Consider the following scenario. You have had an employee injured on a job site and your HR policy indicates that you need to have that employee drug tested. You think nothing of it because it’s standard practice, however, what if the employee fails the drug test? Your HR policy states that there are now grounds for termination. In compliance with your stated policies, you fire the injured employee. But have you thought about how the Workers Compensation responds?
This is a very challenging topic that many employers have been faced with, and a topic I have recently helped one of my clients navigate. Business owners are stuck trying to decide how this might affect their MOD (experience modifier – used to calculate your workers’ compensation premium) and what considerations can be given toward their HR policy on drug testing.
An employer might feel cheated by the system since they are “doing the right thing” according to their own HR policy. The issue that is created is that the injured employee will continue to receive indemnity or lost time payments even though they have been terminated. That means that the employer is now on the hook for the entire loss, including all the medical bills. And the employer has now lost out on the savings that can be realized from getting an employee back to work. The indemnity payments will continue until the employee is released to “full duty” which is determined by a treating physician, whether an employee is fired or not.
The employer can now expect that they will see a bump in their MOD leading to an increased work comp premium. Leaving them only to wonder what would have happened if they had tried to have the employee return to work, even in a minimal capacity. It could have saved thousands of dollars! Under these specific circumstances employers may reconsider their policies on whether it is best to terminate their employees in this situation. This is when the employer needs to weigh the cost. An argument can made that keeping an employee on who is under the influence may cause the company a greater financial loss over time. Do keep in mind, it takes three years after the MOD jumps up to drive it back down, so it does create a very difficult decision.
I am not suggesting employers should immediately change their drug testing policy, only that it is very important to understand how indemnity works and how this affects their MOD. Claims departments are not always transparent about how claims are settled. It is crucial as a business owner to know how these claims work and the impact it can have on your line. If you have not had a discussion about Return to Work Programs and closely reviewed a Mod Master, give me a call!
Ryan Burns is a Commercial Account Executive with Baer Insurance Services. He specializes in construction and manufacturing. Ryan is a former contractor who takes pride in truly understanding his clients industry.
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This blog is made available for educational purposes only as well as to give you general information and a general understanding of insurance topics, not to provide specific legal advice. As always, you should always consult with your attorney regarding employment related matters.