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:
Double Dipping. 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 workers 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 fee 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, Safety) review benefits to make sure these perks and policies do not discourage employees from returning to work as soon as they are able.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Our informal online poll found that only 74% of companies say "Senior Management Supports Their Transitional Duty Program." There are ways to bring senior management on board. Usually they are not on board because they think a transitional duty program will be a problem in the workplace, be unproductive or will cost too much. This opinion usually comes from lack of understanding. That is, senior management does not know how a well-structured program is run. Explain that there are guidelines, policies and procedures to ensure that all employees are treated fairly and policies and guidelines are clearly communicated to employees and supervisors. More information about Sample Procedures. The goal is to have injured employees return to work as quickly as possibly – when they are medically able – after an injury. Show the REAL cost of workers comp translated into sales — a management "hot spot" — with the Real Cost Calculator. Whether you have guaranteed cost insurance or loss-sensitive program, having an effective return to work program will save you money. Most people do better when they have a destination to go to each day. People feel isolated when they are no longer involved in their workplace' however, after a couple weeks of not working they substitute their normal work routine with other activities which often are not productive and become adjusted to not working.This is particularly true if your return to work program pay structure provides more than when an employee is working. Check out the post on Collateral Source Benefits to find out more about this topic. For more cost savings tips go to WC Cost Reduction Tips. Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
When employees can make more when NOT working than when working, there's very little incentive to return to work, right? It's time to examine all the possible sources of "collateral source benefits" (a term I invented almost 20 years ago), to make sure you are not inadvertently making your problem worse than it needs to be. I saw one example recently where an employee stayed out of work receiving workers' compensation, used a travel pass to travel for free, and continued to accrue seniority while collecting a generous combination of benefits. Heck of a good deal, if you asked me. Where do I sign up… So, consider the impact on your workers' comp costs when providing certain benefits.
1. Salary and Wage Continuation: Some companies pay 100 percent of salary in lieu of having an employee collect workers compensation for injuries of short duration.
2. Occupational Injury Pay Supplements : Many firms pay supplemental benefits to make up the difference between workers compensation benefits and regular earnings.
3. Open-Ended Job Return: Instead of holding jobs open indefinitely, employers should hold jobs open for a specific time period, such as six or nine months.
4. Vacation and Sick Time: Companies frequently allow vacation and sick time to accrue for employees on workers compensation. Some even allow employees to borrow more sick time if they need to stay out of work longer.
5. Short-Term Disability: In some companies, disabled employees receive STD benefits in lieu of salary after six weeks. But the standard definition for disability may differ from workers comp, allowing an employee to collect both.
6. Perk Continuation: Employers often maintain ancillary benefits and privileges such as car allowances, club and professional dues, company store privileges and periodical subscriptions for employees on disability.
7. Loan Protection Policies: Individual insurance policies are available to pay mortgages and consumer loans such as car loans and credit card debts in the case of a disability.
8. Unemployment Compensation: In a few states, an employee receiving workers comp also can qualify for state unemployment benefits.
9. Pension and Retirement Plans: If these plans do not allow for offset of workers comp benefits, an employee can receive workers compensation benefits and a full pension.
10. Product Liability Actions: An employee can file an action against the manufacturer of a product that injured him to collect damages. The employer should seek reimbursement for workers comp payment from any such settlement. While these things are great perks and can entice employees to stay on the job with service to your company for many productive years, in the wrong situation that benefit can be offset if you do not combine the benefits with a complete injury management program — with excellent employee communication.
Fail to communicate with your employees and I guarantee your costs will go up. Involve all departments. In a large company, human resources, labor/industrial relations, workers' comp and employee benefits and compensation departments must all be involved in designing, administering and maintaining policies. Incentives to remain at and return to work must be built into the management systems. Disincentives must be removed from all direct and indirect sources. Substantial savings can be achieved when a company coordinates its salary, benefits and compensation programs so employees are not rewarded by staying out of work.
For more cost savings tips go to WC Cost Reduction Tips.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact:RShafer@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
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