If one of your employees gets injured, it may be tempting to sit back and wait for the Department of Labor and Industries (L&I) to get in touch.
Our advice? Resist that temptation.
Here’s why: waiting, even for a short period, can ultimately result in significant costs that could be prevented by taking a proactive approach to vocational rehabilitation.
Proactive Steps Save Employers Money During the Vocational Rehab Process
A case study from the California State Compensation Insurance Fund compared an injured worker who was able to return immediately with a Return to Work plan (RTW) to one who missed 56 days and had no RTW plan. The study found that temporary disability costs were $7,330.40 / $0 and medical bills were $4,417.70 / $868.08. The total cost savings of bringing the worker back sooner was $10,880.02.
Other studies have shown that early contact and starting to work on claims sooner results in a dramatic decrease in claim costs.
Overall Savings
The longer an employee is off work, the more an employer pays in wage compensation. Getting them back on the job sooner, whether through duty modifications or specialized programs like vocational rehabilitation, can reduce costs substantially.
“If the employer is able to continue paying them a salary but cut fees paid to L&I through the amount of money that would go out for medical expenses and time loss, it benefits them in the long run,” says Kevin Leneker, co-owner and founder of Single Handed Consulting.
Keeping Premiums Low
L&I premiums are connected to risk classifications, and the most important factor in determining those classifications is how long an injured worker is off work.
“When we submit our payroll, every classification of job is assigned a code,” Leneker explains. “If we have a bunch of injuries, that factor is increased and we pay higher premiums.”
Two factors affect how the code is calculated: medical expenses associated with injuries and the amount of time an employee needs to spend away from work.
“If you can decrease the time loss, you decrease the percentage by which your premiums go up,” says Leneker.
Keeping a claim medical-only means an injured worker doesn’t receive wage-replacement/time loss benefits. In Washington State, the three days following an injury are considered a waiting period; if the employee is able to return to their regular duties within that time frame, costs are reduced by up to 70%.
Employee Retention
Studies have found that employees who are off work for more than six months are 50% less likely to return to their jobs. “Sometimes an employer will choose not to bring someone back to work when a relationship turns sour and becomes adversarial,” says Leneker. “They may be questioning whether the employee is really hurt, but in the meantime, they’re trying to continue operating and don’t have anyone to do that job.”
The real price of losing an employee is significant: replacing them costs 1.5 times their salary, meaning that it would take $75,000 to replace someone who makes $50,000 a year.
“There are hard costs like L&I premiums, but there’s also the fact that the employee has value,” says Leneker. “Just because he can’t do his job doesn’t mean you can replace that knowledge and experience.”
Hiring someone new involves recruitment, on-boarding, and training costs. The alternative is attempting to continue without a dedicated person fulfilling the injured worker’s role, which may involve overtime costs for other employees and additional training. Either way, productivity gets lost, expenses mount, and the rest of the team is adversely impacted.
Employee Morale and Productivity
The injured worker is the one most directly affected, but in any company how management responds matters. If the process starts early and is proactive, transparent, and collaborative, confidence will increase along with morale, creating a ripple effect.
“For every employee who can’t work, there are 40 other people watching that situation,” says Leneker. “They’re looking to see whether their co-worker was treated fairly.”
This may seem like an abstract issue, but it affects the bottom line. The Gallup Organization estimates that there are 22 million actively disengaged employees costing the economy as much as $350 billion per year in lost productivity through byproducts such as absenteeism and illness.
Start Today
Keeping costs as low as possible starts early and requires a proactive approach. To learn more about other ways to reduce costs and ease the claims process, contact Single Handed Consulting today.
