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Published: March, 2006; Vol 2, Num 10

 

Making Workers’ Comp Work Better

“Everybody complains about workers’ compensation costs,” says LHSFNA Management Co-Chairman and NEA – the Association of Union Constructors Executive Vice President Noel C. Borck. “Now, we’re actually doing something about it. The Fund’s staff presented a number of tested options at last month’s LIUNA Tri-Fund Conference.”

That conference, in Los Angeles, brought together Laborers, union officials, management representatives and health care administrators to look into a variety of issues related to labor-management collaboration in construction and other sectors organized by the Laborers’ International Union of North America (LIUNA). Among the presentations was a series of workshops that offered solutions to high workers’ compensation premiums.

Ray Coia, New England Tri-Funds Coordinator, opened the series with an overview of the workers’ compensation problem. Scott Schneider, LHSFNA Director of Occupational Safety and Health, added that in many cases workers’ compensation premiums can cost a contractor more than its health care premiums. In 2005, the average laborer’s wage was about $30 an hour. Workers’ comp premiums vary by state, but the average for the masonry industry (for example) was about $15 per $100 of payroll. That means masonry contractors pay on average about $4.50 per hour in workers’ compensation premiums. This cost is comparable to or greater than the cost of health insurance premiums.

The actual premium of any individual contractor is derived from its “experience modification rating” (EMR) which is based on the company’s safety record. An EMR of 1.0 is average for the industry. By lowering its EMR to 0.8 through improvements to its safety program, a contractor could save almost $1 an hour.

Terry Bumpers, LIUNA Construction Division Director, then explained how unscrupulous contractors misclassify construction workers (e.g., claim they are office employees) to save on premiums. By fighting back against misclassification – through, for instance, the National Alliance for Fair Contracting – Laborers and their employers can save the system millions of dollars and lower everyone’s premiums.  This also will make honest contractors be more competitive and secure more work for the union sector.

Collectively Bargained Agreements

The second day’s workshop highlighted collectively bargained solutions to workers’ compensation. These agreements can expedite the claims process and limit the possibility that injured workers will file lawsuits against their employers. Under such agreements, workers’ comp claims are settled through a patient advocate and ombudsperson. Workers are steered to a network of agreed upon health care providers. Any disputes that cannot be readily resolved go to a mediator and, ultimately, arbitration.

Kevin Gregorson described the system he developed in Minnesota. Thirty-seven different locals from every major craft participate. One-hundred twenty-nine contractors are now enrolled. Over the past eight years, 98 percent of all claims have been resolved without mediation or arbitration. Less than three percent of the claims were denied. Most claims are resolved quickly, within about two weeks. The system has saved millions of dollars in litigation and medical costs and has gotten members better care and quicker compensation.

Angie King, Director of the Midwest Region Laborers’ Health and Safety Fund (MRLHSF), and Warren Anderson, of Washington Group International, then discussed the collectively bargained system they set up for the Olmsted Dam project on the Ohio River between Illinois and Kentucky. While the project is just getting underway, all the trades and contractors are on board and everyone is excited about the new system.

Handouts from the session included model language for collectively bargained workers’ compensation agreements and model language for state legislatures to adopt in those states which do not currently allow collectively bargained workers compensation agreements.

The final workshop featured a variety of speakers. Mike Moore, CNA Insurance Company, presented the top ten ways contractors can reduce their premiums (see box). He stressed the first three: management commitment, management accountability and pre-job planning. He argued that rather than costing contractors money, workers’ compensation can be viewed as a way to save money and make contractors more competitive. It is clear that the best way to reduce costs is through a proactive safety program.

Coia gave a presentation by Carolina Bernal, Rhode Island Institute for Labor Studies (who was snowed in and could not attend), about the need for outreach to Hispanic workers to help them understand the workers’ compensation system. He described the successful program they have in Rhode Island.

CNA List of Top Ten Steps to a Safer Workplace:

  • Management Commitment
  • Management Accountability
  • Pre-Job Planning
  • Manual Material Handling Controls
  • Falls from Elevation
  • Drug and Alcohol Prevention Program
  • Injury Management
  • Safety Orientation for New Hires
  • Daily Safety Huddles
  • On-going Safety Training
  • Comprehensive Fleet Management Program

Walter Jones, Associate Director of the LHSFNA OSH Division, described various state programs which offer discounts on premiums for companies with a drug-free workplace program or a health and safety program (e.g., joint safety committee) or which provide grants to employers to purchase equipment (like mobile scaffolding) that will help prevent injuries (e.g., Ohio). While few states offer such discounts, it is worth checking to see if they do and what the qualifications are. A list of state discounts for safety programs is below.

Mark Etters, Safety Director for ET Simonds Company in Southern Illinois, described a successful program developed by Simonds called Advocating Care for Employees (ACE). The program creates a proactive relationship with injured employees to help them get back to work as soon as they are medically able. The company joined with the MRLHSF to identify modified duty jobs that injured laborers could do, at least on a temporary basis.

State Workers’ Compensation Discounts for Safety Programs

  • New Hampshire – Safety Program – Assigned Risk Contractors – 10%
    Through insurance carrier
    (603) 271-6850 Tom O’Neil
  • Pennsylvania – Safety Committees – 5%
    (717) 772-1917
  • >Colorado – Safety Program – 5%
    (303) 318-8640 Jeff Roffle
  • Minnesota – Safety Program – 3%
    Through insurance carrier
    (952) 897-6411 Gary Bauer
  • North Dakota – (800) 777-5033
    Small Account Safety Incentive Program for contractors with premiums under $10,000/yr – 8%
    Risk Management Program (RMP) – 15%
  • Florida – Safety Program – 2%
    Workers’ Comp Division (850) 413-1601
  • Louisiana – Cost Containment Program for Contractors with EMRs above 1.5
    (800) 201-249
  • Wyoming – Safety Program – 10%
    (307) 777-6763 Don Ashley

Summing up the workshops, Schneider says, “Because workers’ compensation premiums are based on payroll (in every state but Washington State), our signatory employers, who pay higher wages than non-union contractors, are at a competitive disadvantage. However, relying on our cooperative relationship with union contractors, we can gain a competitive advantage through the use of proactive safety programs, collectively bargained agreements and return to work programs. Everybody wins. Fewer injuries, lower premiums and faster returns to work.”