Workers' Compensation

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Workers' Compensation
MGMT 4030 Managing Employee Reward Systems
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Workers Compensation Purpose

• Financial Assistance to Employees with
  Job-Related Injuries
• Based on No Fault Concept
• Worker that Accepts WC Cannot Sue Employer
• Employer Provides WC Coverage
• Average WC Insurance Rate 1 of Payroll Costs
• Dangerous Jobs Pay Higher Rates - up to 30 of
  payroll. Ex. WC for roofing employees

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Experience Rating for WC Cost Control Factors

• Risk Factors (Based on Occupation)
• Construction (high risk) but professor (low
  risk)
• Frequency of Accidents in the Company
• May vary depending on company accident history
• WC Payout Schedule Varies by State
• Ex. Lose one eye in Colorado, receive 20K, but
  in Wyoming only 10K

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Workers Compensation Benefits

• Covers All Medical Expenses From First Dollar On
• Note Regular Health insurance requires a
  co-payment and possible deductible before
  benefits available.
• Provides Replacement Income While Worker is
  Disabled - more generous than Soc. Sec. LTD
• Total or partial disability payments.
• Covers Rehabilitation Expenses
• Provides Income to Survivors of Deceased Worker -
  Again, more generous than Soc. Sec.

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Managing WC Costs

• Safety Programs Can Lower Accident Rates
• Comply with OSHA Safety Standards
• Awareness of hazards, proper use of equipment and
  ergonomics of using computer.
• Redesign Jobs with Risks of Repetitive Motion
  Injuries
• Audit WC Claims and Challenge Fraudulent Claims -
  There are perverse incentives for fraud.
• Encourage Disabled Workers to Return to Work on
  Redesigned Jobs