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Rethink Your Company’s Workers’ Compensation Strategy

Workers’ compensation, a system of insurance that reimburses an employer for damages that must be paid to an employee for injury occurring in the course of employment. (Merriam-Webster Dictionary) Do you remember when it was called workman’s compensation? As more women entered the workplace the wording changed from workman’s compensation to workers’ compensation. However, while the name has changed, the history of worker’s compensation has generally been one where employers and insurers have relied on tighter medical management and “get tough” approaches to injured employees. This has led to the “us” vs. “them” attitude in the workplace. With our workforce changing from one or two generations working within one company to four or more generations, employers need to rethink their company’s workers’ compensation strategy.


Why are current workers’ compensation programs not working? One reason may be because companies are utilizing a third party administrator service, which may not be cost effective. Another may be that the company’s corporate culture encourages long-term disability claims. The company may also not have a safety program that is proactive or they may have an underutilized or no employee assistance program (EAP). In some cases, if may be difficult for companies to obtain coverage based upon their past experience. Whatever the reason, workers’ compensation costs continue to increase and companies need to develop creative ways to reduce loss costs and focus on injury management. Companies are able to accomplish this by building a culture of concern and safety consciousness and to intervene early in the injury management process.


Begin by asking yourself, how many employees in your company: are asked to participate in safety, employee health, or return-to-work committees; are involved in communication with a coworker who is out of work due to an injury or illness to encourage them to return to work; understand the impact of an injury on the company’s financial results; or understand the impact of workers’ compensation costs on their own job security? Then ask yourself, would our injury management outcomes be different if we involved and empowered the employees and ensured their satisfaction with the workers’ compensation process?


So, how do we create informed employees? One thing that we do know is that informed and satisfied employees significantly impact the outcomes of our workers’ compensation programs. We also know that information and communication needs should be met before the loss, at the time of injury, and during their time away from work. We should also treat workers’ compensation as a benefit and part of the total benefit package. The results will be more frequent returns to the workplace with significantly shorter times away from work. Workers will return to work in half of the time than their unhappy counterparts when they perceive they have been well treated by their employer, regardless of the cause of their disability.


In traditional work environments, companies have used the term “light duty.” This is usually a temporary reassignment of the employee to an entirely new job with lighter physical demands. It may also be that the company is allowing the employee to perform their normal job at less than full productivity with the temporary exclusion of certain difficult tasks. If your company is still utilizing the term “light duty,” consider altering the term to “transitional work programs.” “Transitional work programs may include: alternative work, modified jobs and work hardening. Using these terms allows an organization to maintain its compliance with employment law and ensures that the injured employees who return to work are productive.


Alternative work allows employees to work at less demanding jobs until they are physically able to resume their original work duties. Modified jobs allows for engineering alternations of an employees workstation in order to prevent continued aggravation of the injury. Work hardening employees perform their usual job-related tasks in steps of increasing difficulty until they regain the physical ability needed to perform their original jobs. This allows the employee to remain at work at reduced hours and sometimes this occurs in a simulated off-site work environment. When considering the “best” transitional program, consider the employee’s physical limitations. If injured workers exceed their physical abilities it causes a recurrence of the injury and additional workers’ compensation costs for the employer. Transitional programs may be located in the same or different department, at another company or operating division, in the community at an employer-sponsored volunteer activity or at a commercial vocational rehabilitation return-to-work center (work hardening simulation).


When dealing with a workers’ compensation claim, remember that all absence and disability programs must be integrated with the requirements of the Americans with Disabilities Act Amendments Act (ADAAA) and the Family and Medical Leave Act (FMLA). The ADAAA does not require an employer to allow a person with a disability to work permanently on a reduced productivity basis. However, when in doubt, consult with an HR Consultant or legal counsel for further explanation.


Employers do have responsibilities as it relates to workers’ compensation to include the following. The employer cannot refuse to let an individual with a disability return to work on the basis that the employee is not fully recovered from an injury or illness, unless he/she: 1.) cannot perform the essential functions of the job he/she holds or desires with or without reasonable accommodation, or 2.) the person would pose a significant risk of substantial harm that could not be reduced to an acceptable level with reasonable accommodation (i.e. direct threat). Reasonable accommodation may include reassignment to a vacant position, however, the employer may consider the employee’s qualifications to perform other vacant jobs for which he/she is qualified and reasonable accommodation is not necessary if it can be proven to result in an undue hardship for the employer. Again, for additional information, it is recommended that company’s consult with an HR Consultant or legal counsel.


Employers may also prevent malingering workers’ compensation claims by following basic steps to include:


1.) Before the injury occurs:
• Nurture a supportive organizational culture in which employees feel that they are full partners in the organization.
• Educate supervisors and other employees about the costs of disability and lost work time.
• Promote a safety culture to reduce accident risks and stress.


2.) Early involvement in injury management:
• Encourage the supervisor to periodically contact the injured employee to show concern.
• Involve the employee assistance program (EAP) practitioner, case manager or other individual in a supportive role while the
employee is out on disability and after his/her return to work.
• Involve a psychologist or psychiatrist in the treatment process, if necessary.


3.) During the recovery:
• Ensure the disability accommodates a partial return to work.
• Where appropriate, allow transitional work programs until the injured employee fully recovers.
• Integrate the various players in the treatment and return-to-work processes.


By following these basic steps, employers may be less likely to promote the “us” vs. “them” attitude in the workplace and more of the “we” attitude. In addition, they will have higher and earlier return to work times and more highly engaged employees. All will lead to greater productivity rates and added value to the bottom line of the company.


Written By: Kristen Shingleton, M.B.A., CCP
President, New Focus HR LLC


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