California Workers Compensation Insurance

Back in March, California became the first state in the nation to pass legislation raising the minimum wage to $15 an hour. The increase is expected to impact about 6.5 million residents, or 43 percent of the state’s workforce. Other states and municipalities have since followed suit.

Then in May, the U.S. Department of Labor (DOL) published its final rule updating overtime regulations, which will extend overtime pay protections to more than four million workers nationwide. Beginning December 1, 2016, the minimum salary required to be exempt from overtime doubles to $913 per week or $47,476 annually for salaried employees.

These evolving wage laws are forcing some big changes in the way you compensate your employees. But in addition to higher wages, you’ll also be dealing with higher workers’ compensation premiums.

Higher wages mean increased payroll, and your workers’ compensation premiums are based on your payroll. And along with higher wages comes higher indemnity benefits, which means higher overall claims costs and experience modification factors.

Bottom line – your workers’ compensation cost control measures are more important than ever now. Here are seven crucial things you need to be doing to reduce those costs:

Be smart about hiring and onboarding. 40 percent of all workplace injuries happen to employees who have been on the job less than a year according to OSHA. Be consistent with policies such as background screening, pre-employment physicals, detailed job descriptions, safety orientation, and mentoring with an experienced employee.

Foster a safety culture from the top down. Creating a safe workplace starts with you and your executive team. Lead by example and demonstrate accountability. Promote health and wellness in the workplace, conduct regular safety training, and consider offering incentives for safe behavior.

Verify worker classifications. Your experience modification factor determines your premium, but many experience mods are incorrect simply due to clerical errors, often in payroll classifications. Every classification is associated with a different rate, so make sure your employees are properly classified.

Conduct thorough accident investigations. Besides complying with regulatory requirements, conducting a thorough investigation of each accident can help your loss control efforts by recommending corrective action to prevent future incidents. It’s also a good time to begin researching the legitimacy of the claim to protect against fraud.

Proactively manage claims. Stay on top of claims with regular reviews, status reports, and actions that move the claim along. And make sure you’re complying with all regulatory and reporting requirements along the way.

Aggressively attack medical costs. Medical and pharmacy costs can drive overall claim costs through the roof. Consider using a triage nurse who can immediately respond to an injury and direct the injured worker to a pre-screened and pre-approved medical provider. Use preferred physicians and pharmacy providers who are experienced with occupational injuries, can minimize costs, and will work with you to get injured workers back to work as soon as possible.

Offer return-to-work options. Lost time claims are generally more costly than medical only claims, so getting an employee back to work as soon as possible following an accident is good for your bottom line and the employee’s morale. Even if all the employee does is file or do paperwork, it’s better to have them on the job doing something than sitting at home.

Need more ideas on how to keep your workers’ compensation insurance claim costs under control? Download our free report, “How Much Could You Save by Self-Insuring Your Work Comp” here, or contact us anytime.