Abstract word cloud for Workers’ compensation with related tags and terms
In most states, employers are legally required to carry Workers’ Compensation Insurance, although that requirement may be contingent upon the size of the business. It protects the company in the event that an employee is injured on the job and pays for the following when there is a workplace injury:
- Medical costs– Medical bills related to workplace injury or illness.
- Lost wages– They’ll pay a portion of the employee’s usual pay while you recover.
- Long-term care– If the employee’s injury or illness requires hospitalization or physical rehabilitation, they cover the cost.
- Disability benefits– If the injury causes a disability that doesn’t allow the employee to return to work at all, either temporarily or permanently, they’ll pay out disability benefits.
- Death benefits– If the employee is killed on the job, the next of kin can receive compensation.
- Workplace accommodations– If special equipment, like an ergonomic chair or keyboard, for example, is required for the employee to return to work, they’ll pay for it.
- Job training– If the injury makes the employee incapable of resuming their former job, they’ll pay to train them in a new skill.
Unlike many business costs that employers have little control over, it is the employer’s human resources management practices that can help minimize the direct and indirect financial impact of workplace injuries. When company’s effectively manage workplace injury claims, they mitigate the detrimental impact on their sustainability.
Workers Comp Cases & Injuries Can Cost You Customers!
- Workers Compensation claims increase the businesses insurance premiums for three years.
- Workers Compensation claims can prevent a business from working with some commercial contracts, Federal Subcontractors (such as AT&T, Boeing, etc.), and federal and state government entities. These entities have a minimal Experience Modification Rating requirement for those who do work for them. This rating is a reflection of your past and current workers compensation cases.
- What is an Experience Modification Rating (EMR)?
- In sum, this rating is assigned to businesses based on their payroll, anticipated costs of an opened case, and costs associated with closed cases.
- The way that an EMR is calculated can cause a small business with lower payroll and minimal workers compensation cases to have a higher EMR rating than a large business with more payroll and more opened cases.
- The higher the experience modification rating, the harder it is to find a workers compensation carrier willing to cover a business, which results in businesses having to obtain insurance from a high-risk pool and pay significantly more money in premiums.
- Vendors and customers are increasingly requesting safety information including “DART rates” when vetting companies with whom to do business.
- DART stands for Days Away, Restricted or Transferred. The DART rate is an OSHA calculation that determines how safe your business has been in a calendar year in reference to injuries that result in Days Away, Restrictions, and Transfers.
- These injuries may or may not not result in expensive Workers Compensation Claims, but they do inform clients about your safety practices and can jeapardize your ability to obtain work.
- In essence, workers compensation claims and injuries can prevent businesses from getting more work and hiring employees!
Why do potential customers care about your Workers Compensation and workplace injury cases?
- It is your clients (and taxpayers who fund federal and state contractors) intent to decrease the likelihood that they would be subject to in a third party lawsuit due to unsafe practices. Employees may recieve workers compensation and be a part of a third party lawsuit despite the limitation discussed below!
- Businesses use the Experience Modification Rating and DART rate as indicators (among others) for determining how safe and efficiently you operate.
- Albeit fairly or not, these safety metrics are used to make choices about whether you or your competition gets to work with them.
Workers Compensation Protects Employers from Additional Lawsuits…. Except When It Doesn’t
Generally, the Workers Compensation system is designed to be mutually beneficial to employees and employers.
- As a no-fault system, employees can successfully obtain Workers Compensation without an employee having to prove that their injury was the employer’s fault.
- Employees receive compensation related to their injury (medical costs, lost wages, etc.) in exchange for providing employers with immunity from additional tort civil lawsuits related to that injury thanks to the Exclusive Remedy Doctrine.
- This long-held doctrine specifies that Workers Compensation is considered the exclusive remedy for a work-related injury except in limited circumstances.
- The Workers Compensation Insurance system provides a cost-control mechanism that gives employers a statistical likelihood and experiential baseline for managing their budgets.
There are currently cases challenging the Exclusive Remedy Doctrine, and thus, may result in new precedence with regard to allowing employees to take civil action while receiving Workers Compensation, exposing employers to increased legal liabilities.
Read my article about the financial impact of Employee Covid-19 Workers Compensation Claims.
Eye on the Courts & Covid-19: In one Covid-19-related case, an employer is appealing a decision by a court that allowed an employee to receive Workers Compensation for Covid-19 allegedly contracted while working, while simultaneously allowing the employee and their family members to sue the employer in the wrongful death of her husband who allegedly died after she spread Covid-19 to him. The premise of most Covid-19 related negligence and wrongful death cases is that employers are negligent and failed to follow protocols that they should have known would have prevented the spread of Covid-19.
Employers Blatant Disregard for Safety Protocols Lead to Increased Workers Compensation and Civil Cases
Although the employee is not required to prove the employer is at “fault” in order to collect workers’ compensation, some states have exceptions. Workers Compensation may be granted to an employee when the employer blatantly disregards workplace safety protocols, handles claims in bad faith, conceals an injury that worsens, or whose intentional neglect leads to the injury. Additionally, employers can be held liable under other employment laws like the Americans with Disabilities Act and Title VII of the Civil Rights Act of 1964 pertaining to the injury. In some of these circumstances, employees may be entitled to more workers’ compensation than they would otherwise have been entitled to in addition to civil litigation.
Although employees usually can’t sue an employer once they receive workers’ compensation for an injury, they can still sue a third party if the third party contributed to their injury. This means your employees working on the site of your client may be able to get workers’ compensation and sue your customer.
HR Tips for Managing Costs Associated With Workers Compensation Claims
It’s in the employer’s best interest to minimize the financial impact of workplace injuries. Preventing injuries from occurring in the first place is ideal, but once they occur, the following steps will help you reign in expenses and maximize the sustainability of your business!
- Investigate workplace injuries immediately.
- Obtain witness statements and statement from the employee if able to provide one.
- Take pictures of where the injury occurred and any objects that caused the injury.
- Identify the root cause of an injury and where applicable, remove it immediately.
- Train supervisors on reporting and safety protocols and hold them accountable when they don’t follow them!
- Train Supervisors to abstain from retaliation or any actions that can be percieved as retaliatory. (ie. changing an employee’s schedule, disciplinary action related to a workplace injury, etc.)
- Employees’ have a sixth sense for insincere toxic supervisor’s who don’t take their injury and workplace concerns seriously. Most frivoulous yet costly cases can be prevented with effective employee relations and timely follow-up.
- Ensure that employees are assessed by an occupational doctor recommended by your insurance company.
- Per law, ensure employees have access to a posted Notice of current occupational doctors provided by your insurance company where all employees have access.
- Your insurance company likely has discounted rates with certain healthcare vendors which will help keep medical costs down.
- The insurance company will have easier access to medical information and any necessary follow-up through an occupational doctor which will help both of you manage and close the case in a timely manner.
- Write an investigative report that specified findings, corrective actions taken and a timeline of all medical follow-up required by the employee.
- Update this report as new facts become available until the case is closed.
- The more thorough the information you provide to your insurance company, the easier it will be for them to follow up with the employee and bring the case to a timely closure.
- Maintain good ongoing communication with adjuster and the employee.
- Put follow-up medical assessments scheduled for the employee on your calendar.
- Don’t wait for the adjuster to call you about the employee’s medical status following appointments. Practively call them!
- Institute a Return to Work program allowing employees to be paid through payroll instead of through Workers Compensation whenever feasible.
- Paying for salary outside of workers compensation prevents that cost from becoming part of your premium and Experience Modification Rating for three years.
- Regularly review incidents and near misses to identify systemic changes that can be implemented to prevent the injury from occurring.
- Hold supervisors accountable for instituting those changes in a timely manner!
- Document any systemic corrective actions taken as a result of an injury or illness.
- Insurance companies and potential contracts for future work are interested in what systemic changes you took to prevent injuries from recurring.
- Maintain excellent communication with your insurance broker.
- They are resourceful and provide excellent advice on best practices to manage and prevent claims!
©Denise Scotti-Smith 2021. All Rights Reserved.
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