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NEWSLETTERS
NEWSLETTERS
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In this issue
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A careful audit helps save oil company $2,000 |
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The myth of the bad employee
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Q & A: Common mistakes employers make under FMLA |
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A careful audit helps save oil company $2,000
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Insured
The insured is a large oil company making deliveries to area businesses, including five convenient stores/service stations that it owns. The company has 40 employees and estimated annual revenues in excess of $50 million.
Situation
Following an audit, the insurance company attempted to charge the company for higher job classifications even though the number of employees or the type of work had not changed.
Assessment
Certified WorkComp Advisors (CWCAs) reviewed all audit worksheets. After a careful review and discussion of the situation with the head of the company, it was determined that there were two employees who had been classified as truck drivers, when the proper classification was maintenance workers. It was further determined that the misclassification was made by an independent auditor hired by the insurance company who had no prior knowledge of the company.
Solution
The CWCAs went through the NCCI Scopes Manual of Classifications and found classifications more suitable to the two workers. The request for the change was put in writing to the underwriter, who agreed to place the two employees in the lower classification.
Result
By undertaking the new audit, the CWCAs were able to zero in on the mistake and return close to $2,000 in premiums to the company.
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The myth of the bad employee
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Many employers believe that bad or fraudulent employees drive up Workers Compensation costs. When an employee is off on Workers Comp for an extended period of time, it's not uncommon for an employer to say, "Tom was a model employee for many years. I cant believe hes milking the system. He should have been back to work weeks ago."
While the notion of abuse is widespread in the compensation system, particularly for such 'invisible' injuries as strains and sprains, good employees are unjustly vilified. There's no evidence that competent, honest and loyal employees abuse the system, rather it's the system itself that induces needless disability and high costs.
Fraudulent claims are those filed by employees who were never hurt and say they were or who were hurt outside of work and claim the injury to be work-related. They make for memorable anecdotes - the employee with the injured back who is seen on video salsa dancing- but, in reality, such claims are rare. Those that do occur are often the result of poor hiring choices, so by doing the proper background investigation before hiring, an employer can minimize the chances of fraud.
The biggest problem is workers who don't get well as expected, not as a result of intentional malingering, but as a result of delayed recovery. This is disability duration out of proportion to the severity of the injury or illness. For many, the injury begins as a common problem - a sprain, back injury, or a slip and fall - that escalates into a prolonged or even permanent withdrawal from the workforce.
Consider this hypothetical example. An employee is lifting a 50-pound package from a truck and injures his lower back. According to a study by Dr. Elizabeth McGlynn, RAND Health, the employee has only a one in three chance of receiving the proper diagnosis and care on the first medical visit when back pain is present.
A physician may order an MRI, prescribe muscle relaxants and narcotics for pain relief, when rest, over-the counter pain relievers, and return to work in modified duty may have been the proper treatment. With misdiagnoses, come excessive testing, unnecessary treatments, long delays in return to work, and higher costs for the employer. Even worse, there are unfortunate consequences for employees.
Employees may experience negative side effects from the drugs, lose muscle tone and develop atrophy and feel worse, rather than better. Although some workers will cope with the problem and work through it, others cannot. Representing a small percentage of the claims - 6 to 7% - it is this group that accounts for a large percentage of costs. For them, the medical issues are further exacerbated by a myriad of social and psychological factors.
Injuries disrupt workers' daily lives. Even a minor injury may seem like a major occurrence because it is unfamiliar and frightening or it's occurred at a time when there is stress in the workers' lives. Employers often fail to inform employees about what to expect when an injury occurs, creating further anxiety. Worried about how their co-workers perceive their injury, they quickly become socially isolated, lose their sense of productivity and purpose, and sink into depression. Their ability to deal with the frustration and pain lessens and the magnitude of the injury becomes distorted. Yet, the system turns a blind eye and keeps treating them medically.
Prolonged absences then morph into a 'disability attitude'. Work defines a person's identity in a number of ways, including the self-respect that comes from earning a living. According to clinical psychologist, Dr. Kevin Gaffney, "With delayed recovery comes the issue of identity disturbance."
When that identity is taken away and the claim progresses beyond the expected medical recovery, injured employees begin to view themselves as disabled. The longer an employee stays away from the workplace, the more difficult it becomes to re-establish the discipline of being on the job eight hours a day. Once this disability attitude sets in, the motivation to return to work is compromised.
In fact, the longer workers stays away from the workplace, the less likely it is that they will return. Research confirms that there is only a 50% chance that an employee who has been absent for twelve weeks will return to full employment.
While injured workers need encouragement and nurturing, the employer's reaction - or lack of action - often aggravates the situation. Harboring feelings that injured employees are the "villains," the employer focuses on resolving the resulting production issues and has little or no contact with them. The injured workers sense of self worth and identity spirals downward and animosity and distrust build. Litigation begins to look like the only available alternative.
A report by the American College of Occupational and Environmental Medicine, Preventing Needless Work Disability by Helping People Stay Employed, notes that "only a small fraction of medically excused days off work is medically required - meaning work of any kind is medically contraindicated. The remaining days off result from a variety of non-medical factors such as administrative delays of treatment and specialty referral, lack of transitional work, ineffective communications, lax management and logistic problems. These days off are based on non-medical decisions and are either discretionary or unnecessary. Participants in the disability benefits system seem largely unaware that so much disability is not medically required. Absence from work is "excused" and benefits are generally awarded based on a physicians decision confirming that a medical condition exists. This implies that a diagnosis creates a disability."
Simply put, the problem is claims become exaggerated when a worker gets hurt, gets frustrated, is not getting better and no one is talking to him. Eventually good workers slide into self-destructive behavior. Too many employers believe that these workers are malingerers, or even worse, crooks. Rarely do they recognize that the real threat is not the cost of the claim, but the loss of a valuable, competent employee who is unnecessarily out on a disability that the system has regrettably created.
Workers Compensation is not "found" money. Unlike personal injury settlements, Workers Compensation is a "no-fault" law and lump sum settlements are usually based on estimates of how long employees are likely to be unable to work. Each state varies in the maximum and minimum amounts required for weekly temporary disability benefits, as well as in how any permanent disability is determined. In addition to the physical pain, and the loss of their self-image as self-sufficient members of their families and society, injured and ill workers can face financial difficulties. No one who has been out on workers' comp has improved their life as a result.
To avoid this debacle, early intervention is key. Employers need to understand that Workers' Compensation is not strictly a financial issue, but a people issue. Bringing injured employees back to work as soon as possible in a medically approved capacity is the cornerstone of preventing long-term disability. When the people component is managed well there will be better financial outcomes. |
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Q & A: Common mistakes employers make under FMLA
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Q. "We have over 1000 employees and engage a number of temporary employees. Do we have any obligations to them under FMLA?"
A. Your question is a timely one. A recent decision (Grace v. USCAR and Bartech Technical Services, LLC, March 26, 2008) by the 6th US Circuit Court of Appeals provides insight into the obligations of employers that regularly use contract or temporary employees. The court addressed the issue of "joint employers," finding that both the company (USCAR) and the temp agency (Bartech) had some measure of control over the employees work and working conditions, each with some measure of FMLA liability.
According to the regulations, "joint employment will ordinarily be found to exist when a temporary or leasing agency supplies employees to a second employer." The appeals court found Bartech to be the "primary" employer and USCAR to be the "secondary" employer with liability under FMLA. Furthermore, this liability exists even if the secondary company does not have the 50 employees required under the FMLA definition of "employer." The use of an "employment relationship" test, rather than 50-employee requirement, could be problematic if the rationale is applied to smaller employers in the future.
Q. "Our normal work week is 40 hours. Overtime is often required, and the average number of hours worked by many employees is 46. One such employee, who has been taking intermittent FMLA leave to care for his seriously ill spouse, feels he is entitled to 552 hours (12 weeks x 46), rather than 480 hours (12 weeks time x 40). Who is correct?"
A. Under the FMLA, the term "workweek" is the employee's usual or normal schedule (hours/days per week) prior to the start of FMLA leave, and is the controlling factor for determining how much leave an employee is entitled to use when taking FMLA leave intermittently. If the normal workweek is greater than 40 hours, hours worked above 40 hours must be included in determining the maximum amount of leave available to the employee under the FMLA.
Current regulations do not address the issue of counting missed overtime against the employees FMLA, although there are proposed regulations to address this issue.
Q. "We have an employee who worked part-time for several years and began full-time employment six months ago. While part-time she did not meet the hours of service requirement for FMLA, but combining the full and part-time hours for the past 12 months brings her over the 1,250 hours of service. Is she eligible for FMLA?"
A. Yes. An "eligible employee" is an employee of a covered employer who:
(1) Has been employed by the employer for at least 12 months, AND
(2) Has been employed for at least 1,250 hours of service during the
12-month period immediately preceding the commencement of the leave.
Its important to note that the 12 months need not be consecutive months. If an employee is maintained on the payroll for any part of a week, including any periods of paid or unpaid leave (sick, vacation) during which other benefits or compensation are provided by the employer (e.g., Workers' Compensation, group health plan benefits, etc.), the week counts as a week of employment.
Q. "Can I move an employee scheduled to return from FMLA leave to a position with substantially less responsibility, if the pay and benefits are the same?"
A. Jobs are only equivalent within the meaning of FMLA, if they entail "equivalent employment benefits, pay and other terms of employment." For instance, the jobs must involve the same or substantially similar responsibilities. Simply receiving the same pay and benefits is not enough. Earlier this year, the 7th US Circuit Court of Appeals decided a case, Breneisen v. Motorola that dealt with this issue.
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Top ten most disabling injuries
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The Liberty Mutual Research Institute recently released the 2007 Workplace Safety Index identifying the workplace injuries that cost employers the most in Workers' Compensation. The ten most disabling injuries resulting in a loss of six or more days of work - include:
1. Overexertion, which includes injuries caused by excessive lifting,
pushing, pulling, holding, carrying, or throwing: $12.7 billion (26.3 percent)
2. Fall on the same level: $6.6 billion (13.6 percent)
3. Fall to a lower level: $5 billion (10.4 percent)
4. Bodily reaction, which includes injuries from slipping or tripping without falling:
$4.8 billion (10 percent)
5. Struck by an object: $4.4 billion (9 percent)
6. Highway incidents: $2.3 billion (4.8 percent)
7. Repetitive motion: $2.1 billion (4.4 percent)
8. Struck against an object (for example, a worker walking into a door): $2 billion (4.3 percent)
9. Caught in or compressed by equipment or objects: $1.9 billion (3.9 percent)
10. Assaults and/or violent acts: $0.4 billion (0.8 percent)
As has been true for several years, the incidence of these injuries decreased (21%) but the inflation-adjusted cost of the top 10 injuries increased by almost 4 percent.
The injury categories which saw the highest increase in costs from 1998 to 2005 were fall on the same level (a 25.6 percent increase) and fall to a lower level (a 16.4 percent increase). According to the BLS, floors, walkways, and ground surfaces accounted for 19 percent of injuries in 2005, and falls from ladders increased by 10 percent from 2004. Falls on the same level and falls to a lower level also include injuries such as fractures, which generally rank in the top two injuries for median number of days away from work and, thus, are injuries that cost more in Workers' Comp.
Two injury categories significantly declined in cost from 1998 to 2005: repetitive motion (a 27.5 percent decline) and assaults and/or violent acts (a 19.4 percent decline). According to the report, several recent studies and BLS data indicate that the number of repetitive motion injuries has dropped significantly, which most researchers attribute to two factors. First, the number of diagnoses of carpal tunnel syndrome, which researchers believe was likely over-diagnosed by medical professionals in its "heyday," has declined. Second, increased attention by employers to making ergonomic improvements in the workplace has reduced the risks of repetitive injuries to workers. For assaults and/or violent acts, BLS statistics indicate that reports of lost workday injuries in this category have declined significantly in recent years. For instance, from 2004 to 2005, injuries in this category declined by 18 percent.
Coupled with company-specific injury data, the index can be helpful in and addressing safety issues in the workplace.
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