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Business Protection Bulletin


By Business Protection Bulletin

We all know that persistent pain from work-related injuries affects an employee’s attitude about returning to work. Unfortunately, the psychological ramifications of chronic pain can also result in prolonged legal action, increasing legal fees, large settlements, and ultimately, failure of the employee to return to work. So, how can we prevent chronic pain from escalating workers’ compensation costs?

In a study titled Integrating Psychosocial and Behavioral Interventions to Achieve Optimal Rehabilitation Outcomes that appeared in the December 2005 issue of the Journal of Occupational Rehabilitation, researchers studied the psychological factors that impede an injured worker in returning to work:

  • Obsession. The persistence of the pain becomes so overwhelming that it is the only thing the employee thinks about.
  • Fear. The employee fears the possibility of becoming re-injured, which increases their current pain. As a result, the possibility of another injury and resulting disability cripples the employee psychologically and causes them to put off returning to work.
  • Perception. When an injured worker has been on disability leave for an extended period, they may feel that co-workers believe they are faking their pain. This causes uneasiness about returning to work and facing co-workers.
  • Self-fulfillment. If an employee believes they are not physically capable of returning to work because of the severity of their pain, this can lead to a failed transition back to the workplace.

In addition to internal factors, researchers noted that there are external psychosocial issues that can impact the injured employee’s desire to return to work.

  • Co-worker support. When injured employees feel there is a lack of social support to help them transition back, they delay returning to work.
  • Job stress. Employees who believe that the stress level at work will intensify their physical pain tend to remain on disability.
  • Workplace attitudes toward disability. Injured employees who feel that the general attitude about disability is that it is a way to “milk the system” sometimes delay returning.

The researchers concluded that understanding the significance of the internal and external psychosocial factors on the employee’s successful transition back into the workplace is critical to the design of return to work programs. First-line supervisors should be trained to detect if an employee is experiencing any of the psychosocial risk factors, as well as how to eliminate or lessen the impact of those risk factors.


By Business Protection Bulletin

Running a company can be a risky business. According to the Department of Labor, the amount workers received from employers due to discrimination claims rose nearly 78% between 2001 and 2006. A total of more than $51 million dollars was awarded to employees who pursued claims in federal court.

You may have seen news stories about huge jury awards in workplace discrimination claims. It happens every day, and every business is vulnerable. Here are just a few examples:

  • Thirteen current or former computer company employees claimed employment discrimination on the basis of race and national origin. Employees claimed they were treated unequally and subjected to a hostile work environment. Amount of settlement: $635,000 (salary increases, enhanced promotional activities).
  • Eight employees filed a class action suit alleging sex discrimination by their employer in the handling of wages, promotions, pregnancy leaves and other conditions of employment. Amount of settlement: $600,000 (plus $5 million in legal fees).
  • A senior regional attorney sued a securities dealer claiming age discrimination and retaliation. He claimed he was unfairly terminated for advice he gave to a co-worker regarding his employment rights. Amount of verdict: $443,000.

All businesses are at risk from issues related to employment practices. It can come up during hiring situations if you don’t hire someone who then assumes you were discriminating. It can happen if you terminate an employee who then decides he or she was treated unfairly. Employment-related lawsuits are filed every single day, and up to half of all businesses will face a lawsuit at some point. Is your business prepared?


As an employer, you do everything you can to treat your employees fairly. However, you can be held liable for the actions of your other employees or even vendors and customers. And with new employment-related regulations being added to the books frequently, it can be difficult to understand exactly what you are expected to do.

It’s important to make sure you remain in compliance with laws governing treatment of employees. But there’s an added layer of protection you can obtain: employment practices liability insurance, or EPLI.


Employment practices liability insurance can protect your business against claims made by potential hires, employees currently on your payroll and terminated employees. With a good EPLI policy, your company is protected against claims of:

  • Wrongful termination
  • Employment-related emotional distress and invasion of privacy
  • Defamation
  • Retaliatory/constructive discharge
  • Sexual harassment and discrimination
  • Workplace torts such as slander

EPLI coverage generally includes the cost to defend against the charges plus any damages you are ordered to pay. Depending on your business needs, it might make sense to purchase EPLI coverage as part of your company officers’ Liability insurance since company officials can be named in lawsuits against the business.


Our business insurance agents can answer your questions about EPLI and recommend the coverage that is right for you. We can also discuss how employment-related lawsuits can affect your business by assessing the risk typically associated with your industry.

Remember, employment-related claims can affect businesses of all types. Even if you are just starting out, you could be the subject of a discrimination suit if someone you interview but fail to hire feels that he or she was treated unfairly. And even if you do everything right and comply with all federal, state and local regulations, you can still be held liable for the actions of your employees, vendors or customers. EPLI can provide much-needed protection — and welcome peace of mind.


By Business Protection Bulletin

Your business could face big problems if one of your employees becomes a victim of identity theft. That’s an alarming fact considering the rapid growth of this costly white-collar crime.

How does identity theft among your employees affect your business? One of the provisions of the Fair and Accurate Credit Transactions Act is that an employer whose action (or lack of action) results in the theft of an employee’s information can be sued. As an employer, you should keep in mind that the workplace is the biggest source of identity theft.

Businesses should be concerned with more than just the lawsuits associated with employee identity theft. Reoccurring identity thefts lead to negative publicity — which can impact sales and significantly damage employee recruiting and retention efforts.

How can you protect your employees and your business? There are two things you should seriously consider: Offer identity theft coverage as an employee benefit, and tell your employees what they can do to reduce their chances of becoming a victim.

What does identity theft coverage give employees?

  • Insurance coverage: To help them get back on their feet after they’ve been a victim.
  • Credit monitoring: That alerts them when unusual credit changes take place.
  • Computer protection: Such as anti-spyware and wireless security.
  • Protection of personal information: Such as assistance with opting out of marketing databases, as well as tracking data in Social Security databases and financial databases.

What can you tell your employees about protecting themselves from identity theft? Start with the following checklist of do’s and don’ts.


  • Always shred sensitive information rather than just throwing it in the trash. (This is wise advice whether you’re at home or at work.) Things to shred include any confidential information, such as credit card pre-approvals, credit card receipts, bank statements, etc.
  • Review your credit report regularly. Take the time to make sure it’s accurate. It’s also important to carefully check your bank statements every month.
  • It may seem like a hassle, but it’s a smart idea to have your financial mail deposited in a post office box rather than in your home mailbox.
  • Remove the mail from your mailbox as soon as possible to afford less opportunity for someone to steal it. Also, be sure to pinpoint when all your bills are supposed to arrive.
  • As elementary as it may sound, it’s important to do whatever it takes to keep your personal identification numbers (PINs) secret.


  • Obviously, you should never give personal information to anyone without a good reason for having it.
  • Never carry your Social Security card or passport in your purse or wallet, and never keep them in their vehicle. Remember that thieves are very interested in your private information – just as they’re interested in your tangible valuables.
  • Never put your address or driver’s license number on a credit card receipt.
  • Never put your Social Security number or phone number on your personal checks.
  • Never carry credit cards you don’t plan to use.

By helping employees keep their vital personal information from falling into the wrong hands, you’re doing your part to look after their financial health — and protect your business from a growing risk. Identity theft coverage as an employee benefit not only helps employees stay safer, it makes your business a more attractive place to work.


By Business Protection Bulletin

If you own a business, the last thing you want to face is a lawsuit filed by a current or former employee. In addition to the obvious financial risk involved in defending a case, a lawsuit can result in lower employee morale and a damaged reputation in the community. Even if you win your case, you’ll lose time and money in the process.

For these and many other reasons, it’s a good idea to be proactive about avoiding employment-related lawsuits. How do you do it? A good approach is to familiarize yourself with situations that can prompt employees to file suit. When you understand the common legal pitfalls, you’ll be in a better position to avoid them and protect your business.

Understanding why employees sue

If you’re like most employers, you try to treat your employees fairly. But complicated situations can arise. And remember, your perceptions might not match those of your employees.

Here are some issues that can result in employment-related litigation:

  • Employees feel they have no voice: If you provide employees with a way to express opinions or address problems, you’ll generally have more motivated employees and may also reduce exposure to lawsuits.
  • Employees aren’t in the loop: If your business is going through changes, it’s a good idea to keep employees in the loop. Otherwise, their expectations may not match future business plans, which can result in hard feelings.
  • Managers don’t understand regulations: There are hundreds of employment-related regulations governing the relationship between employers and employees. Make sure you understand them and abide by them.
  • Employees are dissatisfied: When employees are unhappy, they aren’t as productive, and they may also be more likely to resort to litigation to express their unhappiness. Good morale can reduce exposure to litigation and improve business performance.

Avoiding situations that might create a lawsuit

Even employers with the best intentions can make mistakes that result in legal action. There are many regulations that can lead to legal pitfalls, especially in the areas of hiring, managing and firing employees. Employment-related regulations are not only numerous, they change from time to time, so keeping up with them can be challenging, but it’s vitally important. Here are some of the situations you should be aware of as an employer:

  • Promotion opportunities: Be sensitive to employee perceptions when you reward good performance or hold employees accountable for short-comings. If a court finds you created barriers to advancement for a protected class of employees, you could be held liable.
  • Compensation issues: Employee wage and hour regulations can be complex. Make sure you understand them and follow them to the letter. If you’re unsure, it’s a good idea to seek expert advice.
  • Harassment and discrimination: Employers have a responsibility to ensure a harassment and discrimination-free work environment. A sound harassment and discrimination prevention policy is essential.
  • Accommodation issues: Employees or potential hires who are disabled or who have accommodation needs due to religion are a protected class. It’s important to understand the regulations around accommodation.
  • Leaves of absence: Employers in certain locations and those who employee more than a specific number of employees should make sure they comply with state, local and federal regulations on leaves of absence.

How you can reduce legal exposure for your business

We’ve reviewed why employees might sue and some of the reasons employers get into trouble. The next step is to formulate a strategy to reduce risk for your business. A good first step is to formalize a method to address conflicts. If you have an employee handbook, outlining a way to address problems at work as a policy is a good idea. Another effective step is to implement harassment and discrimination prevention policies and outline how incidents will be addressed.

Taking steps to reduce your exposure to employment-related lawsuits takes some time and effort, but in the long run, it’s worth the effort. Not only will these steps help you stay out of court, you’ll improve morale at your company.


By Business Protection Bulletin

If you are looking for ways to keep your Workers Compensation insurance costs under control, it’s a good idea to take a look at your experience modifier. In fact, tackling your experience modifier is generally a far more effective method of lowering your costs than shopping around for cheaper workers’ compensation coverage. That’s because the experience modifier is used to calculate your individual rate.

However, many employers don’t fully understand how experience modifiers work. They don’t completely understand how lowering it can help them drastically reduce Workers Compensation costs. Let’s take a closer look.

What is an experience modifier?

The experience modifier is a formula insurance companies use to predict losses that an employer is likely to incur. To arrive at the experience modifier, the insurance company considers losses over a three-year period in history, not including the current policy period. It takes into account not only amounts actually paid as claims but also estimates of future payments for medical treatments or compensation that will be paid to make up for lost wages.

Your experience modifier compares your actual losses with the expected losses for employers operating similarly sized companies in your state and industry. If your experience modifier is 1.00, that means your losses match the average rate. A modifier that is higher than 1.00 reflects higher losses, while a modifier less than 1.00 means lower than expected losses.

Your experience modifier is used to calculate your Workers Compensation insurance premiums, so the lower your modifier, the less you’ll pay. Let’s take a look at ways to lower your experience modifier.

Toward a lower experience modifier

Here are a few tips on lowering your experience modifier:

Create a safer work environment. Since your experience modifier is derived from your workers’ compensation claims history over a three-year period, the most obvious first step is to create a safer work environment. A workplace focus on safety is a great way to improve morale and help keep costs down. Some companies form safety committees to find new ways to reduce workplace injuries and to provide training that helps employees stay safe.

Return employees to work as soon as possible. Another excellent way to keep costs down is to consider a return-to-work program for injured employees. Remember, workers’ compensation claims involve not only medical bills but also claims for lost wages. In many cases, injured employees who are not yet able to return to their former jobs can come back to perform light duty jobs while they complete their recovery. This helps lower claims costs. It’s a good idea to work closely with physicians who specialize in workplace injuries since they can more efficiently treat your employees and may have more experience authorizing returns to work for light duty assignments.

Hire the right people. Another long-term strategy for lowering your experience modifier is to implement good hiring practices. For example, you may want to consider a candidate background check and drug screening program. Employees who use drugs are far more likely to be injured on the job, lowering morale and driving up your costs. It’s always a good idea to be selective about whom you hire, and the likelihood of future on-the-job injuries is one more factor to consider.

The bottom line

When Workers Compensation insurance prices rise, it’s tempting for employers to shop around for new coverage. But the fact is, employers themselves control a major factor in determining rates: The experience modifier. Take control of your Workers Compensation costs by taking steps to create a safer work environment, return employees to work and hire the right people. Not only will you improve operations and employee morale, you’ll save money too.


By Business Protection Bulletin

If you use workers from staffing or leasing agencies to supplement your workforce, how adequately do your current insurance policies protect your company in the event that one of these individuals is injured on the job?

If you’re covered under an Insurance Services Office, Inc. (ISO) Commercial General Liability (CGL) policy and your Workers Compensation and Employers Liability policies are written on National Council on Compensation Insurance (NCCI) forms with no additional coverage endorsements, you might not be as protected as you think. You should consider adding the Coverage for Injury to Leased Workers (CG 04 24) endorsement to your CGL policy.

A potential gap in coverage arises from the way the CGL policy defines “temporary” and “leased” workers. A leased worker is a person leased to your company through an agreement with an employee-leasing firm to perform duties related to the operation of your business. A temporary worker is a person furnished to you to fill in for a permanent employee on leave or to meet seasonal or short-term workload conditions. Under the terms of the CGL policy, “employee” includes a leased worker, but does not include a temporary worker. The distinction is important, because the CGL policy’s Exclusion E: employers liability, excludes from coverage bodily injury claims made by an employee of the insured.

Thus, if your CGL policy definitions consider the worker to be an “employee” — even though that worker is provided by a staffing agency — the policy will not cover any bodily injury claims by that worker. If the worker is not specifically substituting for a permanent employee who is on leave, or meeting a seasonal need or short-term workload conditions, the worker is not a “temporary worker” in the eyes of the insurer, and instead is considered your employee for purposes of Exclusion E. To be a “temporary worker,” that individual must have a specific end date to his or her employment with you. A temporary employee who is hired for an indefinite period of time simply does not meet the criteria stated above, and is therefore considered an employee, and subject to Exclusion E if they are injured on the job.

Adding the Coverage for Injury to Leased Workers (CG 04 24) endorsement to your CGL policy will help you fill this coverage gap. This endorsement states that the term “employee” does not include a “leased worker” or “temporary worker,” making the employers liability exclusion of the CGL policy inapplicable to the claims for injuries to a leased or temporary worker.

Another way to protect your company in lawsuits by injured temporary workers is to require the staffing agency that provides such workers to include the Alternate Employer Endorsement (WC 00 03 01 A) on its Workers Compensation and Employers Liability policy, and specifically schedule your company as the alternate employer. This endorsement will provide you with coverage as an alternate employer in the event the temporary worker files a tort suit.

Without the right coverage in place, on-the-job injuries to temporary workers can present a significant potential liability to your company. Let us help you examine your current CGL policy and arrangements with any staffing or leasing firms you use to make sure your company is protected.


By Business Protection Bulletin

As an employer, you can be held liable for any sexual harassment that occurs in your workplace. That’s the bad news. The good news is that you can significantly reduce your organization’s liability exposure if you follow the sexual harassment prevention road map laid out in recent years by the courts. As the U.S. Supreme Court explained in 1998, the purpose of sexual harassment law is not to enable people to sue their employers. The purpose is to motivate employers to take reasonable steps to prevent sexual harassment. When employers can demonstrate that they have fulfilled this duty, they are less likely to be faced with sexual harassment liability damages. This article presents policies and practices an employer should follow in its obligation to prevent sexual harassment.

First and foremost, you should have a written policy against sexual harassment. To be effective and to demonstrate your organization’s concern with preventing sexual harassment, the policy should be comprehensive. It should define what sexual harassment is and give concrete examples. It should explain that sexual harassment is determined by how the person on the receiving end experiences the behavior, not on whether or not the perpetrator intended to harass. It should state that male and female workers can be victims of sexual harassment by harassers of either gender.

The policy should avoid legal jargon and be written in language the average worker will understand. If there are workers who don’t speak English, the policy should be translated into their language(s).

Some employers prefer to disregard sexual harassment in their organizations. Their response to a complaint might be to disbelieve it or to view the person who complained as a troublemaker. Many times employers are liable for sexual harassment, not because of the actual harassment, but because they didn’t make employees aware of complaint procedures, or did not respond correctly when an employee filed a complaint.

Risk-averse employers take every complaint seriously and investigate it using a consistent, reasonable process thatis fair to all, and aim to make a truthful determination of what happened. It is critical that your sexual harassment policy covers how to make a complaint and identify several employees designated to receive complaints. It should explain how complaints are investigated and what happens after the investigation. It should describe how the final determination of legitimate sexual harassment will be made; what the possible penalties are; whether the complaining party has the right to know what penalty, if any, the employer has decided to impose; and whether there is an appeal process.

The policy should strongly prohibit retaliation, giving examples of what retaliation is. It should state that retaliation against complaining parties or witnesses will be taken as seriously as harassment itself.

Some employers have well written policies and think that is sufficient. But it is completely ineffective to have a policy if employees can later claim they never saw it. To ensure that every reasonable effort is made that employees know the policy, each new hire should be given a copy of the policy and sign a receipt stating he or she has read and understood it.

If you want employees to remember the policy and to understand that you’re serious about it, there must be ongoing exposure. Some employers have a brochure or pamphlet that summarizes the policy. Employees can be periodically reminded through memos, articles in employee newsletters, during employee meetings, or by some other means of regular communication.

We live in a culture where people might be frequently exposed, outside of work, to behavior that is highly inappropriate at work. The only way employees will know what behavior the employer requires is if they are educated in this area. It is most important to train employees with supervisory authority since they must enforce the policy against sexual harassment. If a supervisor engages in harassment of a subordinate, the employer is strictly liable.

It is not unusual for someone accused of harassment to say, “I’m not the only one who acted that way.” Often, this is true. If there is an atmosphere where behavior is tolerated that is inappropriate for work or where the employers don’t take sexual harassment seriously, the risk of sexual harassment liability can be high. It will not be a defense against liability to say, “But we had a policy.” The policy must be comprehensive and thorough and it must be strictly followed. These are all simple steps, though not necessarily easy, since they require a substantial commitment of time and resources to be followed correctly. The benefit of this is a reduction in sexual harassment liability risk and, for most employers, a more productive workforce.


By Business Protection Bulletin

Workers Compensation is designed as a trade off between the interests of employers and injured employees. In most circumstances, employers receive immunity from lawsuits by workers who are injured on the job or the survivors of those who are killed in work related events. In return, injured workers are not forced into an unpredictable system of lawsuits with long waiting periods for damages and no guarantee of compensation. They receive medical expenses and compensation for lost wages, or when work-related injuries or disease lead to death. Benefits are guaranteed to the worker’s survivors.

For the most part, the system works just as it was designed. There are a few exceptions, however, when courts allow workers who have on-the-job injuries or occupational disease, or their survivors, to pierce the employer’s immunity and file a personal injury lawsuit. As Workers Compensation is a matter of state law, the rules as to when courts permit these lawsuits will vary somewhat from state to state. Most importantly, they will be based on the unique facts of each case. Nevertheless, there are general circumstances that make courts more likely to find in favor of an injured worker, or his or her survivors.

The key issue the courts usually consider is whether the employer intentionally created a situation that would be, in the words of one court, “substantially certain” to lead to a worker’s injury or death. On this basis, an Oregon court held that an employer could lose its Workers Comp immunity by ordering an employee to perform a task that the employer knows is unreasonably dangerous, such as doing work without safety equipment, and thus is substantially certain to cause injury.

If evidence exists verifying the employer knew it was substantially certain employees could be seriously injured or killed, and then deliberately concealed the information from them, the courts are even more likely to permit an injured employee to sue. This is what happened with companies that manufactured or installed asbestos. Ordinarily, Workers Compensation would have been the employees’ exclusive remedy for lung disease and cancer caused by working with asbestos. But in some instances, workers were able to show that the employers had known about the diseases and nevertheless told them there was little risk or need for safety precautions.

In another example, a Florida employer occasionally and deliberately shut off a workplace ventilation system and misrepresented the potential harm of toxic fumes and the need for safety equipment. The court ruled that due to the employer’s deliberate misrepresentation, injured employees were not limited to Workers Compensation as their exclusive remedy, but could also sue. Similarly, a New Jersey court held that an employer lost the exclusive remedy protection of Workers Comp when it removed the warning labels and safety devices from machinery.

Liability for concealment of risks can even be based on an employee’s inability to read or understand warning labels or safety instructions, according to a South Dakota court. The court’s ruling held that if the employer does not clearly explain the hazards and safety precautions so that the employees understand them, it might lose Workers Comp immunity.

In certain cases, the employer can protect itself if it can show the worker fully understood the risks and decided to do the job anyway. In one case, a widow sued the employer after her spouse fell to his death on a construction job, arguing that the numerous citations the employer had received for failure to provide guard rails showed that the employer should be liable for her husband’s death. But a Florida appeals court rejected her claim, finding that the danger of working on an elevated construction site without a guardrail was, or should have been, obvious to an employee. Therefore, the deceased had chosen to accept the risk and the widow’s exclusive remedy was Workers Compensation benefits.

However, not all risks are obvious, and where they are not, courts are likely to find that the employer has a better understanding of the risks than the employee.

There is one other situation that almost always exposes the employer to potential lawsuits by injured employees: failure to maintain Workers Compensation insurance. If the employer doesn’t have insurance, injured workers or the survivors of those who die from job-related injuries have no barrier to filing a lawsuit, which can be a very costly proposition.

We can help you identify and manage potential risks, which might not be covered by your Workers Comp policy. Give us a call today for more information.


By Business Protection Bulletin

The importance of the temporary worker has increased during the past 10 years due to gaps in staffing caused by downsizing, mergers and acquisitions. A temporary worker can be hired to fill in for an employee on leave or they can be used to augment a company’s permanent staff during seasonal fluctuations. Regardless of the reason for their employment, any business owner who hires temporaries should understand that they are entitled to certain considerations even though they will only be with you for a short time.

That entitlement rests on the answer to an important question of whether or not the temporary is an “employee” or an “independent contractor.” This is especially relevant when it comes to the area of discrimination. The Equal Employment Opportunity Commission (EEOC) says that temporaries are covered employees under the federal and state anti-discrimination laws if the right to control the means and manner of their work performance rests with the hiring company, rather than with the temporaries themselves.

It’s important to note that even though the staffing agency pays the temporary based on the number of hours reported by the business owner; it is the hiring company that oversees the temporary’s work. Moreover, the temporary uses the hiring company’s supplies and equipment and works on-site. In this instance, the liability for providing a discrimination free environment is not transferred to the staffing agency, as most companies would believe. The EEOC says the liability is shared by both the staffing agency and the hiring firm.

The issue of safety in the workplace is another area of vulnerability when it comes to hiring temporary workers. The Occupational Safety and Health Review Commission has taken the stance that companies employing temporary workers are primarily responsible for compliance with the Occupational Safety and Health Act with regard to those workers’ safety. The rationale for this position is again based on the fact that the hiring company controls the means and manner of their work.

Employing temporary workers also has ramifications for the hiring company when it comes to the Family and Medical Leave Act (FMLA). This law requires employers with 50 or more employees to allow any eligible employee to take up to 12 weeks of unpaid family and medical leave in any 12 month period, while still maintaining the employee’s health insurance benefits and usually, to restore the employee to the same or equivalent position upon his/her return. Although the hiring firm does not grant FMLA leave to temporaries, they do have to count temporary workers as part of their contingent when determining if they meet the 50 or more criterion. They must also allow a temporary employee returning from FMLA leave to continue working at their site, even if that means letting another temporary worker go who was hired to replace the worker on leave.

The National Labor Relations Board considers hiring companies and staffing agencies to be joint employers for purposes of the National Labor Relations Act (NLRA) when both make determinations that affect the terms and conditions of the temporary worker’s employment. An important consequence of this joint employer determination for the hiring company is that it may be held liable for the staffing agency’s unfair labor practices toward the temporary worker it has hired.

And finally, hiring companies must include most temporary employees in their employee headcounts to see if their benefit plans qualify for a favorable tax treatment under the Internal Revenue Code. However, several courts have ruled that there is no provision in either the Internal Revenue Code or the Employee Retirement Income Security Act that hinders hiring companies from excluding temporary workers from their benefit programs. Our professionals can help you with these and other hiring issues. Call us today.


By Business Protection Bulletin

To the majority of employers, Workers Compensation insurance is just another unavoidable cost of doing business. They never think much about it until they get hit with a rate hike. When rates are low, they don’t give it much thought at all.

However, if employers regarded Workers Compensation as a tool for improving the bottom line, they would find ways to hold on to those low rates over the long-term. The following list represent the most common mistakes employers make that prevent them from maintaining their Workers Compensation savings:

  • Believing that lower rates means lower cost. Don’t assume that if rates have been reduced it will automatically reduce your cost. To establish cost, insurers use an experience modification factor that examines the actual losses of the company being covered. The insurer compares these losses to those of other companies within the same industry classification. If the insured’s past losses are lower than average, the company is given a credit rating that lowers the premium. However, if the insured’s past losses are higher than average, a surcharge is added to the premium before any discounts the insured might be entitled to.
  • Emphasizing injury management and cost containment less when rates are low. Maintaining the focus on safety at all times reduces the number of claims, which helps keep rates low. In addition, employers need to remain alert to issues that impact claims costs, such as lost wages and the cost of medical care. When claims remain open, their costs escalate. This impacts the employer’s modification factor negatively, which increases the cost for coverage.
  • Assuming that Workers Compensation is an expense over which you have little control. You must have Workers Compensation, but you don’t necessarily have to pay an excessive amount for it. Start by realizing that cost reduction begins with the hiring process. Good interview techniques and thorough background checks will result in hiring the right people. But even with the best employees, injuries can happen. For those instances, it is imperative that you have an effective return-to-work program that aids the injured employee in getting back on the job as quickly as possible so as to reduce claim costs.
  • Failing to realize that worker retention is a powerful tool in cost containment. The more skilled your workforce, the less likely they are to have accidents. However, when one of your skilled employees does have an accident, your response will determine whether or not that employee will return to the job after recovering. If the employee feels disconnected during the recovery period, they will probably not return. Here again, an effective return-to-work program is important, because it keeps injured employees in the loop with periodic phone calls informing them about adjustments in policy and procedure, or other workplaces changes. The return-to-work program administrator should also be in constant contact with the employee’s doctor to monitor their recovery progress and determine the earliest date it is feasible for the employee to come back.