It's natural to want to trim costs wherever possible. But doing any serious cost cutting in the area of workers compensation insurance presents special challenges. For one thing, you can't cut benefits levels as you can with health insurance. That's because states mandate full treatment for on-the-job injuries. Another issue is that your cost-cutting steps must be done in conformance with the law. And when it comes to workers comp, the state is all-powerful. "With the exceptions of federal employees and employees working in maritime industries, state laws control workers compensation," says Christopher M. Fox, an associate in the Philadelphia office of Littler Mendelson, the nation's largest law firm devoted to representing management in employment matters.
Unfortunately, juggling the various state laws can get complicated. "Each state has specific rules regarding how you notify employees of their rights, how they can file claims and what doctors they may or may not see," says Fox. "Your state laws will also detail what steps you must take to report workplace injuries." You can obtain information about your own state's laws from U.S. Department of Labor at www.dol.gov.
Nobody wants to deny workers comp benefits for legitimate accidents. But what about those instances when accidents are partly the fault of the employee? Suppose the worker failed to use a safety device, engaged in horseplay, or did something foolish, or worked while intoxicated? Or what if an injury was deliberately self-inflicted?
Many employers would like to weed out such questionable claims as a way of controlling insurance costs. It is certainly possible to mount defenses in cases such as the above. Unfortunately, unless some clear-cut fraud is involved, prevailing in court can be difficult. "Most workers compensation systems have become very liberal as to the definition of an accident," says James J. Moore, president of J&L Risk Management Consultants, a Raleigh, North Carolina-based firm that helps employers manage workers comp costs. "The fact is that courts deny benefits only rarely."
One reason for this is a matter of judgment. Legitimate claims often arise because employees were not paying attention to what they were doing or performed tasks out of the normal work routine. Trying to draw a bright line between legitimate and improper situations can be problematic. Another reason is a matter of perception. "In any workers comp case, it becomes the `big bad insurance company' against the one little employee," says Moore. "Workers compensation judges tend to lean towards the testimony of the employee."
While it seems the workers comp laws are stacked in favor of employees, those laws also protect employers from costly lawsuits by injured workers. "The tradeoff for a no-fault system is that workers compensation is generally the exclusive remedy for employees injured in the workplace," says Fox. "Only in very limited instances may an employee circumvent the system and sue the employer in tort."
And what are those instances? Once again, state law rules, according to Fox. "Using Pennsylvania as an example, an injured worker could sue [the] employer outside of the workers compensation system if the employer failed to maintain workers compensation insurance, or the injury was intentionally caused by the employer," he says. "That being said, Pennsylvania courts have held that even a willful violation of OSHA safety regulations will not expose an employer to civil liability."
There is one highly effective way to control workers comp costs - launch a workplace safety program and constantly work on improving it. If you experience fewer accidents, you will incur lower medical costs - which translates into lower workers comp premiums. "A lot of employers come to me and ask, `How can we reduce the cost of this claim?'" says Moore. "Unfortunately, once a claim is made, you are not going to reduce the cost. The best approach is to take steps to reduce workplace accidents that lead to claims. The least expensive accident is the one that never happens."
While safety programs can become quite detailed, it's wise to start out small and build. The first step is to identify the accidents most likely to happen. "Slips, trips, and falls are by far the most common accidents for almost all employers," says Moore. "I see a ton of knee and ankle injuries resulting from what seem like minor accidents." Such injuries can be damaging to the worker and to the business: "If you cannot put your weight on your hip or your knees or your ankle, you are going to be out of work a long time," says Moore. "That is very costly."
Train your employees to be especially vigilant in quickly correcting conditions that might seem innocuous, but can lead to slips, trips and falls. For example:
• Tangled rugs. Straighten any rugs that have gotten folded over. Watch for corners that curve upward. Make sure the rugs themselves do not slip easily on your floor.
• Wet floors. When it rains, do the floor areas just inside your doorways get wet? Dry them immediately and install high-friction rugs. And install barriers to guide customers around any wet areas.
• Obstructions. Avoid leaving cartons in the middle of walkways. Scoop up any flyers or other pieces of paper that may cause people to slip.
"Studies show that stepping to different levels causes many trips and falls," says Moore. "So you need to pay special attention to stairways, any changes in floor levels, or sections of floor that are on a gradient." On stairs, install roughened safety strips across the steps that help shoes get a firm hold. Place mats at the bottoms and tops of stairs to catch any water tracked in when it's raining. Also make sure your banisters are firm and are mounted at the right height. Changes in floor levels need to be clearly marked. Install bright colored strips along the division and a railing where possible. As for floors that are on a gradient, post warning signs and a walkway railing.