Money-Saving Workers' Compensation Tips

What is Workers’ Compensation?

Workers’ compensation (WC) insurance began in 1915 and is a regulated, mandatory benefit to protect individuals injured on the job.
WC pays for medical bills and lost wages from work-related injuries.
WC is a no-fault system; employees cannot sue their employers for work-related injuries when receiving benefits.

Workers’ compensation is a significant expense for businesses. According to www.insureon.com, workers’ compensation costs Iowa businesses $1.64 per $100 in wages, as of 2012. By improving employee safety and training, you can lower this expense while improving the work environment for your employees.

What is a Mod?

Your experience modification factor, or mod, is an important component used in calculating your workers’ compensation premium. Simply expressed, the mod is a ratio of actual losses to expected losses over a 3 year period.

If your actual losses are more than expected, then your mod is over 1.0.
If your actual losses are less than expected, then your mod is under 1.0.

Your mod determines your final workers’ compensation costs: your premiums equal the basic, or manual, premium multiplied by your mod.

So, how do you lower your mod?

The following are ideas you can easily implement in your business, often at little or no cost.

General Safety Procedures

Protect your employees by minimizing any job hazards. You should always be evaluating every aspect of your workplace to ensure the safest environment possible.
Prepare emergency announcements and do test runs of emergency response systems to familiarize employees.
Choose a practical flooring surface, not just one that looks nice. Often, the best looking floors can be the most dangerous and will be slippery when wet.
Customize workspaces to fit each employee’s needs through ergonomic adjustments. By ensuring that an employee’s work space is tailored, you create a safer environment less prone to bodily stress or injury, and thus, less prone to workers’ compensation claims.
Educate your employees on the safest way to lift objects. Squatting with bent knees minimizes the stress to the back, regardless of what is being lifted.
Create a policy on distracted driving. Motor vehicle accidents account for a large percentage of work-related fatalities. Eating and drinking, cell phone use and music devices are all possible sources of distraction behind the wheel. The use of such devices could also be illegal, as more state and federal agencies crack down on distracted driving. A good policy can help prevent fatalities and limit liability for your company.
Along the same lines, prohibit texting while driving regardless of whether or not your state specifically prohibits the practice. Texting while driving makes an employee 23 times more likely to have an accident. A federal ban prohibiting drivers of commercial vehicles from texting has also been recently enacted. Create a written policy for both distracted driving and texting while driving, and have all employees sign off on it.
Establish and enforce disciplinary measures for safety violations. There should be some type of corrective action for any employee who doesn’t abide by safety requirements.
Train your supervisors in-house. They may have previously been trained as supervisors in general, but they need to also be trained in your particular work environment.

Return to Work Strategies

Job offers should always be made in writing and should thoroughly describe the offered position to ensure the hire is fit for all duties.
When the job is offered, send a formal job offer package along with the offer letter. Make sure it includes all the benefits the potential employee is eligible for, including return to work policies and procedures, so there is no confusion later.
When developing a temporary assignment for someone returning to work, find useful tasks that are not covered by other areas of the company—the goal is not to take work away from another employee.
Create a written job description and job analysis for all transitional duty jobs. These jobs should match physical capabilities with the work that needs to be done so that they are both useful and appropriate.
Hold employees working temporary assignments or transitional duty jobs to the same work rules as other employees. This prevents devaluation of the job by employees and sends the message that they are still contributing to the company.
Develop and maintain a close working relationship with medical providers. Make sure they understand your business so they can help you evaluate return to work policies, procedures and cases.
For all employees assigned to temporary work, monitor their medical health regularly. Make sure they are doing well physically and, if they are making progress, find out from their physician if they can move forward to more demanding tasks.
Develop and maintain a close working relationship with claims adjusters. Make sure they know your return to work program, and ask them for advice and suggestions to improve it.
Resist the temptation to turn temporary job assignments into indirect punishment. Understand that the work is therapy for the returning employee; make sure to stay positive and keep the work meaningful.
Consider establishing a transitional duty pay rate. It will be less than what the employee would earn working their normal job, but make sure it is consistent among all employees on transitional duty.
For return to work program employees, stay in frequent touch from the time of the return to work offer letter until they return to full working status. You should be accessible for them to be sure their return to work is progressing smoothly.
Develop a return to work plan for every injury that results in lost time. Communicate with the employee’s doctor so you understand when and how they can progress to various work tasks.