There are several things an employer can do to protect employees and manage the risk of California Workers’ Compensation claims. These are:

1. EVALUATE WELL BEFORE HIRING THAT EMPLOYEE

Reducing the frequency of your claims starts with hiring the right people for the jobs and functions they perform. Making sure you’re hiring an “A” player will not only improve your company’s productivity and efficiency, it can also lower your workers’ compensation costs. Prospective employees who have a history of “job switching” and short-term employment relationships may also have a history of California Workers’ Compensation claims. People who have filed fraudulent California workers’ compensation claims are often characterized by “quitting” their job, followed by periods of non-employment. While you may not discriminate against an applicant for filing a California Workers’ Compensation claim, employers should be on the lookout for applicants with irregular work history. Do your homework on each and every applicant, diligently confirming dates of employment and reasons they left their jobs. Also remember to do the following:

  • Perform a thorough background check (investigation gaps and transitions in employment)
  • Require physical pre-employment where applicable (generally there must be a bona fide, relevant occupational qualification to test).
  • The institute has a pre-employment drug testing program.

2. KEEP SAFETY FIRST THROUGH TRAINING AND SAFETY PROGRAMS

Employees must be constantly aware of the hazards that exist in the workplace and their possible consequences. Uninformed or untrained workers can be contributing factors to workplace injuries. Although California Workers Comp is no-fault insurance (the insured can pay regardless of who is at fault), many employees caught in accidents may blame their lack of knowledge or training as a contributing factor. To improve workplace safety, managers must initially and periodically train employees on proper safety techniques and practices.

Incorporating training in specific procedures and responsible labor practices is an ongoing responsibility. Close the skills gap and keep safe work practices a top priority for employees. Many safety-conscious employers I have inspected have large signs showing the number of days since a lost-time injury. Many other successful security managers have a security-conscious award that they use to promote people “caught in the act” for taking the extra time to follow security procedures. Also follow these best practices:

  • Keep your Injury and Illness Prevention Plan (IIPP) up to date.
  • Your employee handbooks should require immediate notification of any injury.
  • Hold monthly safety training meetings (especially to prevent common workplace injuries).
  • Carry out regular inspections.
  • Minimize hazards to avoid injury (document in your IIPP folder).
  • Offer group and individual incentives for security-conscious employees.

3. GIVE THEM MORE BENEFITS

Offering health insurance and retirement benefits provides employees with a better quality of life. Uninsured employees often turn to workers’ compensation to foot the bill when it comes to minor “Monday morning” strains and sprains, the most common of all injuries. When faced with high bills, employees may submit fraudulent claims to California workers’ compensation insurance carriers instead of purchasing health care out of pocket.

Providing health insurance can provide companies with special 5-10% discounts on annual health insurance premiums to help offset the cost of benefits when combined with workers’ compensation. Workers’ compensation insurers have a strong motivation to reward you; Your exposure to fraudulent and non-occupational claims decreases significantly when employees are covered elsewhere. For example, a joint venture with Blue Cross of CA and Fremont Insurance may provide a 10% credit to your Workers’ Compensation premiums in their preferred provider network program. Requirements apply, so check with your broker.

Another occupational benefit is the implementation of an early return to work program. This program gives the employee modified duty when recovering from an injury. Implementing a program will lower the cost of compensation payments (lost wages) to the insurer, thus reducing the total cost of the claim. Another benefit of this program is continued employee engagement. When employees are fully engaged in their work, they are less likely to consider alternatives to resolve their Workers’ Compensation claims. With the proper amount of time, rehabilitation, and care, your employee will return to work.

4. TAKE CARE OF YOUR EMPLOYEES

Employees injured on the job often apologize for the harm they have caused. Some even feel guilty about tarnishing the company’s safety record or reputation. In either case, don’t let your employee feel alienated or rejected as a result of an injury. That emotional separation from the employer commonly fuels employees’ decisions to retain an attorney or obtain legal advice regarding their claim. When workers’ compensation claims are litigated, the cost of the claims typically increases. This can affect your company’s loss experience and lead to increases in loss reserves and even your experience modification factor.

Take care of your employees and take care of all their needs, especially when an injury occurs in the workplace. Employees who have received treatment rarely see the need to sue their employer for the benefits of workers’ compensation insurance claims. Follow these steps:

  • It’s the employee is fine.
  • Does the employee feel safe?
  • Do you feel discomfort or pain?
  • Use a job fitness test.
  • Avoid “alienating” employees; spend time caring.
  • In the event of an emergency, take the employee to the medical provider of your choice.
  • In case of an emergency, get access to medical records.
  • In case of an emergency, contact your doctor.

5. INVESTIGATE AND LEAVE NO STONE UNTURNED!

Whenever an injury occurs, your government-mandated injury and illness prevention plan (IIPP) requires you to initiate an accident investigation. Take lots of notes and photos, if possible. Obtain factual data and detailed descriptions of the claimants’ physical characteristics, machinery, equipment, facilities, conditions, and environment. Ask witnesses to describe the accident in detail and sign their statements. Comprehensive investigative records that are accurate and timely provide incredible insight into the claim. By the time a litigated claim finally goes to court or on appeal, 18 to 24 months may have passed. Without a detailed description documented on paper, what the employee/complainant says could prevail. Keeping good records can help minimize the cost of the claim. Always remember:

  • Take exhaustive statements from witnesses.
  • Inspect the work area and conditions.
  • Take photos of the work area (if possible).
  • Keep research records in your IIPP.
  • Update your OSHA 300 (repeat injury) record.

6. MANAGE YOUR CLAIMS UNTIL CLOSING

Claims that are not closed in a timely manner increase your experience modification factor and therefore your California workers’ compensation premiums. By staying in touch with the medical provider (ideally an industrial medical clinic), employees, and other parties, you can help close claims and keep your experience low. After reporting a claim to your CA workers’ compensation insurance carrier, a loss reserve is set aside in your policy based on anticipated future costs for the employee to return to work. Such expenses may include medical costs, severance payments (lost wages due to injury), vocational rehabilitation, and temporary or permanent disability.

Once a year, your California workers’ compensation insurer sends a report card to the government agency that calculates your experience modification factor for the next policy year. The “Statistical Unit Report” provides workers’ compensation offices with information on both premiums paid and losses sustained as a result of injuries. If you have open claims during the time your unit’s statistical report is calculated, your experience modification factor may be overestimated. Always remember:

  • Maintain a good relationship with injured employees.
  • Report the accident in a timely manner.
  • Obtain and audit supplier invoices.
  • Corresponds with the claims adjuster; Keep a file.
  • Take steps to close claims.

7. KEEP YOUR ‘EX-MOD’ LOW

Be sure to request a copy of your experience modification worksheet (often referred to as an “ex-mod”) from your state’s workers’ compensation office. This document provides the calculation and the factors involved in developing your mod. Companies are often overcharged for workers’ compensation insurance premiums due to improperly calculated experience modification factors. Another report you should request is your run-of-loss report. This report from your insurer provides you with an accounting of your premium paid and your open and closed claims by policy year. Review any open claims and review any outstanding loss reserves. Please note that the statistical report of the unit is sent 6 months before the NAD

  • Know that the calculation date is 2 months before the NAD.
  • Request a copy of the loss streaks, unit stat, and carrier experience mod worksheet.
  • Take the initiative: in California, you can dispute the mod factor of your experience!

CONCLUSION

Like many issues plaguing businesses today, there’s only so much you can control when it comes to your Workers’ Compensation coverage costs. Failed and insolvent insurance companies have held the few players in the market hostage to the seller’s market due to limited underwriting capacity. The underlying imperative for prudent businesses is to either manage their costs controllable or hire a company that has a complete soup-to-nuts solution. In the end, you’ll find that a concerted approach with your management team, outside resources, and willing employees will be the ticket to lowering your California workers’ compensation premiums. A good insurance broker will help you implement all of the above suggestions at little or no cost.