The Two-Way Relationship Between Workers’ Comp and Safety

Ensuring compliance with federal or state occupational safety and health laws and regulations is only part of a workplace safety and health professional’s job. Often, safety managers also handle aspects of an employer’s workers’ compensation program. The two aspects of the job have different demands.

OSHA, a federal agency within the Department of Labor, develops workplace safety and health standards that apply nationwide. Despite the fact that approximately half of U.S. states operate under state plans for occupational safety and health, there is a high degree of overall uniformity in workplace safety compliance obligations from one state to the next.

Meanwhile, workers’ compensation is administered at the state level. It shields employers from liabilities for workers’ injuries, illnesses, and deaths while covering the costs of workers’ medical treatments and lost wages or providing death benefits to the surviving spouse and children of a worker killed on the job.

Most states’ original workers’ compensation laws predate the federal Occupational Safety and Health (OSH) Act of 1970, and the provisions of these laws vary greatly from state to state. All states except Texas require employers to purchase workers’ compensation insurance coverage.

Insurance coverage may be sold and provided by private insurers, or it may be offered through a state-run program. Some employers have the option of self-insuring or joining a group self-insurance pool. Some states have publicly funded insurance pools to cover claims at workplaces where an employer has neglected to buy insurance coverage.

Employer Responsibilities

The OSH Act and state workers’ compensation laws create competing and complimentary responsibilities for employers. Some of these responsibilities fall directly on safety managers, while others may be primarily managed by Human Resources or another division within an organization. Depending on the company, safety managers may be tasked with:

• Ensuring compliance with federal or state safety standards, as well as the OSH Act’s General Duty Clause;
• Administering workers’ compensation claims;
• Monitoring workers on leave because of workplace injuries and illnesses;
• Handling an injured worker’s return to work or arranging for and monitoring light-duty programs for workers not yet recovered enough to resume their regular duties; and
• Containing the employer’s costs for workers’ compensation claims or premiums.

When a workplace injury or illness occurs, the first task is to ensure that the employee receives proper medical attention. If the injury or illness is compensable under workers’ compensation rules, the employee may need assistance in filing a claim and navigating the insurance system.

Remaining in contact with workers out on leave because of an injury is essential. This communication serves the practical purposes of confirming that injured workers are receiving proper treatment and monitoring the progress of recovery, in addition to maintaining a dialogue with the injured employee and demonstrating the employer’s concern for his or her recovery.

Throughout the process, employers should be mindful of the end goal: returning workers to their regular duties. A worker’s absence can mean a loss of critical knowledge, as well as a loss of productivity.

Once an injured worker has recovered, a physician or another medical professional will certify whether a worker is fit to return to normal duties or if the worker must be assigned light or alternate duties. Light- and alternate-duty programs frequently require a safety manager’s involvement, working in coordination with Human Resources and other personnel to meet an injured employee’s work restrictions.

Alternate or light duty may involve less strenuous parts of workers’ regular jobs, or it may involve temporarily filling a different job at the same company. The best designed light-duty programs manage to offer meaningful work opportunities—rather than mere busywork—while still staying within the limits of what a returning employee can do safely without jeopardizing his or her recovery.

Regardless of the return-to-work assignment—regular, alternate, or light duties—the safety manager should closely monitor the work to ensure the worker doesn’t become reinjured.

Fraud Concerns

Some employers and insurers worry about having to pay out fraudulent workers’ compensation claims. Fraud is rare, but it does happen. Fraudulent claims may involve:

• Faked injuries or malingering to avoid work;
• Non-work-related injuries;
• Not returning to work once an injury has healed while continuing to collect “lost” wages; or
• Old injuries or injuries from previous jobs.

Safety managers must tread carefully. They have a duty to report suspicious claims to their employer and its insurance carrier. However, it is the insurance provider’s responsibility—not that of the safety manager—to investigate suspicious claims. Confronting a worker about a suspicious workers’ compensation claim can foster an adversarial relationship and undermine employee morale, in addition to creating potential liability problems for the employer.

Fraudulent or Uncertified Providers

While fraudulent claims can and do happen, fraud and impropriety can happen on the provider end, too. Not everyone who offers workers’ compensation insurance coverage is aboveboard. In December, California’s Insurance commissioner penalized American Labor Alliance and CompOne USA $4,345,000 for selling workers’ compensation and liability policies to employers of farmworkers without being properly licensed by the state’s Department of Insurance.

Any policies sold in California by American Labor Alliance and CompOne USA are invalid. On February 13, the state’s Labor commissioner reminded California employers that the commissioner’s office can cite the employer $1,500 per employee not covered by valid workers’ compensation insurance.

Fraud’s Flip Side: Underreporting

There is a flip side to employees’ filing of false, fraudulent, or ineligible workers’ compensation claims: underreporting injuries. Workers may be afraid of retaliation from their supervisors or employers and may not report legitimate workplace injuries.

If a worker suffers a legitimate workplace injury—one that would qualify for workers’ compensation—but doesn’t report it, this can create legal problems for the employer, in addition to undermining safety at the company and increasing the chances of an injury or illness worsening.

Such an injury probably is recordable under OSHA’s injury and illness recordkeeping regulations. If an injury goes unreported, the employer could be cited and penalized for recordkeeping violations.

OSHA requires employers to record a work-related injury if it involves:

• Death;
• Days away from work;
• Restricted work or transfer to another job;
• Loss of consciousness;
• Diagnosis of a significant injury or illness by a physician or licensed healthcare provider; or
• Certain other specific outcomes, such as needlesticks, work-related tuberculosis, and hearing loss.

Controlling Premium Costs

Workers’ compensation insurance premiums can vary by state. Each state has its own formula for calculating premiums. An individual employer’s premiums are also affected by the risks inherent in its industry and the company’s claim history.

The key metric for employers is the experience modification rate (EMR), which is a numerical expression of an employer’s claims history and safety record in comparison to other companies in the same industry. An EMR of 1.0 indicates an average level of risk for the industry, while an EMR below 1.0 indicates a lower risk (i.e., better than average safety performance for the industry), and an EMR above 1.0 indicates a higher risk (i.e., worse safety performance or more claims than the industry average). Generally speaking, a higher EMR translates to higher premium costs.

The best defense against high premiums and claims is the same as the best defense against being cited by OSHA: preventing accidents, illnesses, and injuries.

How Can Safety Professionals Help?

Safety managers can help their employers contain the costs of workers’ compensation claims and premiums by spotting and correcting workplace hazards before they cause an injury and by fostering a strong culture of safety throughout the organization.

Safety managers can make sure employees stay on top of housekeeping—fixing slip, trip, and fall hazards before they become slip, trip, and fall injuries. They can hold safety meetings or give toolbox or tailgate talks—educating employees about hazards inherent to their jobs and instructing them in hazard controls or proper use of personal protective equipment (PPE).

They can conduct regular safety audits to identify and correct problems on the job and make sure workers are following the workplace safety policies and procedures. Even the best intended policies and procedures are worthless if employees aren’t following them.

Workers’ compensation carriers can often assist in these efforts. Many offer consultation services and other safety resources to help employers take proactive steps to prevent injuries and control costs.

Simply Complicated

Being aware of and engaged in workers’ compensation is a necessary and critical part of a safety professional’s job—on top of the responsibilities of complying with federal or state occupational safety and health regulations. In many ways, the workers’ compensation part of the job is simple:

• Prevent accidents, injuries, and exposures that lead to occupational illnesses;
• Ensure injured workers receive prompt medical care;
• Monitor their progress while out on leave; and
• Coordinate their return to work.

What complicates this part of the job is money—the money involved in:

• Ineligible or fraudulent claims;
• Poorly administered treatment;
• Reinjury after workers return to work; and
• Higher insurance premiums as a result of an excessive level of injuries and claims.