🏥 Workers' Compensation Guide
Workers' compensation is one of your largest insurance costs. Managing it well saves money and keeps employees on the job.
How Workers' Comp Works
The Basics
Workers' comp provides:
- Medical treatment for work injuries
- Wage replacement for lost time
- Disability benefits
- Death benefits
In exchange: Employees generally cannot sue employers for workplace injuries.
Who Pays
- You pay premiums based on payroll and classification
- Insurance carrier pays claims when injuries occur
- Your EMR adjusts based on claim history (3-year window)
Classification Codes
Workers are classified by job type. Each classification has a different rate:
| Classification | Description | Typical Rate |
|---|---|---|
| 5403 | Carpentry | $8-15 per $100 |
| 5190 | Electrical | $4-8 per $100 |
| 5183 | Plumbing | $5-10 per $100 |
| 5213 | Concrete | $12-20 per $100 |
| 5551 | Roofing | $20-35 per $100 |
| 8810 | Clerical | $0.25-0.50 per $100 |
Proper classification matters. Misclassification leads to audit problems.
When Injuries Occur
Immediate Response
- Get medical attention — Employee safety first
- Report immediately — Notify carrier within 24 hours
- Document everything — Photos, witness statements
- Complete First Report of Injury — State-required form
- Investigate — Determine root cause
The First 24 Hours
| Timeframe | Action |
|---|---|
| Immediately | First aid / emergency care |
| Within 1 hour | Notify supervisor |
| Within 4 hours | Complete incident report |
| Within 24 hours | Report to insurance carrier |
| Within 24 hours | Complete OSHA log (if recordable) |
Investigation
Every injury should be investigated:
- What was the employee doing?
- What was the immediate cause?
- What was the root cause?
- What can prevent recurrence?
- Who witnessed the incident?
Return-to-Work Programs
Why It Matters
| Scenario | EMR Impact |
|---|---|
| Medical-only claim | ~30% weight |
| Lost-time claim | 100% weight |
Getting employees back to work quickly keeps claims as medical-only.
Modified Duty
Offer modified duty that accommodates restrictions:
- Light physical tasks
- Administrative work
- Training
- Quality inspection
- Inventory
Sample Modified Duty Tasks
| Restriction | Modified Duty Options |
|---|---|
| No lifting over 10 lbs | Paperwork, phone calls, training |
| No standing over 2 hours | Seated work, office tasks |
| No use of right hand | Left-hand tasks, supervision |
| No climbing | Ground-level work only |
Making It Work
- Get restrictions in writing from treating physician
- Communicate with employee about available work
- Document modified duty offered and performed
- Update as restrictions change
- Maintain contact with employee throughout recovery
Claim Cost Drivers
What Makes Claims Expensive
| Factor | Impact |
|---|---|
| Delayed reporting | +30-50% cost |
| Lost time (vs medical only) | 3x weight in EMR |
| Surgery | $50,000+ per claim |
| Legal involvement | 2-3x total cost |
| Permanent disability | Ongoing payments |
How to Control Costs
Before the Claim:
- Strong safety program
- Proper training
- Quality PPE
- Hazard identification
During the Claim:
- Immediate reporting
- Quality medical care
- Active involvement
- Return to work program
After the Claim:
- Root cause correction
- Training updates
- Policy review
Fraud Prevention
Red Flags
- Injury on Monday (alleged weekend injury)
- No witnesses
- History of claims
- Vague injury description
- Delayed reporting
- Employee problems before injury
- Inconsistent story
Investigation
If you suspect fraud:
- Document everything
- Get recorded statement
- Check social media
- Notify insurance carrier
- Consider surveillance (carrier decision)
Don't accuse — investigate facts and let carrier/adjuster make determinations.
Working with Your Carrier
Be a Good Partner
- Report claims promptly
- Provide complete information
- Respond quickly to requests
- Participate in claims reviews
- Ask for loss runs regularly
Request Information
- Loss runs — Summary of all claims
- EMR worksheet — Calculation details
- Classification audit — Verify proper codes
- Premium audit — Verify payroll calculations
Dispute Incorrect Information
If you find errors:
- Document the issue
- Contact carrier in writing
- Request correction
- Follow up until resolved
Annual Audit
At policy end, your carrier will audit:
- Actual payroll by classification
- Job descriptions
- Subcontractor certificates
Prepare For Audit
- Payroll records by employee
- Job descriptions
- Certificates of insurance from all subs
- Quarterly tax returns
- 1099s issued
Common Audit Issues
| Issue | Result |
|---|---|
| Uninsured sub | Charged to your policy |
| Misclassified employee | Rate adjustment |
| Underreported payroll | Additional premium |
| Overtime calculation | Should be straight time only |