Debunking Six Common Myths about Workers’ Comp Insurance

Workers’ compensation insurance is the rare commodity that protects and benefits both the employer and the employee.

Construction worker can now go for Workers' compensation insuranceThis insurance reimburses the employee for injuries sustained in the performance of his or her duties while protecting the employer against lawsuits for said injuries. A further benefit is that proving liability is not necessary. As long as the employer did not fail to remedy a known hazard, or violate any OSHA regulations, the employer is generally safe from negligence suits.

The employer is responsible for both acquiring and maintaining the workers’ compensation policy, and for posting information where employees may easily access it. Employees are responsible for reading the posted information and reporting any work-related injury or illness in a timely manner.

Despite the mutually beneficial aspects of this insurance, numerous myths surround it. We explore, and debunk, six of the most common workers’ compensation myths.

1. Payment of the Claim Marks the End of the Employer’s Responsibility

Many employers believe that, once the employee receives reimbursement for a workers’ compensation claim, the employer’s role is over. In reality, one of the employer’s most important roles is ensuring a smooth transition for the employee’s return to work. The best way to accomplish this is with a Return to Work program.

These programs help reduce the total amount of lost work time, reducing increases in workers’ compensation premiums and increasing productivity.

Properly maintaining a Return to Work program requires the employer to maintain regular contact with the employee. This helps both employer and employee plan the return to work. The employee goes back to receiving 100 percent of his or her pay, and the employer gets 40 more hours of worker productivity each week, a win-win for both.

2. Any Pain in the Workplace Qualifies for a Workers’ Compensation Claim

Every state has its own regulations around workers’ compensation claims, but, generally speaking, an employee’s injury must be related to his or her employment to qualify as a workers’ comp claim.

Employers should operate from a place of assuming an employee is truly injured. However, asking some basic questions is not out of line. This includes:

  • How were you injured?
  • When did the pain begin?
  • What were you doing when the pain started?

3. Happy Employees Do Not Sue

Occasionally, an employer fails to obtain workers’ compensation insurance because he or she believes that, as long as they treat their employees well, their employees will never sue them. Unfortunately, no matter how well you know and like a person, there is no guarantee against lawsuits.

A single, on-the-job injury can result in hundreds of thousands of dollars, and possibly even millions, in claims. Lost wages, rehabilitation, medical expenses, pain and suffering; the expenses add up quickly if you don’t have workers’ compensation insurance.

4. Most Claims are Fraudulent

This myth is likely the result of a “few bad apples spoil the bunch” mentality. In reality, instances of claimant fraud are incredibly low, in the 2 percent range. In contrast, instances of employer fraud are much higher, in the 13 percent range. This includes employers’ under-representing employee numbers through tactics such as misclassifying employees as contractors.

One danger of assuming employees’ claims are fraudulent is this: what happens when you repeatedly deny claims without a valid reason? You gain a reputation for this, and judges and arbitrators award higher amounts to employees.

The best approach as regards workers’ compensation claims is to trust that the claim is legitimate while verifying its validity.

5. Every Claimant Needs an Attorney

The majority of injured workers have no need to hire an attorney. This doesn’t mean that none do, only that the system in most states is designed to ensure the employee receives a satisfactory resolution to his or her claim.

Claimants who hire attorneys may receive a larger average settlements than their non-lawyer-represented counterparts, but this does not mean they generally receive more money. The standard fees paid to an attorney average around one-third. In addition, the client pays a wide variety of costs for legal representation, including fees for expert witnesses, depositions and other discovery phase costs, administrative fees, and court costs. This quickly ratchets up into thousands of dollars.

An award of $100,000 typically nets the injured employee, at most, $60,000. What’s more, it takes years to resolve a workers’ compensation claim through attorneys, versus weeks or months when working directly with the insurance company.

If your case is fairly straightforward, with clear injuries, medical expenses, and missed work time, you only really need to hire an attorney if your employer refuses to honor your claim. Of course, if your case is more involved, or you face opposition from either your employer or the insurer, an attorney may help you achieve satisfaction.

6. Employees Don’t Want to Return to Work

Generally speaking, employees want to return to work. Remember, workers’ compensation only pays a percentage of the employee’s regular salary (typically between one-third and two-thirds).

In addition to financial considerations, most people miss the psychological benefits of employment, including the comfort of a daily routine and social support network of their coworkers. What’s more, the majority of workers derive personal satisfaction when they feel necessary and productive.

Delays in a return to work typically arise from two failures on the part of the employer:

  1. Not having a transitional duty assignment for employees who aren’t at 100 percent capacity
  2. Not understanding the employee’s work restrictions after the first medical visit, creating a lost time claim

Creating a transitional plan for returning employees, and obtaining work restrictions, helps the employee return to work more quickly.

The Takeaways

Workers’ compensation insurance benefits employers as well as employees. The smart course is to communicate clearly with your employees to create an open path for their return to work, and trust that any claims they make are valid, while remaining vigilant for signs of fraud.