The Washington Post reported in April that federal workers compensation costs have roughly doubled since 1995, with 8.8 million Americans receiving disability benefits to the tune of $260 billion per year. Over a quarter $ trillion annually - that's a trully staggering figure.
The Post went on to claim that much of the increase may be due to the changing demographics of an aging population. Whether you buy that explanation or not, many employers fear that some employees are cheating on workers compensation insurance and staying away from work longer than legitimately needed.
Workers Comp 101: How Much Should You Trust Your Employees?
Let's face it, as with almost everything in life, things are seldom black and white. Seemingly good and honest employees sometimes do dishonest things when they feel threatened or insecure. Workers compensation can be an area where a good employee is tempted to stretch the limits of a workers compensation insurance package if your internal company policies are not balanced in such a way as to help keep the system honest and balanced.
Incentives and Disincentives to Return to Work: How Do Your Workers Comp Policies Stack Up?
Many view our national unemployment policies as lacking the common sense checks and balances required to filter out waste and abuse. Fair enough, but have you analyzed your own policies by the same yardstick? A well-balanced set of policies is one that properly provides for the needs of employees during a disability while also achieving the checks and balances that keep the system honest by removing disincentives to return to work, and removing incentives to stay out longer than legitimately needed. And that insurance principle applies as much for a small business as for a larger one.
Here are some things to consider when striving to keep your workers compensation policies properly balanced:
- How long will you hold a job open while an employee is out on disability? Is there a defined limit? Obviously a reasonable but limited time period should be the goal. In today's job market, fewer are willing to gamble with finding a new job should they exceed the period that their current position will be kept open for them.
- What percentage of an employee's salary is collected during a workers compensation event? If your policies are too generous then the incentive to stay off longer increases.
- Do you allow benefits to accrue while an employee is away from work? For example, will sick time and vacation time continue to accrue? If so, should the policy be changed?
- What about high-end benefits? If you offer special benefits such as a company car or other benefits directly related performing on the job, then consider placing them on hold until the employee returns to work.
A Workers Compensation Lesson from Ronald Reagan?
Regardless of your politics, President Ronald Reagan had a principle that served the US well in dealing with foreign policy, and one that President Barack Obama recently quoted: trust but verify. Yes, we would like to trust all employees to do the right thing when it comes to workers compensation insurance benefits. However, given that things are rarely black and white when it comes to human behavior, it is wise to craft your company polices in such a way as to verify that your hard-earned dollars spent on workers compensation costs are being wisely used and not wasted.
Need Help with Workers Compensation Insurance?
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