economic crisis has many employees worried about their future. Feeling
stressed over financial matters, employees can be preoccupied and
become less productive and attentive to their job, increasing the
risk of an injury. Furthermore, anecdotal evidence suggests that fear
of layoffs causes claims to escalate as ill-intentioned employees
look to Workers’ Compensation as a way to sustain their income.
Here are six safeguards to control Workers’ Compensation in
a down economy:
1. Ramp up communication efforts
Employees want reassurance because there is bad news everywhere. According
to Richard Guinn, practice leader in communications at Watson Wyatt
Worldwide, most employers either provide too much or too little information
during a crisis. The important thing is to listen to employees and
respond. Employees working under leadership that is truthful, fair
and provides support and motivation, have lower levels of stress,
anxiety and depression.
Although the message about the economic health of the company best
comes from the top, immediate supervisors and managers need to play
an active role in reinforcing this message. Studies have shown that
workers trust their immediate boss more than they trust the organization’s
senior leaders. In addition, they are closest to the employees and
should be attuned to growing uneasiness or rumors.
2. Rigorously monitor claims frequency
During an economic downturn, it is particularly important to guard
against abuse. While employers should always use analytical tools
to monitor the volume and type of claims, identifying up ticks in
the volume and patterns of claims will help flag potential abuse.
Employers suspecting abuse should immediately discuss the situation
with their WorkComp advisor.
3. Watch job classifications
Reductions in the workforce can result in shifting job responsibilities.
Workers can be repositioned while others take on duties from those
who have left. Be sure that your job classifications are up-to-date.
4. Stay the course with your injury management plan
In all economic environments, there is a constant about Workers’
Compensation – every day an employee is off the job costs
the employer money. Although shifting priorities and a reduced
workforce strain resources, an unwavering focus on returning every
injured employee safely to work as expeditiously as possible is best
for the employee and the employer. The longer an employee is out of
work, the harder it is to get them back to work and the more costly
it is for the employer.
5. Focus on health
If you have not already established a relationship with a qualified
occupational medical provider do so now. Find physicians who follow
ACOEM (American College of Occupational and Environmental Medicine)
and who will take the time to understand your needs. Although it may
sound paradoxical, quality, not price, should govern the choice. Seemingly
low prices from managed care organizations actually can increase costs.
Do whatever you can to maintain and even expand health-related perks
such as wellness programs, fitness opportunities, screenings, healthy
food choices etc. as these will help to keep your employees motivated
6. Provide financial education
Even in good times, managing finances is daunting for many employees.
In this time of volatility and uncertainly, they feel overwhelmed
and burdened. Holding meetings on reducing credit card debt, maintaining/buying
a home, saving for college and investing in tough economic times will
show support and help reduce stress. Allowing spouses to attend by
scheduling meetings after business hours can also be beneficial.
Tips for managing layoffs
When layoffs are imminent, employers need to vigilant in both
controlling claims rates and disability duration. A decline
in premiums as a result of a reduced payroll can be more than
offset by a rise in claim costs. The resulting increase in the
Experienced Mod will have a long-term adverse effect on the
company’s bottom line.
Communicate in timely manner
When accurate and complete information is available about layoffs,
employers should be honest and direct with their employees.
Telling employees too soon can cause confusion and anxiety,
whereas waiting too long breeds rumors and misinformation. Timing
Keep accurate and detailed records
Since it is possible for Workers’ Compensation claims
to increase when layoffs appear imminent, employers need to
be especially diligent in documenting equipment condition, housekeeping
inspections, and industrial hygiene as well as work schedules,
accident reporting and investigations. Videotaping work areas
and activities can also be helpful.
Investigate accidents immediately and thoroughly
Accident investigation is always important in controlling comp
costs and takes on increased importance when ill-intended employees
view Workers’ Comp as an escape from unemployment. Get
signed statements from the injured employee and witnesses, interviewing
each person separately. Immediately remove faulty equipment
from use and address any hazards that may have caused the accident.
Signed verification forms
Have employees sign a form verifying whether they have experienced
any accidents on the job that have not been reported. Such documents
can be valuable should claims arise once employment has ended.
Contact us for sample of form.
Provide employee assistance programs
If employees feel the employer is supportive and concerned about
their well being, they are less likely to abuse the system.
Red flags of fraud
While most claims do not involve fraud, look for the red flags
that a claim might require additional scrutiny. Click
here for Red Flag Fraud checklist
Know the law
Worker Adjustment and Retraining Act (W.A.R.N.) imposes
certain obligations on employers with 100 or more employees
who shut down or downsize their operations. The EEOC carefully
monitors discriminatory actions in layoffs. In addition there
may be state laws that apply. Have an attorney review all aspects
of the reduction in force procedures.
Communicate goals – support those who are
During economic downturns, the need to keep and motivate the
best talent remains. Layoffs are emotionally charged events,
even to those who maintain their jobs. Clearly communicate the
goals associated with the layoff, the structure of the emerging
company and the employees' continuing role.