Taking Control of Worker Compensation Costs

February 1, 2006 By    

With the average payment for workers’ compensation claims among U.S. propane retailers peaking at $4,800 in 2000, business owners should be taking steps to gain control of these costs. Experts say there are effective ways to reduce the probability and control the frequency and costs associated with workplace injuries, but success requires cooperation from everyone in the organization.


1 Pre-Employment Screening. The first step is to focus on hiring people who are most likely to work safely. Due to the detailed requirements of the Americans with Disabilities Act (ADA), employers can no longer arbitrarily refuse to hire certain individuals due to perceived health or other medical conditions or because they have had a history of filing Workers Compensation claims with previous employers.

ADA does allow employers to ask about injuries, illnesses, Workers Compensation claims and potential job limitations after making a conditional offer of employment. You also are allowed to require applicants to take a medical exam (including a drug screening) at your expense after making a conditional offer of employment.

It is a good idea to talk with an employment consultant or attorney to make sure you’re within the complex ADA requirements while getting the most information you can during your hiring process.

2 Insurance Management. There are three basic ways to purchase Workers’ Compensation insurance – third-party insurance, self-insurance or a state pool. Premiums decrease as your workers’ compensation claim numbers and severity levels decrease.

3 Workers’ Compensation Team. The employers that achieve the greatest success in managing workers’ compensation costs typically are those that formally create workers’ compensation teams and involve employees in related cost management issues. No single manager can achieve significant workers’ compensation cost management results alone. Success requires a group effort with a common goal that extends throughout the organization. Participants should include representatives from human resources, safety, risk management, operations and any other department that has an impact on worker behavior and safety.

4 Safety Program. While all elements of a successful workers’ compensation cost management program are important, the two most important are the safety program (in the preincident phase) and the return-to-work program (in the post-incident phase). The more an employer can do to reduce accidents, injuries and illnesses in the first place, the fewer workers’ compensation cases it will need to manage later.

In the Workplace Injury Study of the Propane Industry released in December, author Philip Borba found that one of the most important steps propane businesses can take to reduce accidents and injuries relates to driver behavior.

“Find ways to control the slips and falls that occur when drivers are entering and exiting their vehicles, and the strains that occur when they are moving the hoses,” Borba suggests.

5 EAPs and Wellness Programs. An Employee Assistance Program (EAP) is a service that more and more employers are offering to their employees.

An EAP is basically a professional counseling service that allows employees with various problems to discuss them with trained counselors. Problems can include stress, financial problems and conflicts between spouse and child. Research clearly shows that employees facing these problems – whether on the job or off – are more likely to experience accidents and injuries in the work place.

Some large employers arrange to have in-house EAPs and hire their own counselors; smaller employers utilize the services of private third-party or community EAP provider.

Wellness programs are initiatives designed to encourage employees to become healthier. They include how to maintain a healthy diet, the importance of exercise, smoking cessation and free annual medical examinations. Research definitively shows that there is a direct correlation between employee health and safety at work.


6 Incident Management. Beyond providing proper treatment to an injured employee, it is important to make sure the employee receives the necessary follow-up treatment.

Companies should always conduct a formal accident investigation to determine the root cause or causes of the accident, and implement steps to prevent similar incidents. Those who don’t search for those answers often find themselves repeating the same accidents, significantly increasing workers’ compensation costs.

It is also important to investigate the causes of near misses. These “accidents waiting to happen” can often be avoided to reduce accidents in the future.

7 Physician Selection and Communication. Working with occupational physicians – rather than general physicians – is another integral strategy to managing costs. .

Occupational physicians have more experience treating occupational injuries and understand the benefits (to employees and employers) of getting employees back to work as quickly as possible so that they don’t malinger.

8 Contact. Twenty years ago, it was almost unheard of for employers to contact employees who were at home recuperating from work-related injuries or illnesses. Those details usually were left to the insurance company to avoid the appearance of employer fault.

Today, experts say employers should reach out to their injured workers. Employees left alone not only take longer to heal, but start to feel alienated, frightened and/or angry about their employment status. Such attitudes can lead to longer recuperation periods, increased Workers’ Compensation costs and employee decisions to seek outside legal representation.

9 Return to Work. As with employee contact, return-to-work strategies were foreign to most employers until the early 1980s. Rather than encouraging employees to stay away until fully recovered, recent research shows few employees benefit from sitting idle at home.

If an employee can sit up, employers should find some kind of transitional or light duty work for him or her do to during recuperation. Nationwide statistics consistently show that the sooner an employee gets back to work, the quicker the chance of recovery.

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