It has happened to all of us. You get the phone call. “Peter didn’t come in to work today. He is claiming that he twisted his back yesterday while working. He mentioned that he thinks he is going to be out for a while and he wants to file a comp claim.”
Your first thought…I knew I should have fired Peter. Your next thought….uh oh, how much is this going to cost us?
Let’s take these on one at a time. How much will it cost? The direct impact on cost of a workers’ compensation claim can be quantified relatively easily. The direct impact SHOULD be quantified. As a business owner, we should know exactly what the impact will be on our business. It varies greatly by claim and industry, but it can be minimal all the way to four times the cost of the claim. That’s right, a simple $5,000 claim can end up costing you as much as a $20,000 increase in premium via a three year increase in your experience modification.
What about the indirect costs? What if Peter was a highly skilled sales person in your organization? What is the cost of lost revenue? What if you needed to hire somebody to do Peter’s job while he is out, and the replacement is not as talented, and it’s having an impact on an entire department, and we have a manager spending time they don’t have to manage and train this replacement, and ultimately we lose a very important client because we were not meeting their needs while Peter was at home with his questionable back problem? Might that cost us a whole lot more than the direct impact on premium?
Now we are dealing with all of this noise and expense and we have one thing on the back of our minds, I knew I should have fired him….or I knew I should not have hired him. WE HIRE OUR WORKERS’ COMPENSATION CLAIMS. That’s right, the claim happens at the date of hire. So what can we do to make sure we do not hire that next claim? Here is a list of strategies we have implemented with our clients that have effectively and measurably reduced their risk of hiring their next workers’ compensation claim.
- Hire employees on a conditional basis. What is that basis? You need to show you can meet the physical and mental requirements of the job.
- Partner with an occupational health clinic to provide a third party opinion on a perspective employee’s ability to meet the physical and mental requirements of the job.
- Drug Testing. Even just stating that you will drug test as a condition of employment turns many professional work comp claimants away before they ever become a problem.
- Functional Capacity Exams. Having an employee provide a physical from their own doctor is highly ineffective. Partnering with an occupational health clinic that will test a perspective employee on the physical movement necessary for their position will result in identification of physical problems before they become a claim problem for you or allow you to tailor a job to the specific capabilities of an employee.
- Consistent application of a hiring process is necessary to ensure its success.
You can avoid both of those deep feelings of “I should have fired him” and “how much is this going to cost?” You can prevent or mitigate not only the direct cost of a claim, but the exponential indirect costs that impact your bottom line. Follow these steps and you will be well on your way to saving dollars to enhance your business rather than hinder it.
Feel free to visit our website to learn more about our workers’ compensation services