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Worker's Compensation Costs

Furniture World Magazine


Controlling worker's compensation costs.

Almost every business is aware of the amount spent on workers compensation but most make mediocre efforts at control. The typical approach is to compare rates available based on their own safety record to those available through a group. It is a rare company that really looks at preventing accidents in the first place and managing the situation when an accident does happen. Companies that follow the common sense guidelines presented in this article have reportedly slashed their workers compensation rates by 50 to 90 per cent.

Only 10% of the workers comp cases are uncontrollable accidents and about 70% can be classified as preventable. The remaining 20% are employee fraud, accidents that happened elsewhere or are non-existent ailments. There are several benefits that can be achieved by managing the whole arena of workplace safety practices. The first is eliminating the pain and suffering caused by preventable accidents. The second is the improved productivity of employees at work. The third is cost reduction. The steps you can take to control workers comp don't involve rocket science.

Whether you purchase workers comp coverage through a private insurer, are a member of an industry pool or participate in a state plan, your costs are affected by the incidence and severity of incidents. If the number you experience increases, either your rates go up or you get kicked out of your pool into a higher risk pool. It's just as simple as what happens to your car insurance premium if you get too many tickets or too many accidents. Reducing the number of workers comp cases, the amount of time people are off after an injury and eliminating fraud are the key issues.

As you read this article, remember that the workers comp laws vary from state to state and you must conform to the specific laws applicable to your company. Unionized companies may also have other requirements. Nevertheless, most of the points raised are generally acceptable.

MANAGEMENT'S ATTITUDE: Management sets the tone for safety within the company's culture by making safety a part of everyone's job. You must take a personal interest in safety, make your supervisors accountable for their areas and encourage employees to take an active part in maintaining a safe workplace. By and large, supervisors at all levels don't like to discipline employees so they tend to ignore problems until they are out of hand. It is easier to tell an employee to properly dispose of corrugated and plastic packaging material than to call 911 when the employee has slipped on the trash and injured his head.

COACHING/DISCIPLINE:Whether you call it coaching or progressive discipline, it is mandatory to counsel employees that don't follow the safety rules. When a written warning is given, a copy should be signed by the second level supervisor and mailed to the person's home. That makes it more formal and may also result in some pressure applied at home from their family.

SAFETY MEETINGS: Safety meetings may be as short as 10-15 minutes but emphasize the points that are important to their particular work. This is an opportunity to discuss what types of accidents have happened and how they could be prevented in the future. Employees should also be encouraged to point out legitimate safety improvements. It may be as simple as replacing damaged extension cords or fixing a broken hand rail.

FOLLOW-UP: When a worker is off due to injury, it is important to maintain contact. This is one of the easiest things to do but is a frequently forgotten. A regular schedule should be established. Consider weekly for employees expected to be off less than two months and at least monthly thereafter until the employee returns to work or is classified as permanently disabled. Phone calls are good but visits to the employee's home should also be done. It shows your interest and concern and it also gives you the opportunity to see the employee in his own environment. For instance, a worker off on a shoulder injury showed remarkable improvement after he was observed doing jet ski acrobatics on the lake near his home.

ALTERNATIVE WORK: If alternative work is available that a worker can accomplish safely, it should be encouraged. There are many lighter duty jobs that may be done, whether it be checking inventory, cleaning up the spare parts shelves, getting the vendor returns squared away, painting or even pushing a broom. The longer the employee stays home, the less motivated he will be to return to the normal work schedule.

FRAUD: You must also be prepared to deal with fraud. Many states and insurance companies have established strong programs to deal with this issue but they don't act in a vacuum. If you suspect fraud, discuss it with your workers comp administrator and press them take the necessary steps. Some companies contract with investigators specializing in worker comp fraud but this is usually out of reach for smaller retailers.

Bottom line, the management of a business has the greatest motivation to control every aspect of the operation. Workers comp administration is a controllable expense, just like advertising, rent and utilities.


  • Company policy should clearly state that a safe working environment will be maintained.
  • All accidents will be reviewed. If fraudulent, progressive discipline will be taken.
  • Employees must be participants in the safety process through training and accident analysis.
  • When an employee is off, regular contact will be maintained by phone and visits.
  • If possible, the employee shall pick up benefit checks as an additional company contact.9. Assign alternative work whenever possible. Recovery will be faster at work than at home.
  • Employees must report injuries immediately to the company.
  • File all required reports with your insurance company and government agencies as required in a timely manner.
  • Keep in touch with the employee's doctor about his condition and when they can expect to return to work. If in doubt, require a second opinion.
  • Appropriate medical action will be taken. An accident report will be prepared and signed by the employee and the supervisor.

Daniel Bolger of The Bolger Group assists companies achieve improved transportation, warehousing and logistics. Questions about any aspect of these areas can be directed to Mr. Bolger care of FURNITURE WORLD at dbolger@furninfo.com.