own equipment, doing this in their own office, you know, making up their own schedule, that tends to weigh in favor of a contractor relationship. If the employee has an ongoing relationship with the company— I'm sorry, a contractor has an ongoing relationship with the company, if the company's, you know, policies and benefits apply to the individual, if the work, again, like I said before, is integral to the business as opposed to just, you know, an ancillary project or something like that, that tends to weigh in favor of an employment relationship. Whereas if there are no benefits provided by the company to the individual, if the work is project-based or time-limited based, and if the individual provides the same or similar types of services to various clients, multiple clients, that tends to weigh in favor of a contractor relationship. In addition, again, like I said, there are varying tests. Those are just some of the factors that some of the tests consider. So, it is important to kind of look at each of the tests that are applicable to your workers in your jurisdiction. Like I mentioned before, the IRS uses a different test than the Fair Labor Standards Act tests, and so it becomes a bit complicated, but at the outset of an evaluation, we can kind of just generally look at the relationship and say, well, you know, this seems to be a contractor relationship or this seems to be an employment relationship, but we should kind of delve a little bit deeper.

Um, thank you, Tara. I understand that the federal Department of Labor published a new rule in 2024 which is still in flux. Can you explain that a bit?

Sure. So the federal Department of Labor rules apply to the Fair Labor Standards Act, so the federal wage and hour laws that govern minimum wage, overtime, and those types of things. So in 2024, they issued a final rule that a lot of people refer to as the Biden rule because it was issued under the Biden administration, which essentially replaced the prior Trump administration's rule from 2021. It adopted a totality of the circumstances approach, considering 6 non-exhaustive factors. It made the analysis a little bit more holistic and was likely to result in more workers being classified as employees as opposed to contractors. However, in May of 2025, so a couple of months ago, the Department of Labor issued guidance that said they would no longer be applying that 2024 Biden rule. As you can imagine, with the change in administration, you know, they had determined that they were not going to apply that. And rather than going back to the 2021 Trump rule, the Department of Labor said that they would be applying a rule from 2008, which is called the economic realities test, that considers 7 factors, including whether the services are integral to the business, the permanency of the relationship, the worker's investment in the facilities and equipment used, the nature and degree of control by the employer, the worker's opportunities for profit and loss, and then the amount of initiative, judgment, or foresight required by the individual, and the degree of independent business organization. So, under that test, which was the test used in 2008 and thereafter for a period of time, no single factor is controlling. It focuses on the economic realities of the relationship. Relationship. And so that test is thought to be maybe a little bit more employer-friendly than the 2024 Biden rule. The thing to think about though is that the 2024 Biden rule has not been overturned, rescinded, or replaced. There are court cases currently pending about the status of that rule. So it does remain in effect. However, the DOL, like I said, has published guidance that it's not going to apply that. So employers in that space, the federal wage and hour space, do need to kind of be paying attention to what's going on with those rules. It may be that the Department of Labor, you know, puts a different rule in effect at some point in the near future under the new administration, but we're just kind of waiting to see.

And it all depends, right? That's the lawyer's answer, and it's all about being not very clear, and so important to consult with an employment attorney because there are so many nuances that can get us into trouble, an employer into trouble. Now, I understand that the penalties can be quite severe. Penalties for misclassification can include some things like, under the Fair Labor Standards Act, there can be back wages to include minimum wage and overtime with potential additional damages. Under state wage and hour law, there can be minimum wage, overtime, penalty, and penalties and other damages. There can be state civil fines. There can be in the employer's share of FICA and Medicare. There can be back taxes, interest, unemployment back pay, workers' compensation liability, potential attorneys' fees. It could also lead to a wage and hour audit. And the thing we always want to avoid is for a worker to file a complaint with the administrative agency causing that agency to come and audit your entire company's compliance with wage and hour laws, either at the federal or the state levels. There could be potential criminal penalties for companies and individual owners and officers. There's more importantly, and as importantly, reputational liability. So employers really do need to make sure that their contractors meet the standards under each of these applicable laws, both state and federal, to make sure that employers are not opening up the door to various types of liability. So let me summarize this for employees and 1099s. Onboarding and agreements. Employees are provided with an offer letter, an employment agreement. They complete the I-9, the W-4. They do background checks. For 1099s, it's an independent contractor agreement specifying the scope of work, deliverables, timelines, payment terms. There's a W-9 form and no I-9 form unless there's special circumstances. For pay and taxes, employees receive a paycheck outlining gross pay and deductions. Contractors and 1099s are paid on a gross basis. They're issued a form and responsible for their own taxes and insurance. Let's talk about benefits and policies. Employees are eligible for company benefits, health insurance, PTO, retirement, anything that's covered under the employee handbook. 1099s are not eligible for benefits. They're generally excluded from handbook policies except for safety and security rules. Workers' comp. For employees, you must be covered under employer's workers' comp policy. 1099s. In most states, they are not covered and they should carry their own insurance. They should always establish and obtain a certificate of insurance to avoid claims, but some states do require workers' comp insurance for 1099s. Lastly, performance and termination. Employees can be disciplined and terminated under company policy. It's an at-will employment arrangement unless there's a contract which states otherwise. For 1099s, the termination is governed by the contract terms, the completion, breach, or a mutual agreement. So here's a couple of practical HR tips. I've got 5 of them. 1, document the nature of the relationship before the work starts. 2, use separate onboarding processes for employees versus contractors. 3, avoid treating contractors like employees. No company email addresses unless it's justified. No set hours. No listing on the organizational charts as staff. Number 4, periodically audit contract relationships to ensure classifications remain accurate. And number 5, maintain proof of the contractor's business status with their business license, insurance, and their marketing materials. Now I'm going to turn it back to Tara. Tara, what are the safeguards that we should put in place for 1099 engagements?

Sure, Barbara. So, I mean, there are a couple that I think are really important. The first is to have an actual agreement in place. I guess before we get to the agreement, though, the first step is analyzing the relationship to make sure it is actually a contractor relationship and then papering that relationship. So putting an independent contractor agreement in place that sets forth, the scope of the relationship, and all of the things that as a business you should be requiring of your contractors. So like Barbara mentioned, some of those insurance considerations, you want to make sure that they have coverage, workers' comp insurance, for example. Putting in these contractor agreements, you know, this is what the work is, but we are not going to tell you how you need to do it, when you need to do it, what your schedule is going to be, you're going to use your own tools, we're not going to reimburse you for any expenses, and essentially just making sure that the individual is actually operating under the terms of that agreement that sets forth the contractor relationship. Avoid, like Barbara said, giving contractors company business cards, email addresses, or titles that imply employment. Generally, you don't want to have contractors doing the same type of work as your employees. So, for example, you don't want to have an employee doing this task and then have a contractor doing the same exact task, but maybe on a more limited basis time-wise. You know, in a lot of those cases, that person should be a part-time employee as opposed to a contractor. Generally speaking, if you have someone who is maybe transitioning out, retiring, for example, a lot of times we see businesses say, well, we want to keep them on as a consultant for, you know, the next year when they're only working, you know, 20 hours a week instead of 40 hours a week. And in most cases, that type of relationship is not going to be a contractor relationship. It's more akin to a part-time employment relationship. You don't want to be requiring fixed work hours, and you don't want to be kind of including contractors in your employee meetings. And then just another best practice, like I said before, is just to look at these relationships on a regular basis, whether it be annually, semi-annually, to make sure they have not changed in a way that, that, you know, the nature of the relationship hasn't changed.

Thank you, Tara. This is terrific information and so important to consult with employment attorneys to make ensure that your classifications are correct. Now I'd like to change the topic to utilizing artificial intelligence to measure the success of your human capital and employee benefits program. I would like to introduce a longtime strategic alliance, and I would like you to please meet Ralph Sepe, Executive Vice President at CAC Specialty.

Thank you, Barbara. Wonderful presentation on the Ramon side, very informative. We're very excited to join today and so much appreciate the collaboration with you over the years. We're equally excited today to talk to you about one of the hottest topics in the world right now, which is artificial intelligence. And I know everyone has read and heard all about artificial intelligence and the ways it impacts us throughout the world. But many people, particularly in the human resources, human capital, industry don't realize how utilized and how influential it could be in the world of human capital management, employee benefits, compensation, retirement. Some on the call might be surprised, as I was, to hear that human capital management is one of the top 20 disciplines in the world being impacted by artificial intelligence in many different ways. That fact, along with the recent article in Forbes magazine about a few months ago, talking about artificial intelligence and how to deploy it in HR and human capital management inspired us to have this conversation today. So we're happy to be here. So as I kick off our discussion, let me just spend a minute elaborating a little more on what Barbara mentioned earlier about Brian, myself, and CAC. Brian Clay is joining me today and we'll tag team the presentation, but collectively Brian and I are leaders in the human capital risk practice at CAC, as well as influencers throughout the employee benefits brokerage and consulting operations community here at CAC. Brian heads up CAC's human capital practice, and I lead the business development growth strategy initiatives. Between Brian and I, we have over 50-plus years' experience working with groups in employee benefits, private equity merger and acquisition activity, and other human capital management programs. CAC specifically is a nationally recognized insurance consulting and brokerage firm with offices located throughout the United States. Basically, we work closely with C-suite executives, human capital professionals, and owners and sponsors to evaluate, redesign, and implement the most competitive programs available in the human capital space. So with that, let me jump to the discussion for today and specifically the topics that we'll discuss. There are some great topics to discuss, and I think many people in the HR community and even in the C-suite don't realize, again, how relevant AI is in this space. So what we will talk about today will be common misconceptions about AI in human resources, How AI can impact both a company-sponsored benefit program and the entire human capital approach, discuss some of the tools that are out there, and then finally give some ins— get some insights from a leading AI executive joining us a little bit later in the presentation. What are the common misconceptions about AI? Let's start there. So many organizations think that they're too small to benefit from artificial intelligence. Although it is true that larger organizations benefit from some of the AI intelligence out there, which we'll talk about in a few moments, smaller companies can also benefit in many different ways, and we'll touch on those as part of the discussion today. The other misconception is AI is too expensive. And, you know, as you think about technology, certainly implementation in some cases takes a very long time, is very expensive. Some of these offerings can be, and we'll talk a little bit about those offerings in a bit. But there are many smaller organizations that can access some of this technology just on monthly per head fees or even partnering with the right organization, potentially a payroll company, a PEO, or even, for example, CAC provides some of these applications to HR and other human capital practice leaders through the relationships that we have. So it's definitely not too expensive, and you're definitely able to be able to join and gain a benefit at really any size organization. A third misconception is it's just too difficult to implement. You have to involve your technology group, you may need some special equipment. That's not true at all. Like I said, in many instances, most of this technology is gained through, you know, the internet, the web, cloud-based solutions, and even again, working with the right partners. So I'm going to turn it over to my partner, Brian. He's going to talk about the last, kind of impediment or reason why you may think AI is not for your organization. And that really focuses on return on investment.

Brian? Great. Thank you, Ralph. And thanks, everybody, for being here today. So just continuing the thought process of common misconceptions, ROI, return on investment. So as an organization, you know, there are a lot of AI applications out there. Within your organization, how do you get buy-in from the CFO or the C-suite to actually execute and implement on potential AI solutions? So I always think back in the health and benefits space to wellness, the wellness world, which really came on in earnest 10 to 15 years ago. And in the beginning of that, it was really difficult for employers to justify an ROI. The basic premise is, We can make employees healthier. That's going to drive costs down and benefit the organization. But at the outset, there was really no ROI that you could actually point to when you're going to get approval for wellness programs. We see AI very much in the same vein in terms of being relatively in its infancy in terms of how AI can impact the human capital space. And over time with wellness, those vendors move towards guaranteed ROIs as that matured. You know, here, you know, as AI is beginning to come online within the human capital space, we're not seeing those specific guarantees on ROI. So what are the softer points that, you know, employers as they consider this can consider? So faster HR support, personalized benefit guidance for, you know, for employees as they're interacting with the program going through open enrollment, tailored learning and career paths, you know, reduction in turnover through identifying red flags within the organization sooner, faster, and really reducing that turnover. Sentiment and feedback from employees. We'll talk a little bit more about that towards the tail end with Brian Cochran. About how employee sentiment can really help drive human capital strategies and workload and collaboration optimization. So, you know, when we think back to faster HR support, you know, the bulk of questions that land on the HR desk are routine, repetitive. Using AI to, you know, reduce the number of times the population is coming to the HR professionals really opens up that community or the HR team to focus more on high-value opportunities within the organization. So while ROI as it sits today is rather soft, for lack of a better term, we do foresee, you know, vendors as they come online starting to guarantee ROI based on what they're offering.

Thanks, Brian.

Yeah.

So as we move forward here, we're basically going to focus on 3 topics for discussion in terms of where AI can make the most impact and talk a little bit about the technology and even some of the players in the marketplace associated with these 3 topics. The 3 topics are going to be how AI can impact real-time analytics in your organization, The second topic will be talking about how the way you communicate with your employees and the way they access important information about employee benefits can change dramatically and be customized almost to each employee through artificial intelligence. And then finally, we're going to talk about how AI can help you gather information that's out on the internet in so many different websites about your employees' perspectives and how they feel and think about your organization and how to aggregate that. So those are the 3 kind of main points that we want to talk through. I'll throw it back to Brian to talk about the real-time analytics.

Yeah, thanks, Ralph. And I'll focus in on 2 practical examples. So how is AI being used within, in the benefit space or the human capital space. You know, one example that I'll point to is a company called Gradient AI. And they are— when we think about how health and welfare plans are underwritten, typically they're looking at a previous 12 months, maybe 24 months of claims. And underwriters are really, you know, taking their best stab at what the next 12 months are going to look like from a risk perspective. You know, that, that those assumptions using that limited data set really drive pricing for employers, you know, for the, for the next 12 months. Gradient AI is a tool, and there are others out there that tap into large healthcare databases and go beyond just that 12-month or 24-month look back. They're, they're actually able to look at you know, a longer time period, if you will, but also have access to claims that the particular carrier that is generating the claims reports for your, you know, your upcoming renewal has access to. So it's a broader look. And what it does is it allows underwriters to be sharper in how they're pricing and to be faster in how they're pricing. So that's one real-time example of how we're seeing it emerge in the market. The other, you know, and this really centers around life and disability programs for employers, but is, you know, some of the core carriers are now taking their underwriting processes and using AI to actually, you know, take the data sets from employers and run their underwriting process. So, you know, there's pros and cons there, you know, I think a con is that it's very automated. So there's a loss of the, you know, real-time human element with the program for a particular employer. So, you know, an AI tool in underwriting might, you know, look at data and say, you know, we've bid on this piece of business for the last 3 years, not really understanding what's going on with the business. So there's a little bit of the human element that is missing there. From a pro perspective, it speeds things up. So, you know, by utilizing AI to run the underwriting process, we're getting to pricing decisions, strategy, open enrollment a lot faster. It's just moving the process along much more quickly. And, you know, again, this is emerging, but those are just two specific examples of where we're seeing an impact.

Yeah.

Great.

Thanks, Brian. You know, I'll transition to the second topic, which really involves every employer of every shape and size, no matter how many employees you have, no matter the organization. And this is really thinking about how you communicate with your employees and how they access information. The employee benefits plan, for example, is one of the most expensive things that an employer provides to an employee. So you want it to be represented well. You want individuals to interact with it well. And today you think about how that mostly happens is employees are given handbooks, or maybe they have a link to the handbook online, and they're able to go through and look through and find information relevant to their questions or how to utilize a benefit. And that's largely how most organizations are handling that today. What happens with artificial intelligence is think about taking that booklet, that handbook, that summary of plan document, and putting it in one central database. And what artificial intelligence will allow you to do is have an employee simply interact with artificial intelligence and ask questions, not type them, but simply speak to the computer, ask a question about what my waiting period is or what dependents are covered. And the artificial technology goes out to that document and finds the answer, brings it back, and delivers it to the employee. Not only does it deliver it, it can speak it in a variety of different languages. So if you have a Hispanic population, the employee can speak in Spanish, and the responses will be coming back almost immediately in Spanish. Some of these technologies create avatars to actually create some sort of a human interaction where there can be a dialogue and a conversation about whatever it is that they're being asked to find in these documents. It's really amazing how that changes things. It allows you as the employer to customize the open enrollment, to customize how you communicate with your employees, for every employee to have a unique experience that fits them best. And what does that mean at the end of the day? They're more satisfied. They're better able to access their benefits, for example, their retirement plans. They understand it better. Maybe they keep themselves healthier because they know what benefits they have and they understand how it works, right? It's all of those things that artificial intelligence is doing today. And there's, again, the goal today was to provide some insight, but also give you some ideas about the companies out there. There's a company called People Ally that generated this kind of artificial intelligence that really embraces the interaction between the employee and the information itself. And quite frankly, it takes the employer out of a lot of those conversations. Which you sometimes don't want to be involved in and gives you back so much additional time. So this is just, again, one of the ways that artificial intelligence is impacting self-service concierge services throughout the benefit program, throughout human resources, and again, retirement plans, all of those kinds of things. So with that said, Brian, I'll throw it back to you to transition us over to employee perspectives.

Yeah, perfect. And, you know, just one final point on that experience that you're talking about there, Ralph. You know, it also reduces liability. So if you have an AI tool that is, you know, verbatim pulling information and data from an open enrollment book and interacting with the employees using that data, it takes the liability out of, you know, somebody within the organization misstating a benefit or misstating a deductible. So it really, it does in essence reduce liability in some capacity. But moving on to employee perception, and this is a really important topic for us in the human capital space from our seat because working with employers, we are year in and year out trying to understand how the population views of the benefit program. And, you know, most employers will have, you know, a spot survey a few times a year, pulling down, you know, some sentiment and some information from the population in terms of how they feel about their program. You know, one tool that we've embraced, and we have Brian Cochran here who's affiliated with— one service that we've embraced is called Analyne. And effectively what Analyne does is scrape the internet for beyond a, you know, a direct employee survey. What is the perception of the organization from a benefits perspective, from a management perspective? What is out there on the internet? And it really goes through and pulls that all into one place. So think LinkedIn, Reddit, Glassdoor, anywhere an employee might be, you know, opining on on the organization or the benefits or the management team. And it really distills that into the ability to create a benchmark for you as an employer against other employers and how from each of those buckets, how the employee perception stacks up. So with that said, I wanted to introduce Brian Cochran, who is a key executive in the field as well to offer some insights, you know, in terms of where we see things going, what we're seeing today. And we're happy to have you here, Brian. So thanks.

Thanks, guys. I've had a bit of a power outage, so hopefully I have enough bandwidth here. Can you hear me okay?

We got you.

Okay, good. Hopefully it stays that way. Apologies for not being on screen, but I didn't want to take a chance without the bandwidth. Thanks for the opportunity to discuss this topic. The, just for context, I've— and I worked at Aon for 17. So I have a pretty good understanding of insurance and both human capital, health and benefits, and risk. I jumped ship about 2 years ago to become the chief commercial officer at a SaaS startup, an AI SaaS startup. Called Analyne, as Brian Flaherty mentioned. And the first thing I'll say is if you take a step back and just think about the evolution of AI, what you're seeing here, it's very early stages, but it has moved so fast. In fact, there's been studies done on this. Really, the only thing that's moved similarly but still slower than AI in terms of penetration and use was the internet. And basically AI's done in 2 years what it took about a decade in terms of usage. So it is an incredibly technology that we are just scratching the surface, but adoption has been incredible. And you'll see, you're seeing almost every company, old and new, adopt AI by necessity. Either their employees are doing it on their own to make their lives a little bit efficient, or the progressive companies are having it done to them. Are doing it proactively, I should say. And if you look at it, because we're on their evolution, really AI right now is let's make things more efficient, right? It's, we really haven't quite gotten to what net new products are there, ChatGPT notwithstanding, is really making existing processes, existing products being delivered more efficiently. And to that end, you know, Analyne, before AI was a big deal, has been around since 2019. And what we do is we basically hoover up— well, let me tell you where we started, and I'll tell you AI's impacted our product roadmap pretty dramatically in the last few months. But we started hoovering up all what we call impressions. They're roughly analogous to posts. So for example, Glassdoor posts, basically business social media sites, Glassdoor, Next, LinkedIn, Reddit, there's several sites that we hoover up impressions. And then we feed those impressions into our AI that literally read those impressions. So it's over a billion impressions across 70,000+ companies. Obviously, the more employees a company has, the more statistically relevant our conclusions can be. But then we have an HR dashboard, primarily HR dashboard, that covers everything from integrity, leadership, work-life balance. You can design bespoke versions of the dashboard if you want. And in the early stages, we saw this as a real help to HR departments because you could get a pulse survey done without doing a pulse survey, is one way of looking at it. As our solution evolved, as AI evolved, we added AI agent, our AI agent we call Annie, that would literally let you ask questions about the company that were unstructured and not covered by the dashboard and generate reports on specific topics about the company. What we quickly realized is when we thought we were building an HR window, if you will, is what we really built was a competitive intelligence platform. And where that evolved after that was, hey, we can start layering on external data sources to our existing data sets. We can really come up with some real insights. So for example, we now go out in addition to our impressions from a company standpoint, we now go out We obviously have to be given that. And we built a competitive intelligence platform. And then we kind of thought, well, what can this do? It can certainly help HR because you can keep your fingers on the pulse of what the employee base is thinking and what's really driving them. But if you think about it, Who would like to know most about a company? Well, really there's two groups. One is, hey, if I'm going to buy a company, I really want to know what I'm buying. And AI can really help do that cheaply. So we developed M&A modules that let you look into a company from an M&A perspective. Obviously, it's biased toward the people, given where we came from in our evolution. But then again, M&A is pretty biased toward the people too. I mean, you always try to retain your top talent. You don't want to exit us every time you buy, every time I buy a company. So M&A professionals. And then if we looked at it again, we said, and sales professionals, if you're about to sell something to a company or a solution to a company, wouldn't you like to know that company has that problem? I'm being a little tongue-in-cheek because it's a little more nuanced than that, as anyone who sold something knows. But knowing what the problems are before you go talk to the company and knowing what those problems are, as told by the employees. And what you'll frequently see is the employee's perception of a company is very different than the company's public perception, or what they try to put out in the public. And that's not that unusual. I don't think anyone would be surprised by that. But you can now quantify it. You can now see where those perceptions really, really don't line up. And if you're a good executive, you want to do something about that, right? You want the company to be doing and saying the things or the employees to be doing and saying the things that the company are doing and saying. And there's a big gap there, you're going to have some dysfunctionality. And so that's what Analyne does. Brian had also asked for me to take a stab at what we think, how AI could impact the insurance companies in the future or the insurance space in the future. That was a really interesting question, and I felt shame on myself for not having thought that broadly until Brian asked the question or posed that question as part of this conversation. And when I think about that, I came up with the following. At this stage, it's all hypothesis because AI is still, while heavily adopted, people are still figuring out all the use cases for it. But I can just sort of 3 possible conclusions, and they're not mutually exclusive. One is, you know, the value of brand and the value of the salesperson goes way up. Because if you think about what AI is doing in the insurance area, it's taking the separate information, which, you know, every HR consulting, every H&B broker, every risk broker has information laying in all over the place in various systems, in various formats. And it's bringing it together. So, you can now get a best-in-class property policy, just picking property at random, within a couple minutes. AI can search every property policy ever done, marry it up to the unique circumstances of a given client, and all of a sudden, you've got a best-in-class property policy. You don't really have to have the best-in-class broker to get that. So, what does that mean? That means it's going to commoditize the industry. That's pretty commoditized. Applies now even more and perhaps even more rapidly. So the value of sales and the value of brand is going to go way up. So that's one possible outcome. Another possible outcome is smaller brokers are going to be more nimble. And I think you're going to see some leapfrog— potential leapfrogging here where you have a broker that's completely embraced AI from top to bottom or perhaps even launched a new broker that has embraced AI from top to bottom. And that broker leapfrogs some of the older, larger, more established brokers. A bit counterintuitive because you think a big balance sheet, a big broker with an already existing brand name should win, but the insurance industry is notorious for slow adoption of technology. And then the final possible outcome is that you're going to see a ton of mergers. You're going to see a ton of capability buying. And that's going to be driven by a couple of things. One, you want scale and brand. And two, you need continuous innovation, protected innovation, because that's the one way to not have the business be commoditized. But it'll have to be protected innovation because as soon as you do it once, thanks to AI, if it's not patented or some form of trade secret that won't get out there, you're going to see it being copied almost immediately and copied at scale almost immediately. So, you know, those are the potential outcomes in the next 5 years for the insurance industry. Brian, I'll hand it back to you. Thank you.

Great. Really appreciate that, Brian. Great insight. And I know we're coming to close here. So, Barbara, I'm going to hand it back to you and team to wrap us up.

Thank you, Brian. And I want to thank— many, many thanks to Tara Hama, Ralph Sepe, Brian Clay, Brian Cochran, for generously sharing your insights today. And I want to thank you all for attending today. Each of you will receive a link to the presentation via email along with the email addresses of today's presenters. The link will also be posted to our website at RamonLaw.com and the CAC website, which is CAC Group com. Our next webinar is scheduled for November 24th, so look out for the details and register to attend. We eagerly appreciate you and anticipate you joining us once again. And until then, I wish you a wonderful day, everyone. Thank you.