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Workers’ Compensation Costs: How to Reduce Them
Times are tough.Â 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.Â 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.Â 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
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.