Cut Workers' Comp Costs

(Published May 18, 2009)

Reprinted from PERSONNEL LEGAL ALERT, a widely read employment law newsletter that keeps HR executives up-to-date on the latest court cases, legal trends, government regulations, and federal legislation that affect the policies you write and procedures you administer. 

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Employers in every industry are looking for ways to cut costs without negatively impacting their workforce or work process. One way to accomplish this is by looking at your Workers' Compensation program, where unchecked costs can become a major financial drain on an organization.

Invest In An Ounce Of Prevention

The best way to keep your WC costs under control is to prevent workplace injuries from ever occurring in the first place.

Regularly assess whether the workplace is free of hazards (e.g., equipment is properly maintained, tripping hazards are removed).

Lincoln Laser Corp., a Phoenix-based manufacturing company, has an active Safety Committee comprised of the HR Manager, the Regulatory & Training Manager, and the Facilities Maintenance Specialist, who are permanent members, plus three volunteers from Manufacturing that rotate every six months. HR Manager Rita Campbell explained that the Safety Committee members are paired up to tour one of three specific areas of the facility. The committee meets every other month to discuss the safety concerns from the last meeting, and to report their findings and concerns to a company VP.

"There is a formal checklist that each pair uses to inspect their designated area....The Regulatory & Training Manager keeps the lists and delegates the work or corrective action that must be taken. The VP signs off on this action report."

Check that employees and supervisors alike are following safety protocols, and that violators are being properly disciplined.

"When the committee visits the different areas, we talk to the people working in that department and ask them for their observations and concerns. They are happy to participate," said Campbell. "If an employee's safety concern is deemed hazardous, they get a safety award at the next quarterly company meeting. Of course, the safety hazard is corrected. I feel this has [made] our people sensitive to safety and housekeeping issues."

Provide proper training. Don't forget periodic refresher courses, too.

Determine ways to prevent a repeat occurrence of a work-related injury by reviewing WC claims. You may find that protective equipment needs to be upgraded, training needs to be improved, or a manager is lax in enforcing safety procedures.

Get outside help. Invite a safety inspector from OSHA (Occupational Safety and Health Administration) or your insurance carrier to inspect your facilities and help you identify hidden hazards. Ask the insurer to recommend cost-saving measures or best practices.

Minimize Off-Duty Liability

Workers' Comp covers injuries that arise out of and occur in the course of employment. However, even employees who are off-duty can collect WC benefits under certain circumstances.

Off-duty employee performs work. An employee who is injured while visiting the workplace on a day off generally won't be eligible for WC if they were engaged in a personal activity at the time the injury occurred, and the employer derived no benefit from the activity. Compare: An employee who had permission to use company equipment on a day off to work on a personal project was denied benefits, while an off-duty store clerk who hurt his knee chasing a shoplifter was able to collect because his supervisor had yelled for his help and motioned for him to give chase.

Off-duty social activities that can be considered work-related. Employers that hold company picnics or sponsor sports teams can minimize WC liability for related injuries by following these rules.

• Do ensure that participation is voluntary. Prohibit managers from even encouraging participation, because employees may perceive the "encouragement" as a "requirement."
  
  
• Don't organize athletic activities. If you hold a picnic at a park that has basketball courts, leave it up to employees to organize a game. The more the company stays out of it, the safer it will be.

Get Employees Back To Work

Workers' Comp costs soar when workers stay out longer than necessary. Oftentimes, the longer an injured employee is out on leave, the less motivated they become to return to work. Bring employees back to work as soon as they are medically able.

• Keep in contact with injured employees while they are on leave. Employees who feel isolated or ignored may become demotivated.
  
  
• Keep in contact with the employee's doctor. Rick Ketterer, a Controller in Cincinnati, recalled a previous employer that hired an outside consulting company to write detailed job descriptions for each position and train them on how to use them. "We learned that we should be giving the doctors those job descriptions, not letting the employee tell them what their job required."
  
  
• Know the typical and expected duration of the employee's medical treatment, and have an independent medical exam performed if the employee isn't progressing as expected.
  
  
• Create light-duty work, so employees can return as quickly as possible. The consulting company also helped Ketterer's former employer to "develop a list of light-duty assignments that we could always have available to prevent malingering."

What you don't want to do is assume that employees who are out of work for a long time are milking the system and treat them as such.

Personnel Pause

For each individual WC claim, you should be in constant contact with the insurer or third-party administrator regarding strategy and any developments in the claim.

Related Topic(s): Safety & Health/Workers' Compensation