1. Participate in the annual workers’ compensation audit
Your insurance company will verify your payrolls and risk classes at this time every year. To verify all numbers and challenge any incorrect risk classifications, you must verify them.
Both these areas are prone to errors. They may not say it, but that does not mean it is true. They can assign hundreds of classifications. Any questionable classifications can be challenged, and you should. It is essential to be aware of the different classification options available and which one applies to your employees.
What other way can you determine if the assigned classifications you are given are correct and if you have any other options? If in doubt, challenge. Many people are wrong, and almost all errors will be in favor of the insurance company.
You pay more for errors.
This was done with one company. It saved thousands of dollars annually in premiums. A group of workers was reclassified correctly into a risk of less than $.40 per $100 earned, compared to the previous classification of $5.90 for 100 dollars of payroll. This was an incorrect classification that I have to add. It had been in place for more than 20 years.
Rates for employees can vary greatly. A poor rate classification can easily lead to a loss of hundreds, thousands, or even tens and thousands of dollars per year, depending on the size of your company, industry, payroll, or industry. You can be sure that your insurance company will assign your employee the highest rate classification possible if there are any questions about the correct rate classification. Premiums will be higher for employees with higher risk classifications.
Your goal is precisely the opposite of theirs. Don’t assume anything else!
2. If appropriate, request split rate classification
Many employees today have multiple jobs. There are many rate classifications that can be applied. The lowest possible rate classification is what you want. Insurance companies will assign the lowest rate classification possible.
What if your employee is spending 40% of his time in a higher-rate classification function and 60% in a lower-rate classification function? Why should you pay based on the employee’s time spent in the more expensive rate function? This would mean that one rate could be $3.59 for $100 of earnings, while the other rate could be $2.25 for $100. This is a big difference.
Splitting rates can help you reduce workers’ compensation costs by 10% to 50%, depending upon the rate differential and how much time is spent on each job function. If your carrier won’t split rates, and your state allows it. Find another one!
3. Stop fraudulent workers’ compensation claims
Employers have fewer rights each year, but they still have some. One of these rights is the ability to fight a questionable claim. Get involved. If you are unsure about the validity of the claim or if it is work-related, you can dispute it.
False claims of injury on the job or related to work account for 20% to 25% of all claims. The average worker’s compensation rate has increased by 150% in the past ten years. This is a massive increase in your costs. It is time to do something about this.
Workers’ compensation was created to assist workers in times of legitimate injury and not to allow them to profit from the system. Rates will change with every claim. One claim can make your rates triple. Every day, fake claims are made. Let me give you an example that I am aware of:
On Sunday, a man was playing softball. He fell into home plate, tore his knees, and slipped. He was quick to think. He didn’t go to the hospital. He stayed home through the night, and he went back to work the next day at the warehouse job he had. The other employees found him on the pallet, his knees in pain. The poor man had apparently “fallen off the pallet” and fractured his knee. For more than two years, he was unemployed.
4. Request insurance certificates
You should make sure that all contractors and workers who aren’t on your payroll but work on your premises have certificates of insurance. If an injury happens under these conditions, you may be able to file against their insurance. Do not assume that they have coverage. For your records, request a copy of the current insurance certificate. No certificate, no job. It’s straightforward.
5. Facilitate clarity
Both your insurance company as well as the doctor involved in the case should be aware of the employee’s job duties. You don’t want the decision about whether an employee can return work to be made solely based on the employee’s description of his or her job. This has happened on multiple occasions. One case was exciting. The employee claimed that heavy lifting was the bulk of his employment when in reality, the most crucial thing he lifted was his paycheck. This employee might not have been able to return to work if he had given a detailed description of his job. That is not what you think he intended.
6. Written statements are important
As a result of a few phone calls by the injured worker, time can distort what actually happened. If you want to fight a questionable or bogus claim, you must get written statements from witnesses as soon as possible after an accident.
This has allowed us to stop fraudulent claims on more than one occasion. Do not wait for your insurance company’s investigation to begin. This can take several weeks or even months, and it may not be completed properly. It is possible for a critical witness to forget, quit, be fired, or have a different view.
Derrick Welch, an author of “In Pursuit Of Profits: How at Least Double Your Profits without Increasing Sales,” provided this edition of The Welch Report. This report includes 1,000 cost control, expense reduction, and income-producing strategies you can start using today to dramatically increase your bottom line.