Hello, as the "featured blogger" this week, I'll be writing on topics that relate to workers' compensation cost containment. Some will be basic, some advanced. Please let me know if there's anything in particular you would like me to focus on and I'll do my best to accommodate you. Write to me at: RShafer@ReduceYourWorkersComp.com
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When executives at a major publishing company were pondering their skyrocketing workers' compensation costs last year, they found a convincing explanation. Employees who were receiving workers' compensation were effectively receiving one hundred ten percent of their salaries. That company is not alone.
Consider the following sources of income and why they might be a disincentive to return to work:
Disability Policies - Like many other employers, a national construction company had a group disability insurance policy provided by the company. One employee was receiving workers' compensation following back surgery and, after 26 weeks, began receiving disability payments too. This can happen with personal insurance policies. This double income meant the worker's at-home pay exceeded his at-work pay. When the company offered him a job with lighter duties at his full salary during his recuperation, he turned it down.
Unemployment - In some states, employees on workers' compensation qualify for unemployment benefits under certain circumstances. To prevent this, companies should offer all injured worker' transitional jobs they can perform even with their physical restrictions. Under the eligibility rules, workers who refuse such offers will likely not be deemed unemployed.
Lawsuits - While workers' compensation statutes prevent workers injured on the job from suing their employers, they can still sue others. Someone hurt while emptying garbage into a dumpster, for example, can sue the dumpster owner and manufacturer.
If such a worker receives a court award or settlement, he gets paid twice for the same injury. Most states allow insurers or employers to seek reimbursement for sums spent on workers' compensation but I have seen many cases where this is not done. I have also seen many situations where the insurance company waives the company's liens – often without their consent.
Pension Pay - Older workers who receive workers' compensation benefits may retire during their convalescence and can continue to receive workers' compensation benefits. The remedy is to revise pension plans that do not offset workers' compensation by retirement pay.
Grossing Up - Some employers offer "occupational injury supplements," which can raise workers' compensation benefits from two thirds of salary to full salary But, given that workers' compensation is tax-free and employees at home save on commuting and other work-related costs, a full salary is more lucrative for workers on leave than for workers at work. Thus, companies must carefully design any programs for supplemental pay to avoid any disincentives to working.
Motor Vehicle Accidents - In some states, employees who are injured when driving a car on company business may receive both workers' compensation and medical benefits from their no-fault auto insurance policies. To prevent this redundancy, no-fault benefits should be deducted from workers' compensation benefits, where permitted by state law.
Additional Collateral Sources - Employers have many other policies that dampen the enthusiasm of those on workers' compensation to return to work. Open-ended transitional duty jobs and allowing employees on workers' compensation to accrue sick time can deter their desire to return to work.
The Solution - Eliminate double dipping where possible. This requires advance planning so company-paid policies are structured to allow offsets. Have all departments (HR, WC, Labor, and Safety) review benefits to make sure these perks and policies do not discourage employees from returning to work as soon as they are able.
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