Getting an injured employee back to work is an important way to reduce workers’ compensation costs and promote employee morale. This is accomplished by an effective return to work program and promoting a safe work environment. Notwithstanding these efforts by an engaged employer, policies are sometimes implemented that create perverse financial disincentives. These can sabotage a post-injury return to work program, and encourage an employee to stay off work.
It All Starts with Effective Coordination
It is important for an employer to ensure their return to work program does not have a negative impact on disability pay programs. To ensure this does not take place, it is important to take a step back and make sure there is proper coordination with the workers’ compensation program and one’s employee benefits and compensation program.
Common examples of this include instances where a benefits program provides a financial disincentive for an employee to return to work. When designing your integrated disability management programs, keep this in mind the following factors:
- Identify workers’ compensation savings that have yet to materialize even though your company has implemented a corporate return-to-work program. This should include a review of the long-term (LTD), and short-term disability (STD) benefits an employee can receive, and if they care to receive these benefits while being paid associated workers’ compensation wage loss benefits such as temporary total disability benefits. In some instances, employees will receive more money if they were working when receiving both LTD/STD and workers’ compensation benefits.
- Review and analyze credit disability insurance programs. This allows the injured employee to exclude payments on a mortgage, car payments, and other lines of credit when they are unable to work. There are also reductions for things such as childcare, and other commuting expenses that can be taken into consideration. This provides the employee with an “incentive” to not accept transitional work.
- Examine how collateral resources impact your workers’ compensation program. Some of these include:
- Salary and Wage Continuation: Employers sometimes pay 100% of an employee’s salary instead of the employee collecting workers’ compensation wage loss benefits. A review of these programs should include a determination if they comply with the workers’ compensation law as only insurers should be making wage loss payments in some instances.
- Occupational Injury Pay Supplements: Other policies will pay supplemental benefits to “make up the difference” between workers’ compensation benefits and regular earnings. This has an impact on the payment of Temporary Partial Disability (TPD) benefits.
- Open-Ended Job Return: Job offers should never be open-ended. Allowing this encourages employees to remain off work, and can limit defenses available to wage loss claims.
- Vacation and Sick Time: Companies frequently allow vacation and sick time to accrue for employees on workers’ compensation, even if not required under state law. In other instances, employees can “borrow” sick time.
- Perk Continuation: Employers often maintain ancillary benefits and privileges such as car allowances, club, professional dues, and periodical subscriptions for employees off work due to a workplace injury.
- Loan Protection Policies: Individual insurance policies are available to pay mortgages and consumer loans. This often includes car loans, and credit card debts.
- Unemployment Compensation: In some jurisdictions, employees can receive workers’ compensation and unemployment benefits at the same time. Make sure you know the law on this issue.
- Pension and Retirement Plans: If these plans do not allow for offset of workers’ compensation benefits, an employee can receive workers’ compensation benefits and a full pension. This is a common pitfall for employers when an employee has a potential claim for Permanent Total Disability, or open-ended Temporary Total Disability claim.
- Product Liability Actions: Employees injured due to defective equipment and machinery can file product liability actions. Mindful employers should examine these issues, preserve evidence, and pursue subrogation actions when able. This is based on payments made to the employee receiving workers’ compensation benefits or settlements.
Conclusions
Employers should be commended for doing the right thing. These actions sometimes create a disincentive for an employee to return to work. When this occurs, the insured ends up paying higher workers’ compensation premiums. Proactive employers need to strike the right balance between protecting their employees, while at the same time being mindful of their bottom line ethically and honestly.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a 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 the founder & lead trainer of Amaxx Workers’ Comp Training Center.
Contact: mstack@reduceyourworkerscomp.com.
Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.
