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Cost control

Management | August 1, 2014 | By:

Tips to minimize workers’ compensation costs.

Workers’ compensation costs can become a major expense. Almost every business in the United States that has employees must deal with the cost of workers’ compensation. Take these steps to help keep workers’ comp costs under control.

Smart hiring comes first

Within the limits imposed by labor law restrictions, interview techniques should be designed to identify applicants who may pose a higher-than-average behavior or accident risk potential.

Always begin by thoroughly examining the applicant’s resume. In particular, look for gaps in the employment history. Ask for an explanation of any gaps, and consider the applicant’s answers carefully. “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.”

Be cautious of recommendations from former employers. There are many reasons for an employer to provide favorable recommendations for a former employee; not all of them are as sincere as they might appear.

Keep the interview on track. Like 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 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. If you see the conversation going in this direction, you should make a concerted effort to stop and switch gears.”

Talk less, listen more. “Most interviewers talk too much,” says Emory Mulling, chairman of Mulling Corp., 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.

Prepare a written list of questions. You should 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.
Analyze answers carefully. “Even after asking the right questions, some interviewers make the wrong choice because they didn’t listen carefully to the answers,” Mulling says.

Safety in practice

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.

Have permanent programs in place to train employees on the safe use of equipment and safe working behavior.

Search for workplace hazards that have caused or may cause an injury or illness. For example, look for situations that may cause dangerous trip-and-fall accidents.

Make it policy

Classify employee job descriptions and titles correctly. Some jobs are riskier than others; with more than 600 job classification codes in use today, improper job classification for even one employee could increase your workers’ compensation premiums. Job codes are subject to change, so use the most recent edition of the classification codebook for your state.

Some business owners intentionally misclassify workers and manipulate payroll figures with the intent of lowering insurance costs, or have no workers’ compensation coverage at all. Employers who engage in this type of activity not only put their workers in danger, but also risk harsh financial penalties and prison time.

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 the company’s safety programs and prepare safety instructions for distribution to employees.

In the event of any employee injury, 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.

Work with disabled employees to get them back on the job 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 less physically demanding job. The longer an employee remains unable to work, the more the insurance company will be required to pay in compensation benefits.

Many employers consider workers’ compensation insurance an unavoidable expense over which they have little or no control. Experience shows, however, that workers’ compensation costs will respond to dedicated efforts to keep them contained.

By William J. Lynott, a business writer based in Rydal, Pa.

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