If you want to give a human resources professional a migraine, just whisper two words in their ear: workers’ compensation. This system of government-regulated insurance for work-related illnesses and injuries is as complicated as it is vast. In most states, workers’ compensation is a “three-way” system: an employer can be self-insured, participate in the state-funded program, or obtain third party insurance. But fear not. The following pointers will dispel the top five myths about workers’ compensation.
1) Self-insured employers pay more than employers insured through the government. False. Employers who self-insure (i.e. do not pay quarterly payroll taxes to their state government) pay less on average for workers’ compensation than employers who participate in a state-run system. Self-insured employers are able to closely manage their claims beginning with the question of whether they will cover an employee’s claimed injury or illness. The employer may also take a more aggressive stance in managing the claim right down to determining the most cost-effective treatment strategy for the injured employee.
2) Work-related stress is a compensable occupational illness. Not true. Unless an employee works in a uniquely high-stress environment or their stress was induced by an objectively traumatic event, general work-related stress is not a compensable factor or condition. In other words, an employee who claims the tension with a supervisor is causing the employee immense stress and led the employee to seek medical treatment is not covered by the workers’ compensation system.
3) Injuries occurring beyond the walls of the office are not covered by workers’ compensation. Guess again. Under the right circumstances, the company picnic can become an extension of the office, subjecting the employer to a workers’ compensation claim. Compensable injuries may arise in non-traditional settings depending upon the time, place, and manner of the injury. Did the injury occur during work hours? Was the employee compelled to be present at the site of the injury? Did the employer provide transportation to the site of the injury? To put these questions in context, consider the case of a software engineer who died in a car accident while driving in the company car to a required team-building exercise away from the office. Because his accident or “injury” occurred during work hours – he was required to participate in the exercise – and the company provided the transportation, his death is likely a compensable event.
4) Longer recuperation periods for injured workers will expedite the employee’s full return to work. Nope. In 2003, the Rehabilitation Counseling Bulletin reported that of the half-million injured workers who were disabled for at least five months, only half of those workers ever returned to work. There are many factors that play into the successful return of an injured worker. One of those factors is the amount of time the injured worker is out of the workforce. The longer an employee is away from the office due to their work-related injury or disease, the less likely they were to return to work. The longer the employee is unable to return to work, the higher the employer’s costs climb related to workers’ compensation and business productivity. Because it is in the best interests of the employer and the employee to facilitate a successful re-entry to work, if possible, many state governments provide “return-to-work” programs. Through these programs, the government will contract with a legion of vocational counselors who can coach the employer, the employee, and ideally, the medical provider through the re-entry process.
5) Workers’ compensation is complicated and expensive. Ok, this one is true. But consider the alternative. Although workers’ compensation can be challenging to navigate, it offers significant advantages for both employees and employers.
For employees, workers’ compensation provides a safety net for every worker in the United States who is injured while on the job. It makes it possible for an injured worker to take the time to recover from an injury or illness without forfeiting their livelihood. In addition, as discussed above, most states’ workers’ compensation systems also provide services to assist employees in the recovery process for a successful and timely return-to-work.
For employers, the worker’s compensation system injects an element of predictability and cost-control with respect to paying for claims filed by injured workers. It is a progressive system where employers in high-risk industries (e.g. construction, coal mining) are required to set aside more money than employers engaged in relatively tame pursuits (e.g. horticulture, web blogging). Indeed, in some industries, workers’ compensation imposes a heavy financial burden. This cost, however, must be weighed against the employer’s nearly unlimited liability if every workers’ compensation claim was determined by a jury. In an era where the size of jury verdicts frequently makes headlines, employers can look to workers’ compensation as a financial shield that is a reality, not a myth.
Merisa Heu-Weller, Davis Wright Tremaine LLP
* Special assistance from Charley Bush, Vandeberg Johnson & Gandara LLP, and Mike Killeen, Davis Wright Tremaine LLP.
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