Identifying the Stumbling Blocks of Workers’ Compensation
Workplace safety should be a priority in every business setting, but no matter how hard an employer might try—accidents happen.
“You can’t reduce every injury, but you can create a functioning workplace where safety is a priority,” said Amanda Lavis, an attorney with Rhoads and Sinon LLP in Harrisburg.
Trying to understand workers’ compensation can seem like a daunting task for many employers—especially when the rules and regulations vary from state to state.
Workers’ compensation is statutory, which means each state has its own laws requiring employers to provide their workers with insurance coverage. These requirements set out the duties of employers and rights of employees when an injury occurs. In most cases, the insurance is there to pay a portion of missed wages and the cost of medical expenses directly related to the injury.
In Pennsylvania, it’s mandatory for employers to provide insurance coverage for employees should they be impacted by occupational injuries or illnesses. However, employers have the option to provide the insurance through self-insuring, a competitive state fund, or through a private insurance carrier.
There are pros and cons to being self-insured, Lavis said, but the employer should make sure they understand what those aspects are before making a decision.
While self-insured businesses could save money, they also could financially expose themselves, especially if the company is smaller and the employer doesn’t have the financial resources to back a major claim.
“It’s a risk I think all employers should keep in mind,” Lavis said. “It’s a little bit of gamble.”
In addition, employers who are self-insured have a lot of paperwork to complete with the state, including proof of an accident- and illness-prevention program. The state also could choose to deny an employer self-insurance if there seems to be financial weakness in the business.
“The best people who are able to evaluate your financial state are an insurance broker and accountant,” Lavis said. “If you’re a business that belongs to a larger association—banker association or automobile association—you often can find self-funded insurance through those programs. But there are always risks you have to balance.”
One of the biggest keys to success is to make it a priority to have an injury-free workplace through a certified workplace safety program.
The Pennsylvania Bureau for Workers’ Compensation can certify such programs, which can sometimes lead to a discount on workers’ compensation insurance policies, Lavis said. While having a program isn’t a requirement, it’s a best practice that Lavis recommends for all employers.
In fast-growing companies, especially ones that went from being a tight-knit family company to a business with 50 to 100 employees, it can be easy to overlook these types of policies, noted Lavis. Making it a goal can pay off in the long run.
Lavis also suggests businesses make it a priority to maintain the integrity of workers’ compensation by identifying fraud.
“Fraud contributes to the increased cost of doing business because it calls for higher premiums across the board,” Lavis said. “It’s up to the employer and employee to maintain that integrity.”
An employer can identify fraud by watching for someone who might deliberately be trying to collect workers’ compensation in the amount of normal wages, or they fail to report other wages they might be receiving through Social Security or other benefits.
Another common area of fraud is when an employee tries to say an injury that took place outside of work occurred on the job.
“Any time there is a reported injury at work, an employer has the duty to report that,” Lavis said. “To protect the employer, an investigation should be done with every case. That means conducting interviews, talking to witnesses—and not necessarily to determine fraud but with the goal to determine if safety measures can be improved. As part of that process, if inconsistencies become obvious, then you address those. But the priority should be improving safety with any reported injury.”
Employers also should keep HR professionals up to speed on any changes in workers’ compensation through continued training, Lavis said. The same training should be passed down to managers who might take reports or investigate injuries, she added.
The Pennsylvania Department of Labor and Industry has many free resources for employers and employees that can be helpful for staying on top of a frequently changing area of law.
“As much as we rely on the Internet, I don’t suggest using Google to look for policies and forms as your sole source of information,” Lavis said. “Make sure your sources are reliable. Local organizations, such as the Society of Human Resource Professionals, are often willing to help in these areas.”
In any case, Lavis also suggests employers consult an attorney if any workers’ compensation claim doesn’t seem cut and dry.
“It’s easier to reach out and talk through these situations than to have a subsequent claim for making a decision that may not have been the best,” she said. BW