OSHA employer-paid PPE implemented
May 15 was the implementation date for OSHA’s final rule requiring employers to pay for employees’ personal protective equipment. OSHA finalized the rule on Nov. 14, but allowed a six-month implementation period.

Drug-free workplace kit available
The Substance Abuse and Mental Health Services Administration has produced a new kit offering guidance on developing and implementing a workplace drug policy. The kit includes nine pull out brochures, 13 fact sheets, a bumper sticker and poster and covers topics such as how to assess your organization’s needs and drug testing in the workplace.

Department of Labor’s new Internet tool helps employer compliance
DOL’s new elaw program, First Step Recordkeeping, Reporting and Notices is designed to help small business owners learn about and comply with the federal laws that apply to them.

Food source website for healthy dining
HealthyDiningFinder.com provides consumers with a centralized resource for identifying the healthier choices and corresponding nutrition information from restaurants nationwide. Developed in collaboration with the National Restaurant Association (NRA) and with partial funding from the Centers for Disease Control and Prevention (CDC), HealthyDiningFinder.com provides a search function by zip code or address information.

The Department of Labor estimates that 70% of employers are out of compliance with federal laws governing wage and hours. Class actions have emerged as one of the most significant employment law trends of this decade.

According to Tammy McCutchen and Lisa Schreter of Littler Mendelson, experts in wage and hour compliance, the most significant wage and hour risks faced by employers today include meal and rest periods, off-clock work, continuous workday issues and employee misclassification. To control risk they recommend:

• Conduct an audit to ensure jobs are classified correctly
• Keep job descriptions up to date and have employees confirm accuracy during performance appraisal – there is often a disconnect between what’s on paper and what an employee is actually doing
• Centralized review of new and changed jobs by HR/Legal
• Periodic training for HR/Legal
• Adopt employment policies, including “off-the-clock” policy, payroll integrity policy, overtime policy, and rest and meal break policies
• Conduct periodic audits of payroll records
• Provide training to front-line managers and employees
• Hold managers accountable

Employers who demonstrate they have made a sincere effort to comply with the FSLA can avoid significant additional liability on top of whatever back wages are owed. In addition, state laws may be more restrictive than FSLA and employers must also understand the laws in all states where they have employees.

While the ideal situation is to have all Workers’ Compensation injuries treated by physicians trained in Occupational Medicine who understand how to facilitate recovery and expedite return to work, it’s not unusual to be dealing with a family practitioner who has little or no training in Occupational Medicine. Frequently, there are stories about the physician asking injured employees how many days they want off work or prescribing the improper treatment. And the blame for the unnecessary costs and delays in return to work is placed squarely on the treating physician. Yet, a passive employer can be equally as responsible because many doctors do not understand the process and the employer does not educate them.

At a recent symposium of the Institute of WorkComp Professionals, Dr. Michael Weizman, a board certified family physician, presented a new perspective on the employer – employee – physician relationship. Prior to being introduced to the Institute’s process of managing Workers’ Compensation, Dr. Weizman’s views were quite typical:

• Assumed the injured patient did not want to return to work
• Assumed that injured patients in general wanted to blame the employer and take advantage of the situation
• Assumed the injured employee’s visits would be unrewarding doctor-patient encounters
• Would more than likely give the patient whatever he/she wanted to expedite his day

Dr. Weizman readily admits that he did not fully understand the mentality and motivation of the injured employee, or the motivation and goals of the employer and had little incentive to learn more or change his ways. Although he wanted to do what was right for his injured patients, he lacked knowledge and understanding of Workers’ Comp and had not been contacted by employers who may have altered his views.

However, when he was introduced to the Institute process and educated on the value of managing Workers’ Compensation, he realized his approach was flawed and that:

• Injured employees in general do want to return to work
• Employers want to minimize their losses
• There are evidence-based guidelines for various injuries and time away from work predictions that he can use
• The sooner employees return to work, the more likely they are to stay in the workforce
• He could take a more pro-active role in the process
• He could increase his job satisfaction of caring for injured patients by doing the right thing

Today, Dr. Weizman works to influence patient outcomes based on his newly developed proactive approach to Workers’ Comp cases. While he is committed to expanding his knowledge, he expresses frustration that few employers are proactive and contact him.

To optimize the services from any medical provider, employers need to communicate and monitor the patient care to return the injured employee safely to work as soon as possible. It is only with an understanding of the essential job functions, the availability of modified duty and the employer’s concern for the employee, that treating physicians can make reasonable decisions on when employees can return to work.

Many employers believe Workers’ Compensation is “what it is” and few really understand it. Yet, two identical companies in the same industry can have widely varying premiums. The company with the higher premium accepts reports at face value and believes that it cannot alter the system, whereas the company with the lower premium is proactive and has an ongoing process in place to prevent injuries, manage claims and return employees to work as expeditiously as possible.

Here are some common myths often held by employers that unnecessarily drive up the costs of Workers’ Compensation:

#1. As long as losses remain the same, rates will not increase
Unlike other insurance, Workers’ Compensation functions like a credit line to finance the cost of injuries. The premium is calculated by rate x $100 payroll x Experience Modifier (a complex calculation that reflects the expected loss performance of an employer). When rates are declining, it is assumed that expected loss rates will also go down. If all other factors remain the same, the lower expected loss rates would result in higher Experience Modifiers. When rates and expected loss rates are declining, employers have to continually improve just to remain the same.

#2. Experience Modification Factors are correct
Calculating the Experience Mod is a complex process and errors are often made. There can be errors in payroll amounts, open claims, payroll classifications, claims in the wrong year, clerical errors, and calculation errors. Verifying Experience Mods can save money.

#3. Workers’ Compensation audits are routine
Workers’ Compensation audits are full of errors. Employees can be put into wrong classifications, legally entitled deductions overlooked, subcontractors charged improperly, excluded remuneration included, etc. Audit mistakes default to the insurance company and are costly to the employer.

#4. Uncontrollable medical prices are driving the costs of Workers’ Compensation
Medical expenses are 57% of the claims dollar and are climbing. While price increases are a minor factor, the growth in utilization is the key driver. An NCCI study found that Workers’ Compensation pays more than group health to treat comparable injuries and that utilization differences explain 80% of the overall treatment cost disparity. Chronic pain-related injuries such as bursitis, back pain and carpal tunnel have particularly large variances. Utilization can be managed and controlled.

#5. Managed care saves money
In many cases, managed care discounts are defined as savings to the employer. When discounts equal savings, there is no incentive to reduce utilization. In fact, more utilization means more savings and employers are being “saved to death!” A better definition of savings is the difference between the cost of the claims using managed care compared to the cost of the claims outside the program. (Health Strategy Associates)

#6. Treatment of Workers’ Comp injuries is the same as all other medical care
A CWCI study assessed the impact of the volume of Workers’ Compensation cases and the impact on outcomes. Comparing the most and least experienced physicians found the average cost per case to be 56% lower, the average disability duration 41% lower and the attorney involvement rate 58% lower. Working with physicians experienced in Occupational Medicine and Workers’ Compensation will reduce costs.

#7. Employees want to abuse the system and fraud drive costs
Most employees value their job and fraud represents a very small percentage of claims. 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 that is created by the system.

#8. Bidding and quoting is the best strategy to drive down costs
The view that Workers’ Compensation is a commodity is shortsighted at best. To manage premiums over the long term requires expertise in claims management, medical cost containment, injury prevention and management, return to work, and supervisor training. There must be a proven process in place to minimize the cost of injury and expedite injured employees return to work. One mismanaged claim can drive up future premiums and result in the loss of a valuable employee.

Client
This assembler of office furniture employs 86 and has revenues in excess of $32 million annually.

Situation
The employer saw its Experience Mod escalating steadily up to 1.22.

Assessment
Certified WorkComp Advisors (CWCAs) found that one reason for the increase in the Experience Mod was the claim reserve for an employee who suffered a shoulder injury, resulting in numerous surgeries. Based on the extent of the injury, the carrier set a loss reserve in excess of $100,000, resulting in an increase in the Mod.

Solution
Upon researching the case, it was determined that even though the claim was actually settled for $19,000, it remained on the books at $100,000. The CWCAs had the insurance company reopen the claim and re-file it with the state in order to have the lower amount reflected on its state Experience Mod worksheet.

Result
With the identification and correction of this error, the company saw a 22% drop in its Experience Modification Factor from 1.22 to 1.0, lowering its annual premiums by $6,000-$7,000.

Client
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
Our 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, our CWCAs were able to zero in on the mistake and return close to $2,000 in premiums to the company.

Workers with acute low back pain may be reluctant to return to return to work because they are afraid of pain and the perception of pain becomes exaggerated. Fear of pain can actually become more disabling than pain itself.

A recent study in the February 2008 Physical Therapy Journal, “Effects of Education on Return-to-Work Status for People With Fear-Avoidance Beliefs and Acute Low Back Pain” examined two groups of workers who were unable to return to work following a work-related episode of low back pain and who exhibited fear-avoidance beliefs. Both groups received conventional physical therapy intervention. One group also was given education and counseling on pain management tactics and the value of physical activity and exercise.

The effectiveness of the education and counseling was measured by the number of days it took people to return to work without restrictions. All participants in the education group returned to regular work duties within 45 days, whereas one-third of the other group were still off work at 45 days. The study concludes, “Education and counseling regarding pain management, physical activity, and exercise can reduce the number of days off work in people with fear-avoidance beliefs and acute low back pain.”

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 can’t believe he’s 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 physician’s 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.

Fines for federal immigration violations increased
Effective March 27, 2008, the civil monetary penalties assessed against employers who violate immigration laws were increased. Among the more significant fines under the revised regulation for knowingly hiring or unlawfully employing an undocumented worker, an employer will now face civil fines of: $375-$3,200 for each undocumented individual; $3,200-$6,500 for each undocumented individual, if the employer has previously been in violation; and $4,300-$16,000 for each undocumented individual, if the employer was subject to more than one cease and desist order.

While the regulation made no mention of an increase for this, employers who are convicted of having engaged in a pattern or practice of knowingly hiring unauthorized aliens or continuing to employ aliens, knowing that they are or have become unauthorized to work in the United States, may be fined up to $3,000 per unauthorized employee and/or face up to six months of imprisonment.

Fines increased also in the areas of record retention, antidiscrimination obligations, final notifications, and document fraud.

Workplace injuries linked to chronic health conditions
A study of workers at the Eastman Chemical Co. in Tennessee revealed that employees who reported workplace injuries had higher rates of chronic health conditions and risk factors than those who did not report an injury. Men 50 years and older and women 40 to 49 years old had the highest injury rates.

The group of injured employees had higher blood pressure readings, headache symptoms, depression and metabolic syndrome (a combination of disorders that increase the risk of developing both heart disease and diabetes that is more prevalent with age).

The researchers conclude that wellness initiatives to address health issues among workers should lead to a healthier, more productive workforce.

Study shows wellness programs pay off
According to a white paper, The Health and Economic Implications of Workplace Wellness Program, by the American Institute for Preventive Medicine in Farmington Hills, MI, a three-year study found that health risks decreased after the implementation of a comprehensive worksite wellness program. Each year, savings increased due to reduced health care costs, absenteeism, and Workers’ Comp claims. In the first year the total savings was $116 per participant and in the third year, it was $464 per participant.

Noting that an estimated 87.5% of health care claims are lifestyle-related, companies and employees receive many benefits from a workplace wellness program in addition to reduced costs. These include increased employee morale, improved employee health and increased productivity.

GAO identified $13 million in improper federal Workers’ Comp payments
One of our tenets is that mistakes are often made in Workers’ Comp. According to a report from the Government Accountability Office (GAO), the Department of Labor’s Office of Workers’ Compensation Programs (OWCP) is ineffective in managing improper payments. OWCP staff reported that quickly processing claims had a higher priority than detecting and recovering improper payments and that processing deadlines prevented payments from being quickly cancelled when the claimant returned to work or died. From a review of a sample of claims files for overpayments identified by OWCP in 2006, GAO found that many occurred because claimants did not notify OWCP in a timely manner when they returned to work. Errors also contributed to the overpayments.

EEOC issues new fact sheet
A bad hire is one of the most costly mistakes an employer can make. Yet, many employers fail to evaluate thoroughly potential employees before making the decision to hire them.

More employers are utilizing employment testing due in part to post 9-11 security concerns, issues related to workplace violence, safety, and liability as well as the large-scale adoption of online job applications that require efficient ways to screen big applicant pools in a non-subjective way. Yet, others shun their use, believing that there are too many risks involved, particularly increasing their exposure to being sued.

Some of the tools available to employers include skill testing, character assessment, and fit-for-duty exams. The legal risks associated with these hiring activities, while they do exist, are minimal compared to the risk of hiring the wrong person. Moreover, assessments, when used properly, can help reduce exposure to charges of discrimination or privacy breach because they add objectivity to the selection process.

Both skill testing and personality assessment tools are subject to uniform guidelines. The Equal Employment Opportunity Commission’s (EEOC) Uniform Guidelines on Employee Selection Procedures provide a framework to help ensure that a test used as part of the hiring process will be employed in a non-discriminatory manner.

The EEOC has issued an extensive fact sheet on the application of federal anti-discrimination laws to employer tests and other selection procedures to screen applicants for hire and employees for promotion. The technical assistance document is available on the agency’s web site at www.eeoc.gov/policy/docs/factemployment_procedures.html.

The fact sheet describes common types of employer administered tests and selection procedures used in the 21st century workplace, including cognitive tests, personality tests, medical examinations, credit checks, and criminal background checks. The document also sets forth “best practices” for employers to follow when using employment tests and other screening devices, and cites recent EEOC enforcement actions.

An area of particular relevance to Workers’ Compensation is pre-employment physicals. If a company requires “fit-for-duty exams” to avoid hiring a Workers’ Comp claim, they should be structured so that they comply with privacy laws and the American with Disabilities Act (ADA). Employers are limited in the scope of allowable inquiries before making a conditional job offer. Our strategic partner, HR That Works!, notes that the ADA allows prehire inquires on an application into the ability to perform a particular job (e.g., Can you lift this 30-pound mail sack with or without accommodation?) but prohibits pre-offer inquiries about a generalized disability (e.g. Have you ever been injured when lifting?).

However, after making a conditional job offer an employer can ask about the employee’s Workers’ Compensation history, sick leave usage, medical challenges, etc. as well as require a medical examination, provided that all candidates who receive a conditional job offer in the same category are required to take the same examination and/or respond to the same inquiries. If the employer chooses not to hire someone based on their medical history, the decision must be directly related to their inability to perform the job up to a certain standard or because in doing so, they may harm themselves or others. Employers with more than 15 employees are required to consider job accommodations. It is recommended that medical inquires be done by a physician and that the physician maintain the underlying records.

Another objection sometimes heard about pre-employment testing is that it doesn’t work. A study by PreVisor, Inc. of 29 organizations, including several Fortune 1000 employers from the retail, telecommunications, health care and financial services industries found that the use of tests have enabled employers to “accurately correlate candidate assessment scores with performance on the job, creating measurable and sustainable improvements to business results.” One result is reduced turnover. For example, in a warehousing and distribution role, 43% of associates who scored high on a customized job-fit measure remained on the job after 90 days, whereas only 23% of those who scored low on the assessment were retained.

When managed properly, integrating pre-employment testing into your hiring process can decrease turnover, improve productivity as well as reduce the likelihood of employment practices lawsuits. For more information, contact us.