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Published: Winter, 2006; Vol 8, Num 1

Negotiated Workers’ Comp Programs
Save Money, Speed Results

To ensure that every worker is compensated for on-the-job injuries, workers’ compensation insurance is federally-mandated, and no employer may operate without it. However, across the U.S., due to rising health care costs and increased litigation, workers’ compensation premiums are soaring. This rising cost is a significant impediment in construction which generally has profits only in the two to four percent range.

Negotiated workers compensation programs (NWCPs) can help control these escalating costs.

Frequently, in situations without a NWCP, when a worker is injured, a lawyer is hired, and the two sides wrangle until a settlement is reached or a line is drawn. If necessary, the state’s workers’ compensation board decides a just award. Either way, the process is long and some of the award goes to the lawyers.

In contrast, in collectively bargained situations – where workers have a means to express and negotiate on their own behalf – some states allow NWCPs minimize and more quickly resolve disputes and, thus, limit the need for legal representation. This can greatly reduce the cost of injury compensation which, in turn, can significantly enhance the competitive position of union employers in the marketplace.

The most significant mechanism in a NWCP is the advocate, who immediately contacts an injured worker to help with the often complex and protracted compensation process. If a dispute between a worker and the company develops, the advocate attempts to work it out. If facilitation cannot resolve the problem, the NWCP provides for mediation and, sometimes, voluntary arbitration. If all these options fail, the worker may appeal to the state workers’ compensation board.

NWCPs also save money and improve efficiencies by designating health care providers – agreed to by labor and management – that are familiar with workplace injuries and have prices within the mainstream of the local health care market. Another advantage of NWCPs are the return-to-work programs that bring workers back quicker, minimizing compensation loss for workers and lost workdays for employers.

Strategically, the most important advantage of NWCPs may be their establishment of joint labor-management safety committees that identify worksite hazards and adopt procedures and training to minimize their risks.