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Workers' Compensation
MGMT 4030 Managing Employee Reward Systems
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
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
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.
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