Workers' Compensation

1. Workers' Compensation MGMT 4030 Managing Employee Reward Systems

2. 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

3. 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

4. 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 DeceasedWorker - Again, more generous than Soc. Sec.

5. 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