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Experts cover today’s key dairy labor issues and offer fool-proof techniques to optimize employee performance, sat­isfaction and longevity.

Stopping the Torment of Workers’ Compensation Abuse

Sep 19, 2011

Tips on managing the cost of workers’ compensation claims and limiting their manipulation and misuse.

Anthony Raimondo 2010 06 photoBy Anthony P. Raimondo, attorney
One of the most frequent problems that plague dairy producers is the abuse of workers’ compensation. Many states, especially California, provide compensation systems for workplace injuries that are very generous to employees and can be difficult for employers.
In California, the employer’s insurance premium is regulated by law. While base premiums are standardized, the primary factor that can drive up premium costs is the "experience modification rating" (commonly referred to as the "ex-mod"). Like car insurance, the number of claims and the cost of those claims lead to increased premium costs, which increases overhead costs and eats into profit margins.
Dairy producers are often frustrated at the functioning of workers’ compensation systems. In states like California, these systems are heavily biased in the employee’s favor, and enterprising employees and knowledgeable attorneys can drag out the process, with every dollar spent ultimately costing the producer in the form of increased premiums. Fortunately, there are things that can be done to manage the cost of workers’ compensation claims and limit the abuse.
Know Your Adjuster: When an employee files a workers’ compensation claim, the dairy must make contact with the adjuster as quickly as possible in order to understand how the carrier intends to handle the claim. Don’t be afraid to ask questions, and be sure to share information that you know about the employee. If the employee is working "on the side" while supposedly injured, the carrier can have an investigator film him or her in action to undermine the claim. If an employer wants the carrier to handle the claim aggressively, he needs to be a bug in the adjuster’s ear. Employers cannot expect an insurance adjuster handling hundreds of claims to be aggressive with the claim unless they are invested in the process.
Use Light-Duty Work: Light-duty work is an important part of controlling claim costs. In California, employers are not required to offer light-duty work, and dairy producers are often reluctant to do so because they don’t want the injured employee back until the worker is healed. This can be a mistake.
Properly designed light-duty work can control claim costs (and the impact on premium) and create an incentive to return to work. Light duty reduces claim costs because the employee remains working and does not collect temporary disability benefits paid by the carrier. Light duty can encourage a return to work because a properly designed light-duty position will make the employee want to go back to the regular job.
The best light-duty jobs are physically easy, to accommodate work restrictions, but boring and isolated from other workers. While employers must avoid assignments that are so unpleasant as to be punitive, a boring task that the worker does without anyone to talk to may encourage a quick recovery. Every dairy has little chores that fit this requirement, like cleaning manure off of rails, painting fences, inventorying parts and equipment and other similar tasks. In contrast, if the employee can sit at home doing nothing and get a check from the insurance carrier, there is very little incentive to return to regular work. 
Light-duty assignments should be provided in writing with an explanation of the work and a clear statement that the assignment is temporary. If necessary, the description can be sent to the employee’s doctor for confirmation that the employee can handle the work.
Document and Enforce Disciplinary Standards: It is not uncommon for employees who are performing poorly to suddenly suffer disabling injuries when they feel that they are closing in on termination. It is important to have an employee handbook that sets forth rules and performance expectations, and to document employee performance problems consistently. While employers cannot discriminate against workers who suffer industrial injuries, an industrial injury does not insulate the employee from discipline for performance problems. 
A history of documenting performance problems with all employees will enable the dairy to show that the injured worker was treated no differently than uninjured workers with similar performance problems by showing that the rules are enforced consistently. Also, documenting performance problems will clearly show that the employee’s problems started long before the injury. Finally, clearly stated safety rules that are enforced through discipline can often help support the employer in controlling the benefits paid when an employee causes his or her own injury through a safety violation.
While some employees will always search for a way to manipulate the system in their favor, employers can give themselves an advantage in preventing workers’ compensation abuse by having written policies, a strong practice of documenting performance problems and disciplinary issues, and by being actively engaged in the handling of claims. If a dairy producer simply lets the process happen, abuse and increased premium costs are a virtual inevitability. As with all aspects of the business, active management is the key to better results.
The goal of this article is to provide employers with current labor and employment law information. The contents should not be interpreted or construed as legal advice or opinion. For individual responses to questions or concerns regarding any given situation, the reader should consult with Anthony Raimondo at McCormick Barstow LLP in Fresno, at (559)433-1300.
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