Sally Smith is a great employee for ABC Manufacturing. She is dependable, energetic, and hard working — a true rock star. One morning, Sally arrives at work before most of her coworkers to get an early start on her to-do list. Upon arriving, Sally realizes that she needs to move a few large boxes in order to complete her tasks. She knows the boxes are heavy but doesn’t want to wait for someone else to arrive to assist her. She picks up the first box and moves it to its new location without issue. As she is carrying the second box, however, Sally trips over a cord and drops the box on her foot, causing her to fall to the floor.
When you, Harry Human Resources, arrive at work, you find Sally sitting on the floor holding her foot. You get her the medical attention she needs and start recording and reporting the injury as necessary.
The next day, Sally calls to inform you that she needs surgery on her foot, and she will be out of work for a minimum of eight weeks. After eight weeks, she should be able to return to a light duty position.
How much is this going to cost ABC Manufacturing — surgery and a minimum of eight weeks of lost wages? Oh wait, we have workers' compensation insurance, so it won’t cost us anything — right? WRONG!
Worker’s compensation premiums are determined based on your experience modifier, referred to as your mod. An employer’s mod is based on the cost of its workers' compensation claims over the previous three-year period as compared to similar business types within its state. If an employer’s mod is 1.0, then the employer will pay the industry’s average premium rate. If its mod is .8, however, it will pay 20% less than the industry rate. On the other hand, if your mod is 1.2, you will pay 20% more than the industry rate.
As you can see, Sally’s surgery and lost wages will likely have an impact on ABC Manufacturing’s mod. If there are other workplace injuries giving rise to workers' compensation claims, an employer’s mod can quickly increase and become a substantial liability for the company. Given the impact that each claim has on your future premiums, it is to your benefit to identify the ways that you can minimize injuries in your workplace.
Register now for our April 20 webcast "Understanding why work comp is so expensive" for a discussion regarding the factors that impact your workers' compensation experience mod, as well as some techniques to reduce injuries and, as a result, workers' compensation costs.
For more information about workers' compensation or business insurance in general, please contact us.
Hannah advises employers on leave policies, discrimination, harassment, accommodations, wage and hour obligations and any other issues that may arise in the workplace.
Hannah advises employers on leave policies, discrimination, harassment, accommodations, wage and hour obligations and any other issues that may arise in the workplace. In addition to providing practical solutions to employment law matters, Hannah has extensive private practice experience. Her focus included early intervention advice and solutions to employers, as well as representing them in the defense of administrative claims. She now works on a team dedicated to providing solutions for employment law and compliance matters for employers of all sizes. Hannah graduated from William Mitchell College of Law, after receiving a Bachelor of Arts degree from Winona State University.
Risk management and human resources are traditionally two different job functions, and the people in these areas have rarely crossed paths — but that is changing.
Why are these people starting to work together more frequently?
In its 2014 Workplace Safety Index, Liberty Mutual estimated that employers pay just under $1 billion per week to injured employees and their medical care providers. Since even one serious workplace injury may impact the bottom line of a small or mid-size business, it is essential that employers have an effective injury and illness prevention program in place.
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