Workers’ Compensation is a type of business insurance that helps provide benefits to employees who experience a work-related injury or illness on the job. Many employers make mistakes when it comes to managing workers’ compensation for their business and especially during workers’ comp audits. In this chat for USA Manufacturing Hour on Twitter, Host, Julia Gardner from Hourly in California led a discussion about common mistakes to avoid on a workers’ compensation audit.
Defining Workers’ Comp
The discussion began with everyone identifying what they know about workers’ comp. Participants gave their thoughts.
Adam Baker from Schooley Mitchell in Pennsylvania said, “Documentation is everything and make sure you include the worker's comp group in every conversation with the employee.”
Janice from Social Success Marketing in California said, “It is a payment for injuries or diseases that are related to the work you were doing.”
Ruby Rusine from Social Success Marketing in California said, “Very helpful for legit workers’ claims. I said legit because there are many fraudulent claims too.”
VirtuDesk said, “We totally agree with you, Ruby.”
Dan Bigger, a Manufacturing Advocate in South Carolina said, “ I don’t know much about it. You get hurt and you file a claim and get paid while you are out recovering.”
Host Gardner said, “True Dan, and you get the medical benefit too!”
Felix P. Nater from Nater Associates Security Consulting in North Carolina said, “Seriously, I found that when employee complaints of workplace violence fall on deaf ears, they file stress related claims in order to obtain medical care and relief from the predator.”
John Buglino from Optessa Inc in New Jersey said, “I have not heard great things about it. I can only reference it from what I am being told.”
VirtuDesk said, “Same here, John. When we are reading the comments here, we found out that we know, nothing.”
Will Healy III, an Engineer from Ohio said, “Really only hear the horror stories of people being failed by their companies...”
Rusine said, “My husband had a lot of horror stories about this including lawyers, judges and workers.”
Kyle from Tuffaloy Products in South Carolina said, “I know the same amount as Dan Bigger.
Typically it's something that a company doesn't want to deal with so they try to minimize risk through safety guidelines.”
Brett from FreightPOP in California said, “It allows workers to continue to have a source of income after getting injured on the job.”
VirtuDesk said, “Benefits you provide to your employees. Like paying them when they have to do overtime or coming to work during holidays.”
Rebecca Prox from DSI/Dynamatic in Wisconsin said, “I had to use it once when I got hurt on the job a long time ago. The insurance carried by the company covered all of my medical expenses.”
Host Gardner said, “Ooh firsthand experience!”
Jill Farr from Graphic Products in Oregon said, “I actually know a little bit about WC, from a previous life in insurance. (Just enough to be dangerous, haha!)”
Gina M. Tabasso from MAGNET in Ohio said, “You get compensated/paid if you are injured on the job and need to be out while healing and recovering. I think.”
Host Gardner said, “Yes, you get a gold star!”
Erin Courtenay from Earthling Interactive in Wisconsin said, “Not a lot! Looking forward to learning from you.”
Sue Nordman from Obsidian Manufacturing in Illinois said, “Risk management and very much a necessity!”
Host, Gardner provided some clarity. She said, “Workers’ comp is a type of business insurance that provides benefits to employees who suffer work-related injuries or illness. It covers illness or injury, disability, death benefits.”
Nightmare Stories
Participants then continued the chat by sharing their nightmare stories about workers’ comp.
Nater said, “Denying workers comp because the victim of psychological harassment couldn’t prove her supervisor was changing her days off; denying leave; cutting her work hours to intentionally harass.”
Healy said, “Sat next to a dude coming home from a training literally last night on my plane. He was wearing a leg brace, it barely fit the seat. Asked him about it. "This is my new life." He got hurt at work 2.5 years ago, they paid for 6wks of PT & now it's his problem. “
Bigger said, “The idiots that do the fraud deal hurt the people that really need it. I hate to see and hear this, Will.”
Nordman said, “I fell on black ice in the parking lot of my employer several years ago. I hurt just about every major joint on my right side of my body. Very thankful for the coverage.”
Rusine, “I bet trips and falls are the common case claims....(not an expert!)”
Baker said, “Employee had burn to face during work, spent week in the hospital. Hospital kept sending him the bills saying workers comp group won't respond to them.”
Prox said, “Honestly, I haven't heard many stories about it at all.”
Tabasso said, “They have agents that stalk you and take photos and notes on you like a detective to prove that you are really sick or injured and that you can barely leave the house in fear of being disallowed.”
Pavel Stepanov said, “Good thing I haven't experienced any yet. You have to be strong and healthy for your family. Be alert as well to avoid accidents as much as we can.”
Kyle from Tuffaloy Products said, “I know some family friends that have experienced horrible workplace injuries and the process of getting paid took sometimes years. We pride ourselves on taking care of our employees and we develop a relationship with them, unlike some corporations.”
Stepanov said, “I hear stories like this too. It's the process that takes time.”
Rusine said, “My husband shared a story...a worker claimed he couldn’t work. My husbnd followed him and also had him filmed by an investigator (witness) doing a laborious job. The judge scratched off the evidence. Worker won the case regardless. Case was already won regardless of their efforts.”
Stepanov said, “Hmm…That's awful, Ruby. Something is fishy.”
Manufacturers' News, Inc. said, “Given that we're in an office environment, can't say we've had any nightmares to speak of (or many claims). A very important topic for manufacturers though! We see a lot of content around the web on forklift/warehouse safety.”
VirtuDesk said, “Being sick probably and can't come to work. Then your pay is affected but thanks to workers comp, we are saved.”
Courtenay said, “I don't recall many first-person stories (though I know I have heard some). But the stereotype bad rap is typically fraud-related.”
Packer said, “There are a few from years ago. The comp went to the widows.”
Buglino said, “They all seem to involve the back and the drawn out process to get the right care/attention.”
Host Gardner said, “Yeah that's a doozy!”
David Crysler from The Crysler Club in Michigan said, “I once had a person refuse to come back to work. It went so far that we had to hire a PI who caught this person multiple times cutting their grass despite their wrist/hand injury... can't work one handed but can cut grass with both hands no problem.”
Host, Gardner said, “I know of a man who lost a finger in some machinery at work. He filed the claim and got paid out. Easy money, he thought. Wanting another payout he “accidentally” cut off another finger. Yikes! His second claim was denied, so now he’s missing two fingers, and a little wiser.”
Choosing Quality
The next question posed to participants was whether they tend to be frugal or spend a little more for quality and if so, why they chose to do so. People had a bit to share on this topic.
Prox said, “It truly depends. If it's a health-related product, I don't mind spending a little more if I know it's worth it. I can be frugal with a lot of other things. I am an avid DIYer.”
Packer said, “I was speaking about this a few days ago. I look for reparability. Can the product be repaired? If yes, then it is usually a higher quality product. They last a lot longer.”
Host Gardner said, “That's a good idea, Nigel!”
Kyle from Tuffaloy Products said, “Oh that's a tough question since everyone is different, however, it all depends on what I'm purchasing. 1st question: Is it a liability or an asset? 2nd question: How will this benefit me and for how long? Opinion: True quality lasts or builds overtime.”
Brett from FreightPOP said, “Personally, I feel like quality is always worth spending a little more. My motto for important purchases has always been, "Buy nice or buy twice".”
Bigger said, “I always spend more for quality. It always pays off in the end.”
Tabasso said, “Mid-range. Got quoted for $800/month but hired $1,000/month person because I felt more confident ability to deliver. Same an hourly could have gone with the $35/month. Didn't go w/$100/month but went with the $65-80/month.”
Healy said, “I've trended over the years to more often then not paying in the high-mid range for things. There is a correlation of price to quality to a point. BUT I feel extravagance is a logarithmic scale of marketing hype and when I go too cheap I get what I pay for.”
Tod Cordill from Moderno Strategies in Oregon said, “I'm frugal, but I almost always pay for quality. I don't see them as polar opposites. It's more of a value/cost continuum.”
Buglino said, “Spend!! You get what you pay for.”
VirtuDesk said, “For us, Quality that fits the budget of course.”
Courtenay said, “I'm not sure I agree that the two are diametrically opposed. I actually do both. I'm not much into spending but when I do it is on quality.”
Velavu Tech in Canada said, “You get what you pay for 99% of the time. In the long run it makes sense to invest in quality, especially if it's something you rely on for everyday operations.”
Manufacturers' News, Inc. said, “Quality! Most definitely!”
Stepanov said, “Quality!”
Host, Gardner said, “Balance, right? Pay a little more for quality. Same for your workers’ comp, and it can pay to go with a carrier with superior claims handling, like Pie Insurance, Employers, or Hourly! It’s stressful enough when something bad happens, you don’t want to chase your insurance too.”
Common Audit Mistakes
The discussion then turned to some common mistakes people make on workers’ comp audits. Participants weighed in with their thoughts.
Rusine said, “Not paying workers comp insurance and then an accident happening would be a common mistake.”
Prox said, “I'm not sure. I'll watch these answers from the bench.”
Nordman said, “I don't know the answer to this. I'm going to guess transparency. One thing I would like to mention about my experience would be how the healthcare industry treats Workman's Comp claims & patients. There was a separate waiting room for us-I thought that was wrong!
Rusine said, “What!? Really.”
Bigger said, “I have no idea as I have no idea what goes into an audit of this kind.”
Courtenay said, “Do you mean mistakes or "mistakes"?”
Stepanov said, “I have a team working on our payroll. Not just sure about their process.”
Host Gardner said, “Ahhh the mysteries of payroll…”
VirtuDesk said, “Not sure of this one as we have a different team handling our payroll.
Kyle from Tuffaloy Products said, “I'm lost on this one.”
Host Gardner said, “We can guide you! Come to the light!!”
She continued, “Lots of room for error in workers’ comp audits! Incorrect payroll estimates, not classifying employees with the correct class codes, failing to include deductions for things like overtime, not confirming subcontractors have COIs, and not paying workers’ comp on bonuses when you should.”
Systems in Place
Participants were then asked to share what organizational systems they have in place to help them stay organized with their audits.
VirtuDesk said, “Creating folders to organize your files, we also use sticky notes. ClickUp and Google drive are so helpful when it comes to sharing and storing files in one place.”
Stepanov said, “Totally agree. I put some of my tasks on Google calendar too. It's helpful because it sends you reminders.”
Prox said, “My organizational systems include a working notebook, digital calendar, Post-It Notes, and file folders (digital and hard).”
Courtenay said, “Did someone say "organizational systems"?”
Rusine said, “Yup, Erin. Someone did.” She continued, “My inbox is one and also my computer folders. Do these count?”
Packer said, “SOP's”
Host Gardner said, “Ahh the good ol' SOPs...”
Bigger said, “Not a 1.”
Gardner said, “I won't tell if you won't!” She continued, “Organization = less stress. To get ready, you’ll need: payroll records, certificates of insurance, employee records (e.g. Form 941), cash disbursements for contractors, and descriptions of business operations. Or you can use a platform like Hourly to keep track of it all for you!”
When it comes to workers’ compensation, the best plan is to be organized and stay ahead of any potential issues before they happen. Avoiding common mistakes on a daily basis, such as incorrect classifications or payroll errors, can help everything stay organized and help businesses avoid audit issues in the future.
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