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Worker's compensation is a costly line item in my labor intensive industry. What are effective cost containment ideas for this?
Best Answer
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- E. James (Jim) Brennan
Mitigations begin with recruiting and screening, for sure. Genuine ergonomic processes and equipment are keys for the long term. Saftey shortcuts must be hanging offenses. Wellness programs can help to bring at-risk employees back from the brink.
Off-loading the problems and risks to temps and contractors is ineffective in the long run, and morally suspect in the here and now.
There is a long list of preventive and contingent answers. Better recruitment, supervisory training, documentation of disciplinary actions and severance protocols, careful record-keeping by folks who understand your state laws, responses to notifications, appropriate challenges and defenses, voluntary contributions and probably a few other things.
all very knowlegable insights. our issue is the state of California and the industry we are in (day spas). we have no classification to fall into, and apportionment across multiple policy years for cumulative trama for massage techs is diffficult. we have many proactive hiring, training, and wellness programs in full force, yet the problem exists. looking for new approaches.
For some reason, I was unable to edit my immediate response (within the time limit, too) to make the above answer more specific to WC rather than UC, where there are parallel needs.
No one yet has mentioned the obvious: safety equipment and intensive feedback.
Outsourcing or employee leasing evades the question but created other issues. Reducing your direct payroll and reducing your WC cost exposure will more than proportionally increase your expense cost for the same labor when you outsource because you now carry the burden of the outside supplier's profit margin after the same payroll and WC costs. The number gets larger but is entered as an expense item rather than as a deductible payroll or insurance charge. You would not BELIEVE the mark-ups applied to some leased-employee deals, especially after a reliable dependency relationship has been created.
If it was dangerous for your experienced and trained employees, why should it be safer for "outside contractors"? You will still end up paying the cost but it will be larger.
Second, DOL and IRS are sharpening their knives to make "independent contractor status" extremely problematic. In their precise narrow view, if you control the work done, they are your employees (no matter what you claim) and you stand to pay a whole lot more after fines and penalties and such. Look long and hard before you leap.
Employee leasing (and PEO) tackles the issues head on by providing safety procedures, manuals and systems. In addition, back-to-work protocols to decrease the overall losses.
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Partnering with a PEO or employee leasing company will not only get lower rates for small businesses, but also a provider in place that will work with its clients to keep claims down and back-to-work policies that keep the cost of claims lower.