Editor's note: The following article was featured in the July/August issue of PorkNetwork magazine.
If you’re a typical pork producer, workers’ compensation costs – or the threat of them – can quickly become a major expense burden. Almost every business in the United States that has employees must deal with the cost of workers' compensation, so you’re not alone in this potentially damaging liability.
Fortunately, there are steps you can take to help keep your workers’ comp costs under control while lessening the chances of a costly and burdensome claim. But keep in mind that controlling workers’ compensation costs is a challenging task requiring attention and commitment on the part of management.
Perhaps most important is an understanding that policies designed to protect employees’ safety and well-being provide a solid foundation for minimizing workers’ compensation claims. Experience shows that employees who feel that workers’ safety is a major concern of management are less likely to attempt to abuse the workers’ compensation system.
Here are 10 steps you can take to help control workers’ compensation claims and insurance premiums:
1. Cost Control Begins with the Interview: Pre-hiring interview techniques should be designed to identify applicants who may pose a higher than average behavior or accident risk potential. These steps will help:
- Begin by thoroughly examining the applicant’s résumé. In particular, look for gaps in employment history. Ask for an explanation of any gaps and consider the applicant’s answers carefully. Any unexplained gaps should be considered as red flags.
- “Look for ‘short-timer-itis’ -- the person who seems to switch jobs every 12 months,” says Therese A. Hoehne, Director of Human Resources, Aurora University, Aurora, Ill. “If the applicant is new to the job market and has already had two or three jobs, this may or may not be a warning sign. However, if the applicant has 10 years’ experience and 8 or 10 jobs, you should discuss the reasons. Such a history could indicate a ‘job-hopper’ at best and a serious problem employee at worst.”
- Keep the Interview on Track: As with any conversation, a pre-employment interview can stray far off its proper path if not carefully controlled. “Ask only those job-related questions that you need to ask to make a lawful hiring decision,” says Labor Attorney John C. Romeo, Philadelphia, Pa. “Pay close attention to the direction the conversation takes during the interview. It can easily turn into a conversation about family, religion, or national origin,” he says. “If you see the conversation going in this direction, stop and switch gears -- get the conversation onto a proper, legal, and informative topic.”
- Talk Less; Listen More: “Most interviewers talk too much,” says Emory Mulling, chairman of The Mulling Companies, Atlanta, Ga. “The interviewer’s role is to get information from the candidate.” Human resources professionals agree that talking too much during an interview is a common mistake by employers. Remember, your job is to obtain as much meaningful information from the potential employee as possible. You can’t listen when you’re talking.
- Prepare a Written List of Questions: You may deal with applicants of both sexes in your business. If you do, you must not ask different questions of males and females. To do so is to risk violation of anti-discrimination laws. It’s best to create a list of questions to ask all candidates before the interview process starts. Then put those questions on a sheet of paper with space between them to take notes.
- Listen Carefully to the Answers: “Even after asking the right questions, some interviewers make the wrong choice because they didn’t listen carefully to the answers,” says Mulling. “Don’t think you can overcome potential risks and make someone fit in just because you like the way they look, or because their past experience is a good match for the job.
2. Do a Background Check: After obtaining written consent from the applicants, conduct thorough background checks before hiring. Include physical fitness exams appropriate for the job if included in the written consent. Applicants who are reluctant to agree to such checks must be viewed with suspicion.
3. Training Programs are Critical: Have permanent programs in place to train employees on the safe use of equipment and safe working behavior. Discourage unsafe working habits. Instruct employees not to take risks. Encourage the safest, least risky procedures even if they may take longer to complete the job. Make sure that new workers are aware that workplace safety is a top priority on your farm.
4. Show You Care: By demonstrating management’s interest in safety, you establish your concern for employees’ well-being while helping to minimize the possibility of costly workers’ compensation claims.
5. Maintain Safety Awareness Throughout the Workplace: Remind your employees to practice safety procedures by displaying safety posters where practical. Within legal parameters, develop programs designed to keep your workplace drug and alcohol free. A failure to address this issue might be considered by some as your lack of interest or concern.
6. Look for Potential Safety Issues: Search out workplace hazards that have caused or may cause an injury or illness. For example, look for situations that may cause the always dangerous trip and fall accidents. Wherever possible, keep your workplace clean by eliminating unnecessary clutter.
7. Classify Employee Job Descriptions and Titles Correctly: Obviously, some jobs are riskier than others; an office worker works in a less risky environment than a farmhand. That’s why it’s so important not to assign all of your employees to the same job classification. With more than 600 job classification codes in use today, improper job classification for even one employee could increase your workers compensation premiums.
Each classification code is based on the level of risk associated with that job. Job codes are subject to change, so it’s important to use the most recent edition of the classification codebook for your state.
Unfortunately, some business owners intentionally misclassify workers and manipulate payroll figures with the intent of lowering insurance costs. Even worse are situations where employers have no workers’ compensation coverage at all. Employers who engage in this type of unlawful activity not only put their own workers at risk, but also risk harsh financial penalties and even prison time.
8. Delegate a Safety Committee: If your operation is large enough, establish a safety committee made up of employees and management. The committee’s purpose will be to identify and correct safety problems, provide ideas for improving safety programs, and preparing safety instructions for distribution to employees.
9. Act Promptly. In the event of an employee injury, even of the slightest nature, be sure to provide medical attention promptly to minimize possible complications from delayed care. Complications to even a slight injury can result in increasingly costly workers’ compensation claims which in turn can result in permanently increased insurance premiums.
10. Allow for Full Recovery: Work with employees who are on disability claims to get them back to work as quickly as practical. An employee who is unable to return to work on a full-time basis may be able to work part-time or in a job of lesser demands. The longer an employee remains unable to work, the more the insurance company will be required to pay in compensation benefits; that in turn is likely to result in increased insurance premiums for the employer.
Many employers look on the costs of workers compensation insurance as an unavoidable expense over which they have little or no control. However, experience shows that workers’ compensation costs will respond to dedicated efforts to keep them in tow. A casual attempt isn’t likely to do the job, but a determined and continual effort can result in not only major reductions in expense, but dramatic improvements in employee morale as well.
Editor’s Note: William J. Lynott is a veteran freelance writer who specializes in business management as well as personal and business finance. His work appears regularly in leading trade publications and newspapers as well as consumer magazines. For more information, call him at 215.850.5367.