And keep workers’ compensation costs under control.
By William J. Lynott
If you’re a typical specialty fabrics business owner, workers’ compensation costs—or the threat of them—can quickly become a major expense burden. Almost every business in the United States that has employees must deal with the cost of workers’ compensation; it’s a perennial issue, but needs annual attention.
There are steps you can take to help keep your workers’ comp costs under control while lessening the chances of a costly and burdensome claim. But keep in mind that employers who have successfully cut their workers’ compensation costs report that this is a challenging task requiring attention and ongoing commitment from management.
Perhaps most important is an understanding that policies designed to protect employee safety and well-being provide a solid foundation for minimizing workers’ compensation claims. Experience shows that employees who feel that worker safety is a major concern of management are less likely to attempt to abuse the workers’ compensation system.
Smart hiring comes first
Ten steps you can take to help control workers’ compensation claims and insurance premiums:
1. Cost control begins with the hiring process. Within the limits imposed by labor law restrictions, interview techniques should be designed to identify applicants who may pose a higher-than-average behavior or accident risk potential.
Always begin by thoroughly examining the applicant’s rÃ©sumÃ©. In particular, look for gaps in the employment history. Ask for an explanation of any gaps, and consider the applicant’s answers carefully. Any unexplained gaps should be considered as important red flags. “Look for ‘short-timer-itis’ —the person who seems to switch jobs every 12 months,” says Therese A. Hoehne, director of Human Resources, Aurora University, Aurora, Ill. “If the applicant is new to the job market and has already had two or three jobs, this may or may not be a warning sign.Â However, if the applicant has 10 years’ experience and 8 or 10 jobs, you should discuss the reasons.Â Such a history could indicate a ‘job-hopper’ at best, and a serious problem employee at worst.”
Be cautious of recommendations from former employers. There are many reasons for an employer to provide favorable recommendations for a former employee; not all of them are as sincere as they might appear. These recommendations deserve consideration, but they should be considered within the context of all other information gathered about the applicant.
Keep the interview on track. Like any conversation, a pre-employment interview can stray far off its proper path if not carefully controlled. “Ask only those job-related questions that you need to ask to make a lawful hiring decision,” says attorney John C. Romeo, Philadelphia, Pa. “Pay close attention to the direction the conversation takes during the interview.Â It can easily turn into a conversation about family, religion or national origin,” he says. “If you see the conversation going in this direction, you should make a concerted effort to stop and switch gears—get the conversation onto a proper, legal and informative topic.”
Talk less, listen more. “Most interviewers talk too much,” says Emory Mulling, chairman of Mulling Corp., Atlanta, Ga. “The interviewer’s role is to get information from the candidate. Too often, interviewers spend too much time talking about the job and not enough time asking relevant questions of the candidate.” Human resources professionals agree that talking too much during an interview is a common mistake by employers. Your job during a pre-employment interview is to obtain as much meaningful information from the potential employee as possible.
Prepare a written list of questions. You probably have to deal with applicants of both sexes in your business. You should not ask different questions of males and females; to do so is to risk violation of anti-discrimination laws. It’s best to create a list of questions to ask all candidates before the interview process starts. Put those questions on a sheet of paper with space between them to take notes.
Analyze answers carefully. “Even after asking the right questions, some interviewers make the wrong choice because they didn’t listen carefully to the answers,” says Mulling. “Don’t think you can overcome potential risks and make someone fit in just because you like the way they look, or because their technical skills or past experience are a good match for the job.”
Safety in practice
2. After obtaining written consent from the applicants, conduct thorough background checks before hiring. Include physical fitness exams appropriate for the job if included in the written consent. Applicants who are reluctant to agree to such checks should be investigated thoroughly.
3. Have permanent programs in place to train employees on the safe use of equipment and safe working behavior. Discourage unsafe working habits. Instruct employees not to take risks. Encourage the safest procedures even if they may take longer. Make sure that new workers are aware that workplace safety is a top priority in your company.
4. By demonstrating management’s interest in safety, you establish your concern for employees’ well-being while helping to minimize the possibility of costly workers’ compensation claims.
5. Maintain safety awareness throughout the workplace. Remind your employees to practice safety procedures by displaying safety posters throughout your work spaces. Within legal parameters, develop and include programs designed to keep your workplace drug- and alcohol-free. Failure to address these issues might be considered by some as a lack of interest or concern.
6. Search for workplace hazards that have caused or may cause an injury or illness. For example, look for situations that may cause the very common and always dangerous trip-and-fall accidents. Keep the workplace clean by eliminating unnecessary clutter.
Make it policy
7. Classify employee job descriptions and titles correctly. Some jobs are riskier than others; an office clerk works in a less risky environment than a shop worker. With more than 600 job classification codes in use today, improper job classification for even one employee could increase your workers’ compensation premiums. Each classification code is based on the level of risk associated with that job. Job codes are subject to change, so it’s important to use the most recent edition of the classification codebook for your state.
Some business owners intentionally misclassify workers and manipulate payroll figures with the intent of lowering insurance costs. Even worse are situations where employers have no workers’ compensation coverage at all. Employers who engage in this type of activity not only put their workers in danger, but also risk harsh financial penalties and even prison time.
8. If your company is large enough, establish a safety committee made up of both employees and management. The committee’s purpose will be to identify and correct safety problems, provide ideas for improving the company’s safety programs, and prepare safety instructions for distribution to employees.
9. In the event of any employee injury, provide medical attention promptly to minimize possible complications from delayed care. Complications to even a slight injury can result in increasingly costly workers’ compensation claims, which can result in permanently increased insurance premiums.
10. Work with disabled employees to get them back on the job as quickly as practical. An employee who is unable to return to work on a full-time basis may be able to work part-time or in a less physically demanding job. The longer an employee remains unable to work, the more the insurance company will be required to pay in compensation benefits, which leads to higher premiums for the employer.
Many employers look at the costs of workers’ compensation insurance as an unavoidable expense over which they have little or no control. Experience shows, however, that workers’ compensation costs will respond to dedicated efforts to keep them contained. A determined and continual effort can result in major reductions in expense, as well as dramatic improvements in employee morale.