Part 1: Layoff Planning to Control Workers’ Comp Claims

Mass layoffs or company closures can trigger a significant increase in workers’ compensation claims—some legitimate, others potentially unsubstantiated. Proper layoff planning isn’t just about handling employment transitions; it’s crucial for controlling claims costs and ensuring that resources are available to support genuinely injured workers.

Pressure in an Uncertain Job Market

When layoffs occur, employees might rush to file claims for minor injuries they’ve previously worked through, feeling pressured by the uncertain job market. At the same time, companies must navigate various state and federal laws like the Worker Adjustment and Retraining Notification (WARN) Act, which requires advance notice for mass layoffs or plant closures, allowing employees to plan their future employment.

Here are six critical actions your company can take before a planned layoff to effectively manage and potentially reduce workers’ compensation claims:

1. Enhance Claims Handling Capacity

Prepare for an uptick in claims by adding staff who can handle the additional workload effectively. Timely processing prevents claims from becoming unnecessarily expensive and ensures each case receives the attention it deserves. Quick handling preserves the integrity of claims defense.

2. Assign a Dedicated Adjuster

Request a dedicated claims adjuster who understands your specific operations. Ideally, claims should be managed by adjusters who are familiar with your worksite and operations. Invite them to tour your facility beforehand to enhance their understanding of potential injury contexts.

3. Secure a Defense Firm Early

Partner with a reputable defense firm and arrange the handling of any litigation anticipated post-layoff. Involving your defense attorney early—ideally having them tour your worksite—can strengthen your defense against questionable claims by familiarizing them with your operations and specific work conditions.

4. Document the Facility

Proactively video record work areas, equipment, and machinery most likely to be involved in injury claims. This is especially important if your facility will undergo significant changes, renovations, or demolition, as this evidence could later be essential in claim defenses.

5. Record Job Functions

Clearly document on video the job functions likely to be cited in injury claims. This information can prove invaluable to medical providers who must assess whether claims are valid or exaggerated.

6. Prepare a Key Personnel List

Compile a comprehensive list of key personnel, managers, and supervisors who can serve as credible witnesses if needed. Ensure you have their home addresses and reliable contact numbers, ensuring accessibility for investigations or testimony long after the facility closes.

Conclusion

Effective layoff planning does more than ease workforce transitions—it directly mitigates the risk of inflated workers’ compensation claims that can arise during uncertain times. By proactively strengthening your claims-handling capabilities, assigning dedicated adjusters familiar with your operations, partnering early with a defense firm, and thoroughly documenting both your facility and job functions, your company can significantly reduce the incidence of questionable claims. Furthermore, maintaining a ready network of reliable witnesses ensures that legitimate claims receive the attention they deserve, protecting resources needed by genuinely injured workers.

As layoffs present unique challenges, these proactive measures set the stage for smoother transitions and better outcomes. Stay tuned for Part 2, where we will explore additional strategies to continue minimizing post-layoff claims.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

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

Injury Management Results (IMR) Software: https://imrsoftware.com/

©2025 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.