Workers Compensation – Mutually Beneficial
Eve Framiñan, TPO, Inc., October 2008
Workers’ compensation may seem like one more cost of doing business – a cost that many business owners would prefer to do without. But workers’ compensation serves a purpose for both the worker and the employer. It provides for prompt medical and wage benefits for injuries incurred on the job and benefits for dependents of workers killed because of work-related accidents or illnesses. Workers’ compensation is also a no-fault system; negligence or fault is not at issue. A covered employee has only to show that he or she was injured as a result of employment or at least partially as a result of employment. Payments of benefits are handled without litigation so employers’ have some economic protection; while employers pay for workers’ compensation coverage, the costs are small in comparison to a potential law suit or settlement. Finally, it can be argued that workers’ compensation laws have improved work safety, reduced employer/employee issues, and reduce the societal costs of disabled workers.
Workers’ Compensation programs are enacted and governed by state law. There are a few Federal programs but they are limited to specific positions and injuries. With the exception of Texas and New Jersey, workers’ compensation is mandatory in every state. If an employer that is required to have coverage does not provide it, the employer is subject to penalties, prison time or both. But more importantly, if an employee is injured on the job and the employer does not have workers’ compensation coverage, the employee can sue for a variety of things like assumption of risk, contributory negligence, reckless behavior, emotional distress and punitive damages.
It is important for you to know your state’s law. Most state laws define covered injuries, the amount of benefits, waiting periods and procedures for filing, contesting and settling claims. But each state has different rules on covered employers, the definitions, and procedures to follow. For example, in Virginia, all employers who regularly employ three or more full-time or part-time employees must purchase and maintain worker’s compensation. Alaska requires all employers regardless of the number of employees. And in Florida, all construction industry employers regardless of the number of employees and all other employers with four or more employees must provide workers’ compensation coverage.
Most states have some form of non-retaliation component in the law. For example, in Texas, employers cannot suspend, terminate or otherwise discriminate against an employee for exercising any right under the workers’ compensation law. If the employer is found to have violated the law, the employer must reinstate the employee with full back pay and benefits. If there were court costs involved, the employer may be responsible for the attorney and courts costs. You can find your state’s workers’ compensation laws on the state website.
Workers’ Compensation Insurance
There are several ways to get coverage for your company but its important to know what your state permits; some states limit the choices of what constitutes acceptable coverage.
The most common are listed here but each business is unique and you should consult with an insurance expert before deciding which is best for your business. You can buy private insurance through an authorized insurance carrier. The carrier will pay, administer and investigate claims. In many states, an employer can be self insured and pay and administer claims itself. If you elect to self insure, you will have to prove to the state your business has the ability to pay claims. Some states allow employers in similar businesses to pool their workers’ compensation coverage and create group self-insurance. Many states have workers’ compensation funds that allow companies to purchase their workers’ compensation coverage from the state fund; some states mandate the use of the state fund. For employers with poor accident records or in high risk industries, there is residual insurance. Residual insurance is usually offered by private carriers and the premiums are higher.
Regardless of the type of workers’ compensation coverage you elect, your state will have requirements of the employer and the employee. States legislate the time frame for an employee to report an accident or illness to the employer and similarly, the timeframe for an employer to report the event to the state. The length of time can be short; for example in Florida, the employer must report the accident or injury within 7 days of being notified by the employee. Details such as the correct form to use to report the injury may also be specified in the state law. If you have taken private insurance, the insurance carrier can help you with the requirements.
Controlling Workers’ Compensation
A safe workplace is the best way to control workers’ compensation claims. Every workplace should have a safety policy and training program. Start with a policy that outlines your expectations regarding every employee’s role in safety and steps to be followed in the event of an accident. The following is a sample policy.
You are expected to give your full-time skill and attention to the performance of your job responsibilities utilizing the highest standard of care and good judgment. You are also expected to follow all safety rules and regulations at all times including the use of protective clothing and equipment, attendance at all training sessions related to your job description, and follow the directions of warning signs or signals and/or directions of supervisory personnel.
All job-related injuries or illnesses are to be reported to the supervisor immediately, regardless of severity. In the case of serious injury, your reporting obligation will be deferred until circumstances reasonably permit a report to be made. Failure to report an injury or illness may preclude or delay the payment of any benefits to you and could subject [COMPANY NAME] to fines and penalties. If an injury occurs you are required to:
· Take remedial first aid actions
· Report the injury to your supervisor as soon as possible
· Seek emergency care if necessary
· Fill out accident form
· Provide human resources with a medical release from the healthcare provider
· Review incident with human resources
In addition to the policy, provide training for all new employees and annual updates for all employees. Include specifics for your industry such as proper lifting and handling of equipment, safe driving practices such as no cell phone use or text messaging while driving, and the appropriate use and disposal of hazardous chemicals or materials. And be sure to tell your insurance carrier about your training program. Many policies offer discounts for employers with formal safety training programs.
There are several other leave and disability laws that need to be taken into consideration when dealing with a workers’ compensation claim. Because an employee has been injured or become ill as a result of her or his employment, Family and Medical Leave Act (FMLA), the American with Disabilities Act (ADA) and the HIPAA privacy rules may apply. The different laws are discussed below but because each case is different, it is a good idea to seek the advice of an employment attorney or qualified human resources professional to see if any apply.
If the employee’s absence under workers’ compensation would have been considered a qualified absence under FMLA, it is usually best to designate the leave as FMLA leave. You can require the workers’ compensation leave and FMLA leave run concurrently. Doing so protects the employee from being terminated for his or her absence until FMLA leave is exhausted which is typically longer than most employers’ policies. It also uses some or all of an employee’s FMLA leave leaving less time off an employer many need to approve in the future. It is important to follow the correct procedures to designate leave as FMLA; an employer cannot retroactively designate workers’ compensation leave as FMLA leave.
While an employee might suffer a disability as a result of a workplace injury, it is not necessarily a disability under ADA. The ADA was enacted to protect disabled people with an impairment that substantially limits one or more of life’s major activities from discrimination. Usually a job related injury is only a temporary disability that warrants workers’ compensation benefits but is not protected under the ADA. If the injury caused a permanent disability, it could be covered under the ADA. In the event of a serious accident, seek the advice of an employment professional such as human resources or an attorney. Note that it is a violation of the ADA to ask questions of applicants or employees that are likely to elicit information about disabilities.
The HIPAA Privacy Rule was enacted to protect individuals’ medical records and other personal health information. HIPAA covered entities must protect personal health information and are prohibited from sharing the information without explicit authorization from the individual. However, health plans and medical providers can share medical information when required to do so under the workers’ compensation law without the employee’s authorization. Workers’ compensation insurers are not covered entities and under some state laws, are specifically allowed to share the employee’s medical information with the employer. Regardless, it is a good practice to ask employees to complete an authorization form when filing a workers’ compensation claim.
As tempting as it might be, it is illegal in most states to ask an applicant if he or she has ever suffered a workplace injury or filed a workers compensation claim. Similarly, an employer cannot ask an applicant to undergo a medical exam or drug screening until after employment has been offered and accepted. It is appropriate to state on job descriptions which the new hire should sign and to ask during an interview if the candidate can meet certain physical requirements. It is good to be specific but make sure your questions are directly related to the position and that you are consistent and ask all applicants for the positions the same questions. For example when interviewing a plumber, it might be appropriate to ask the job applicant if she or he can regularly lift packages of up to 25 pounds (or what ever is required), use fine motor skills to manipulate small objects, squat for periods of an hour, etc. It is probably inappropriate to ask if the candidate has expert knowledge of software programs.
If you elect to ask for a drug test or medical exam prior to assigning the employee to a job (remember, this is after the employment offer), be sure the tests are job related and the doctor knows the physical demands of the position.
Many businesses require background checks as part of the pre-employment process. Investigating previous workers’ compensation claims should not be included.
The best way to manage the costs of workers’ compensation is to provide a safe workplace. Be vigilant about safety measures and regularly inspect your workplace for hazards such as unstable stacks of supplies, tripping hazards such as cords across paths or torn rugs or flooring, and casual or sloppy habits for lifting or using dangerous materials. Even the safest workplace can experience an accident so the wise business owner knows the state laws, finds out and obtains the right type of insurance for his or her business, develops policies and practices for reporting injuries or illnesses as soon as they occur, trains all employees on workplace safety, and gives additional training to supervisors and managers on implementing policies regarding workplace accidents and injuries.
Established in 1994, TPO offers human resource outsourcing services to small and mid-sized organizations. As the first and most experienced outsourcing firm in the DC-Metro area, the company was specifically designed to deliver a noticeably different experience – one that seeks to understand the unique needs of each client and then craft solutions that make the HR function an effective driver of better business results. Visit http://www.tpo-inc.com/ for more information.