This trend reflects greater awareness of workplace best practices and is great news for employers and employees alike. However, workplace injury and illness remain a huge issue. If you’re an employer and one of your workers has suffered an injury, you may be liable to pay workers’ compensation. If this is the case, you’ll be looking to limit your liability here as much as possible. So, how is workers’ comp calculated? Read on to find out.
What Is Workers’ Compensation?
If an employee suffers an injury or illness through their working activities, they may be entitled to workers’ compensation. This scheme entitles them to payments that cover some of their medical bills and replace some of their wages. The rules on what exactly workers’ compensation can cover vary from state to state.
How Is Workers’ Comp Calculated?
There are a few different elements to a workers’ compensation payout. Which ones are relevant to you will depend largely on the length of time an employee must spend out of work due to their injury.
Temporary Total Disability
This describes a situation in which an employee is entirely incapacitated for a given period. An example would be a construction worker suffering a severe leg break. The amount payable here varies from state to state. However, it is about two-thirds of a worker’s normal wage on average. This includes all overtime, tips, and benefits. Many states impose a weekly cap on this kind of payment.
Temporary Partial Disability
This occurs when a worker suffers an injury that limits their ability to perform certain tasks but is not serious enough to warrant a long absence from work. The compensation payable usually serves to make up the portion of a worker’s wage that they miss out on due to injury. For instance, if they can only earn 50% of their normal wage while injured, compensation will cover the other 50%.
Permanent Impairment
If a worker’s injury is something from which they will not ever fully recover, they may be entitled to ongoing compensation for the duration of their working lives. Because this has the potential to be hugely costly, it must be signed off by an independent doctor. The condition has to be of a sort that will not improve over time. The greater the impact on an employee’s ability to work, the greater the payment.
Medical Expenses
An injured worker will be entitled to recover some of the medical expenses associated with their injury, if not all of them. The rules on medical care from workers’ compensation can be a little complex. Firstly, it is important to note that only state-sanctioned workers’ comp doctors can provide care to workers’ comp patients. Depending on the state, the employee may have to find a workers’ comp doctor themselves, or the employer might nominate a doctor with whom they have a working relationship. This rule does not usually apply to initial assessments. When a worker first gets injured they can go to any doctor of their choice (or the emergency department) and recover the related costs. There are usually limits to the amount of ongoing care an injured worker is entitled to. For instance, workers’ compensation programs only allow for a certain number of physiotherapy sessions.
How to Reduce Your Workers’ Compensation Liability
Employee welfare is always going to be the first priority for an employer. That said, workers’ compensation can become a huge liability if left unchecked. It is therefore important to take every reasonable step to limit this expense. The following are some of the measures you can take to lessen liability and risk in relation to workers’ compensation.
Insurance
Workers’ compensation insurance is mandatory for employers in every state other than Texas. Therefore, the chances are that you already have this. That said, there are things you can do in relation to your insurance to keep expenses low. Firstly, make sure you’re getting a good deal on your premium. Negotiate with your provider at the end of each year. Don’t hesitate to shop around if you don’t like what they offer you. Also, be wary of fraudulent claims by employees. While your insurance company will cover the expense of a claim, your premium will shoot up if you have one. You should always be entirely clear on the cause and origin of an employee’s injury before accepting their claim. It is not your duty to pay for incidents that took place outside of work.
Pathways
A sensible return-to-work pathway for an injured employee is perhaps the best way to reduce workers’ compensation liability. The first element of such a pathway involves setting out a program in which an employee takes on limited roles within the business during their recovery. The benefits of this are twofold. Firstly, it is more cost-effective for the employer. Getting an employee back to work, even in a limited capacity, is more efficient than having them sit at home. Secondly, it has benefits for the employee’s recovery, especially in physical jobs. If you gradually reintroduce an employee to work after an absence, they are less likely to suffer a further injury when they resume full duties. As well as this, light-duty pathways ease some of the mental health difficulties that employees may experience from being idle for too long.
A Fair and Healthy Workplace for Everyone
So, how is workers’ comp calculated? As you can see, the answer to this question depends on a number of factors. The severity and duration of the injury, the extent of the medical attention it requires, and your own approach to the situation will dictate your liability. Did you find this article useful? If so, be sure to have a look at some of our others! We post regular content on all kinds of topics as well as current affairs.
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