by Mike Menath
During the Great Recession (2007-2012) there was one silver lining for business owners. They had a distinct advantage when it came to hiring quality employees. Jobs were so precious that an employer was in a position of strength when it came to carefully hand selecting a competitive team. Those business owners with cash in their pockets at the time were able to attract and retain top level talent to their firms. However; a quick glance at today’s unemployment numbers provides enough evidence to affirm the leverage pendulum has swung sharply in favor of employees.
With the job pool shrinking at an alarming rate, finding excellent hires to fuel the growth in your business is getting more difficult each day. Additionally, there is a “bottom of the barrel” phenomenon where some businesses are having to contemplate much higher risk individuals than they were just a year ago.
This is leaving businesses more susceptible to Workers’ Comp fraud than ever before, as unfortunately there are some who use the somewhat lax “no fault” provisions of the labor law to get extended time off complements of the system. Make no mistake about it, the core mission of Workers’ Comp is worthy and it makes perfect sense. If an employee is hurt while performing their job in the way they were trained, they should be compensated until they are healthy enough to return to the workforce. And it’s also an ethical requirement of businesses to provide the safest workplace environment possible for their staff.
The challenge is in those gray areas. Did this employee truly injure their back while lifting a box at work? Or did the injury really occur over the weekend with a misfired homerun swing at the softball tournament? Most experienced business owners have their horror stories to share regarding Workers’ Comp. It’s hard enough to get in adequate revenues to cover payroll every other week. It’s all the more difficult to have to pay higher Workers’ Comp fees because of those who don’t even work on the job anymore.
Sadly, even a single carpal tunnel claim can be enough to push a small office to the brink. It’s even worse for those higher risk enterprises like construction where as much of 25 percent of payroll expenses can go into paying Workers’ Comp rates. So, what can a business owner do to lower their risks and costs for Workers’ Comp in the age of the employee? Here are three key suggestions:
Hire Slowly, Fire Quickly
You’ve heard this phrase used often in terms of human resources, but perhaps it’s in regard to work safety where it is most critical. Most business owners will share that despite their best efforts, people don’t change all that much through the course of employment. You can provide individuals with safety education, and apply stringent rules until you’re blue in the face. But, most people come to your operation with either an instinct for safety, or a natural disregard. If you suspect there is someone on your team who is a high risk to the safety of your organization, you need to part ways with them sooner rather than later. One bad apple can not only spoil the whole tree, it can take it down entirely.
Independent Set of Eyes
Workplace safety is a team project. Rather than merely printing out work safety directives in an employment manual and calling it good, you need to put in place a comprehensive plan to proactively limit your risk. If your employees are involved in the process, they will be much more likely to own and implement the policies. Put together teams within your organization who will help create and monitor safety guidelines in every aspect of your business. This will have a profound effect. But, it’s critical you take it even a step further. Go outside of your team and bring in a third-party expert to teach the best practices other similar industries are using. They’ll also be able to share with you things you need to know that your employees may not feel comfortable bringing up themselves.
Of course, for any business person, price is important. But, when it comes to Worker’s Comp insurance, it’s not the only consideration. The truth is that most of the options you’ll get in terms of pricing will all be in the same ballpark. The initial rates won’t vary that much from provider to provider. What will vary tremendously is the impact your insurance representative can have on lowering your rates over time. You’ll want to get the most experienced and knowledgeable professional possible to assist you with Worker’s Comp. They’ll be able to provide that third-party review of your practices. They’ll also be able to offer a wealth of wisdom in strategies helping you to increase safety practices thereby lowering your rates. Additionally, this professional will be a skilled advocate for your business in dealing with insurers, which is hugely important.
When is the last time you gave your Worker’s Comp processes a thorough review with an insurance expert? In the age of the employee, there has probably never been a better time.
Menath Insurance is an independent insurance agency with headquarters in Incline Village, NV and an office in Reno, NV.