Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Workers’ Compensation Costs: How to Reduce Them


Published on

Workers’ Compensation Costs: How to Reduce Them by Harry R. Tear III and Kim A. Roper

Published in: Law
  • Be the first to comment

  • Be the first to like this

Workers’ Compensation Costs: How to Reduce Them

  1. 1. Workers’ Compensation Costs: How to Reduce Them Times are tough. During these difficult economic times, employers are looking to minimize risk and exposure with regard to work-related accidents. Eighty percent of workers’ compensation dollars are spent on twenty percent of claims. The restaurant industry, with its unique safety hazards and potentially large number of undocumented workers, is no stranger to the workers’ compensation system. Below are simple steps you can take to reduce workers’ compensation costs. The first step to cutting costs is prevention. Pre-accident documentation can set up legal defenses that result in significant savings to employers. Employers should require written applications from all prospective employees, obtain a detailed employment history, and undertake to check references. The time and money spent contacting the applicant’s references is well worth it as it can prevent the hiring of a problem employee that could ultimately cost the company thousands of dollars. Your insurance carrier and their claims professionals cannot correct bad hiring decisions once an injury occurs. In addition to requiring applications, all employers should follow the I-9 process to verify the applicant’s ability to work legally in the United States. This is the process by which the applicant completes Section 1 of Form I-9, Employment Eligibility Verification and provides two forms of identification. The employer must make copies of the two forms of identification, and then complete and sign Section 2 of the form. Though undocumented workers are entitled to workers’ compensation benefits, if you have followed the I-9 process and subsequently learn an injured employee is undocumented; thus, preventing you from offering him work under Federal law, you may not have to pay weekly disability benefits if you have suitable light duty work available. Once an applicant has been offered a job, employers should consider requiring the employee to complete a Post Employment Medical Questionnaire. The Americans with Disabilities Act prohibits an employer from asking medical questions of applicants until after a job offer has been made. Nonetheless, Post-Employment Medical Questionnaires are a good tool in reducing workers’ compensation related costs as they can be used to set up what is known as a Rycroft defense. A Rycroft defense allows an employer to deny a claim where: the injured employee made false representations regarding his medical condition at the time of hire; the employer relied on the false representations in making the decision to place the employee in a particular job position; and there is a casual connection between the false representation and the injury. In many cases, injuries that result from an aggravation of a condition that the
  2. 2. employee concealed on their Post Employment Medical Questionnaire can be quite serious, and this defense can provide significant savings to the employer. Employers should also consider requiring employees to submit to physical examinations at the time of hire. A physical examination can help establish a baseline of the employee’s medical condition and uncover non-disclosed medical problems. In addition, as part of the physical examination, the employee should be required to submit to a drug screen which can eliminate dangerous employees before accidents occur. Injuries from slip and falls are quite frequent in the restaurant industry, and while some slip and falls may be unavoidable accidents, others may be the result of an employee’s drug use or intoxication. Therefore, not only is it important to require a drug screen at the time of hire, it is also important to institute a policy requiring employees to submit to a drug screen following the report of an accident as a positive drug test can provide an affirmative defense to a workers’ compensation claim. It is impossible to eliminate all work-related accidents. Therefore, one of the most important ways that employers can keep costs down is by maintaining control of the medical treatment, and the tool to doing this is the Panel of Physicians. A Panel allows employers to control an injured employee’s medical treatment as long as it is properly composed; it is posted in a prominent place; and the employee has been informed of the function of the Panel and his/her right to select a physician if injured at work. The best way to document the employee’s understanding of the function of the Panel and their rights and obligations is to have the employee sign a Panel Acknowledgment Form and place it in his/her personnel file. These steps are just some of the ways that employers can reduce costs by both preventing avoidable claims and minimizing exposure when an accident occurs. If you have any questions, or would like to obtain copies of the documents referenced in this article, please contact either Harry Tear or Kim Roper with Moore Ingram Johnson & Steele at (770) 429-1499.