The Most Common Work Comp Mistake to Disincentivize Return to Work

Hey there. Michael Stack here, CEO of Amaxx.

So, we all make mistakes, right? None of us does everything perfect all the time. I want to share a real quick anecdote story of a mistake that I made, and relate it to how it could work in your work comp program.

Set Up For Failure From the Beginning

So, about a year ago, my family and I moved up to Maine, and the way the housing worked out, we did a short term rental to allow us time to find and purchase our house. Everything ended up working out great, but the way that we were treated throughout that short term tenancy by the managing brokerage agency as well as the owners of the property was just inappropriate. It’s just not the way you treat people in that situation. We knew based on their behavior that collecting our security deposit, not that it was an overly huge amount of money, we’re talking about $1,000 here, not insignificant but it’s not gonna change the world. But the way that they acted, the principle, was significantly more important than the money.

So, there’s certain laws in the state of Maine that they didn’t follow, along with the behaviors that they demonstrated, and I knew it was going be difficult to collect. So, I had to file small claims suits against them to collect that money based primarily on the principle. Come to find out that I made a mistake in filing that claim. I filed it against the brokerage agency as agents of the owners of the property, and according to the judge, I should’ve filed it against the brokerage agency joint and several along with the owners of the property. So, that was my mistake. I was set up for failure right from the beginning of that case.

‘Grossing Up’ & Wage Continuation Common Mistake

Same thing happens all the time in your work comp program, and that may be happening right under your nose without you even realizing it. So, I want to give an example of one of the common mistakes that I see, and this is either grossing up an employee’s salary, an injured worker’s salary, to 100%, or just payment of 100% in lieu.

So, let’s see what this exactly looks like. So, let’s say it’s 66 and two thirds in your state, or whatever the specific percentage is. So, instead of that employee getting $663, you gross him up to $1,000, or you don’t even file a claim at all, and you continue to pay them their $1,000 a week salary. The concept there, and the reason that you do this type of policy, is based on a very positive ideal. The fact that you want to take care of your employees.

Set Your Work Comp Program Up For Unnecessary Challenges

But here’s what’s happening right under your nose and you’re setting yourself up, just as I did, for failure right out of the gates. This $663 is not taxed. It’s work comp indemnity payments, and so when you’re grossing up that employee, they’re making more money being out of work than they are at work. Every one of your employees isn’t gonna be impacted by this type of policy. But certain employees, with certain psychographic financial situations, various things that they have going on, the relationship with the employer, this type of policy will dramatically impact their motivation to return to work. It’s a mistake that I see very often that sets risks managers up for failure right out of the gates, making it just that much more difficult to be successful.

So, I encourage you to take a look at your policy. Take a look at what it says in regards to this type of financial arrangement, and if you have something similar, I would take a serious look at changing that policy to be more appropriate to get a better outcome for your injured workers, and then obviously have a much more dramatic and positive effect on your company’s bottom line.

Again, I’m Michael Stack, with Amaxx, and remember your work today, it can have a dramatic impact on your company’s bottom line. But it will have a dramatic impact on someone’s life. So, be great.

For more detail, check out: How to Avoid 19 Workers’ Comp Mistakes & Loopholes

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

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