Simple Methods for Reducing Workers Compensation Costs

As the costs of doing business rises, companies in every state and across all industries are constantly looking for ways to cut costs. Even though people are living longer, the general consensus is that we are sicker than we have ever been. The healthcare industry is booming and there are only two ways for companies to lower costs associated with their employees health, lower healthcare costs by promoting wellness or reduce the number of worker's compensation claims and costs. True smaller organizations that have less than 25 employees may not feel the sting of worker's compensation costs unless they are in an accident-prone industry, such as construction.

The best way to reduce costs is by employment testing prior to hiring and potential employee and testing annually to ensure that the employee can still perform their duties. Most large firms in industry require a physical prior to your start date. However, few continue with follow up or annual testing. Many municipalities, other government entities, and non-profit do not test at all. Pre-employment testing allows the employer to distinguish what conditions are pre-existing. So, they do not end up fitting the bill for an injury that the employee received during a previous position. Pre-employment tests should also prove that the new employee could handle the physical requirements of the position. And just like there are different positions within an organization, there should also be different pre-employment tests. For example the physical demands of a secretary are different than those that are common among janitors.

You may also want to try a moonlighter's policy. A moonlighter's policy is rules and/or procedures that will govern the type of second or part time job your employees may have or wish to obtain. There are different ways to set up a moonlighter's policy but two important components to have in place. First, will moonlighting require approval? Government entities and some large forms require an employee to get approval before starting a second job. This prevents the company for paying for an injury gained while performing your second job. For example, a police officer that has a part time job as a security guard or bouncer has a high chance having accident on both jobs. So, his employers should be aware of the double duty. Second, you should consider documenting the type of tasks required by the second job. A lot of injuries are caused by repetitive motion, and employees may not always be able to pinpoint the exact day that they starting hurting. So, you may be able to argue that the injury is due to tasks being performed for another employer. For example, if you have secretary that is having back pain that moonlights as a loader for Wal-Mart chances are good she did not hurt her back due to tasks being performed as a secretary.

Depending on the size of your organization, you may also want to try allocating costs back. The technique allows you to charge a deductible back to your departments or divisions for workers compensation. The approach similar to the insurance set up with out the premium. Allocating back is popular among municipalities and government entities. The idea behind this method is that you are forcing to departments to realize how accidents and mistakes effect your bottom-line. Supervisors will begin to discourage employees from going to the emergency room for minor ailments. It will also allow your organization to pinpoint and monitor problem areas.

In the end there are probably a combination of different tactics that would help your organization reduce worker's compensation costs, but the idea is start and maintain programs and policies that you will be able to keep in place over a long period of time. It is also important to note that workers compensation laws vary by state; so, you should contact your state's Department of Insurance, Department of Labor, Industrial Commission, or similar organization to find out what is and is not allowed.