IENG 331 - Safety Engineering Workers

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IENG 331 - Safety EngineeringWorkers
Compensation

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

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October 2 6, 2009

• Friday, 10/2, Class will not meet
• Take Home Assignment, Watch your Email
• Monday, 10/5, Guest Lecture, TBA
• Wednesday, 10/7, Exam I
• All materials covered in class and homework thru
  Wednesday, September 30th
• Closed book, closed notes
• Format short answer, a few quantitative
  problems, and perhaps some matching and lists

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HW6

• Read Chapter 6
• Review Questions
• P. 66
• Odds
• Exercises
• P. 65
• 1, 7, 8
• If you cant find the SD rates, try any other
  states
• Due ?

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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

• US employers spend about 100B annually for WC
  insurance
• 25 for medical care
• 50 for compensation payments
• lt1/3 for administrative costs for SH and legal
  services provided by insurers
• Average cost is about 2 per 100 of payroll

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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,
  extraterritoriality 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

• 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
• Payments for permanent partial disability
• Whole-Man Theory
• of whole, fully-functional person
• Lost Wages Theory
• Actual loss in wages are compared to a standard
• Loss of Potential Earnings Theory (most common)
• Future earnings capacity is estimated using
  factors such as impairment, age, occupation,
  gender, education

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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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South Dakota Workers Compensation

• www.state.sd.us
• Select Government, then Agencies, then
  Labor, then Resources, then Workers
  Compensation

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HW6

• Read Chapter 6
• Review Questions
• P. 66
• Odds
• Exercises
• P. 65
• 1, 7, 8
• If you cant find the SD rates, try any other
  states
• Due ?