Committees; Certificates; Crime-Busting: 3 Ways to Reduce Workers Compensation Costs by Marty Davis

It goes without saying that reduced workers’ compensation rates means more money can be diverted to equipment, employee hire, bonuses, expansion plans and general profit margins but how can companies take practical steps to keep premiums low – apart from their general drive to maintain a safe and healthy workplace?

It can be educational to look around the country and research what other states and industries are doing and then see if there’s anything similar in your neck of the woods. If not, then maybe it’s time to push for something.

For example, for some time (since 1993, in fact) Pennsylvania’s Department of Labor and Industry has been operating a Workplace Safety Committee Certification. It’s a simple concept: employers set up an on-site committee, with at least two employer and employee reps, they agree to some basic meeting, training and reporting standards and they get a certificate. However, this basic system is enough to drive down workers’ compensation to the tune of 5% per year; this saved PA employers a combined total of $4.6m last year.

Some industries have taken it upon themselves to be proactive in bringing down workers’ compensation premiums. For example, the much maligned staffing industry, renowned, perhaps unfairly, for disregarding employee health and safety, have come up with WRC (pronounced ‘work’) – or the Workers’ Compensation Risk Certification scheme. One of the stated benefits of achieving WRC certification is that employers enjoy increased leverage in workers’ compensation negotiations. Clearly, such certification also has a double bonus since clients are more likely to look favourably upon staffing companies who show commitment to personnel safety and affordable unemployment insurance.

Finally, the impact of crime on workers’ compensation premiums is particularly relevant this week here in Florida. Workers’ compensation in the contracting industry is now under close scrutiny after several individuals were busted for their part in a sub-contracting workers’ compensation scam. In a nutshell, these criminals were involved in the setting up of fake ‘shell companies’ which then procured cut-price workers’ compensation certificates and rented them out to sub-contractors, taking a cut from the final bill. A large part of the ruse involved the cashing of checks at check cashing stores to impair tracebility. Of course if a serious workplace accident were to occur, or if a workers’ compensation investigation began, the bogus companies vanished into thin air leaving general law-abiding employers to foot the bill.

Hopefully, legislation will be coming soon to make it more difficult for the fraudsters, to the benefit of the rest of us.

One Comment

  1. Being able to cut down the cost in employee compensation would be a big help especially if you have expansion plans or other channels that you would want a budget for like improvement of facilities so that the work place will be more employee friendly and achieve 0% accidents in the work place and it is a long term benefit for all of you.

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