TM 650 - Safety Management Workers

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TM 650 - Safety ManagementWorkers Compensation

• Carter J. Kerk, PhD, PE, CSP, CPE
• Industrial Engineering Department
• South Dakota School of Mines

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Reading Assignment

• Asfahl pages
• 14-17
• 32-37
• 98-99 (Extra-Hazardous Employer Status)

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WC Concept

• Developed as a way to allow injured employees to
  be compensated appropriately without having to
  take their employer to court
• fairness to injured employees, especially those
  without resources to take legal actions
• reduction of costs to employers associated with
  workplace injuries
• No-fault approach

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WC Concept Cont.

• WC is a compromise between needs of employers
  employees
• Employees give up their right to seek unlimited
  compensation for pain and suffering thru legal
  action
• Employers award the prescribed compensation
  regardless of the employees negligence

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Costs

• Pays out gt70 million annually in benefits and
  medical costs
• National average net cost of WC in mfg sector is
  6 per 100 of payroll
• See Table 2.2, p. 33

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Objectives of WC

• Vary widely from state to state
• Widely accepted objectives
• Replacement of income (about 2/3)
• Rehab of injured worker
• pays medical costs until fit to return
• vocational training
• Accident Prevention
• fewer accidents result in lower premiums
• Cost Allocation
• higher risk pays higher premiums

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Who is Covered?

• Varies widely by state
• Employees generally not covered or limited in
  coverage
• Agricultural, domestic, casual, hazardous work,
  charitable / religious, railroad maritime
  (FELA), contractors, subcontractors, minor,
  extraterritorial employees, employees of small
  organizations

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WC Legislation

• Varying WC laws are present in all 50 states, DC,
  Guam, and Puerto Rico
• Born out of the sweat shop era
• In recent times, medical costs and insurance
  premiums have skyrocketed, making survival
  difficult for many small businesses
• Most companies purchase WC Insurance to satisfy
  WC obligations

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WC Insurance

• States vary widely
• Three primary types
• State funds
• Private insurance
• Self-insurance
• Arbitration is available for disputes

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WC Insurance Premium Determination

• Schedule Rating (compared to baselines)
• Manual Rating
• a manual of rates is established for various
  occupations
• Experience Rating
• employers are classified by type and compared
  within
• Retrospective Rating
• rate is established, at end of period - adjusted
  for exp
• Premium Discounting (quantity discount)
• Combination Method (2 or more methods)

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WC Benefit Eligibility

• WC benefits are owed only when the injury arises
  out of employment (AOE) or occurs in the course
  of employment (COE)
• work prescribed in job description
• work assigned by supervisor
• work normally expected of employees

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Disabilities

• Temporary Partial Disability
• Temporary Total Disability
• Permanent Partial Disability
• At one time the loss of a hand in PA (116K) and
  CO (9K)
• Permanent Total Disability
• More expensive than death!

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Monetary Benefits

• Disabilities
• Death burial benefits
• Medical treatment rehabilitation
• Lost wages (about 2/3rd)
• Why only 2/3rd?

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Problems with WC

• Stress claims
• Waste, fraud, and abuse flags
• claimant is never home, injury coincides with
  layoff or termination, active in sports, has
  another job, is in line for early retirement, has
  made full recovery, only a PO Box, no witnesses,
  history of filing, during hunting season, etc.

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Additional Resources

• www.workerscompensation.com
• Private, good source of information
• State of South Dakota, Workers Comp
• www.state.sd.us
• Follow these links
• Government Agencies Labor Programs Labor and
  Management Workers Compensation
• US Dept of Labor
• Office of Workers Compensation Programs
• http//www.dol.gov/esa/owcp_org.htm