Five Ideas to Reduce Workers Compensation Exposure When Downsizing


These are dreaded words heard ‘round the locker room or break room table.'  They may start out as nothing, maybe a little one-liner about “some layoffs coming down the road” or maybe another guy said he saw Keith talking to Bob about “Immediate downsizing.”

Whether these are true or untrue, as a risk manager or someone involved in the claims process, be ready for the onslaught of the consequences of layoffs or downsizing.  Not everyone will file a claim for workers comp, but bet the disgruntled employees will, along with a few unexpected employees to now report an injury of some sort in the past. (WCxKit)
How are these issues controlled and handled proactively? We discuss a few options below, and remember these may or may not apply in your jurisdiction. 
Always consult counsel before implementing any of these ideas.
1. Go back to documentation
Keith just received his letter that his job was terminated and his last day of work will be in 10 days.  Keith is nervous, because he has limited job skills, bills to pay. He lives in a small town and there are not a lot of jobs out there.  Plus he does not have the greatest relationship with his supervisor, and he feels this is a personal assault coming directly from that supervisor who just does not like him. 
What does Keith do? Well he decides to say he injured himself a month or so ago but was afraid to report it, because he heard that layoffs were coming. And he did not want to be one of the guys picked to be laid off. 
This is a very common scenario. And this is where attention to documentation comes in to play.  By now, everyone on the work floor should know that if any injury happens, whether they want treatment or not, the worker is to come to the risk manager's office to complete some paperwork.  And those who decide not to do this face the consequences associated with not reporting it.
The first question to Keith after he tells you he hurt himself a month ago should be “Why did you not tell me?  You knew the procedure, right?  Did you tell anyone?  Did anyone witness your injury? Did you see your doctor?  Why are you telling me this now?”
These are the first handful of questions to ask.  Then call in his claim to the carrier/TPA immediately.  And let them deal with it.  If you still want to lay him off while his claim is under investigation, that is fine.  If you want to wait until a decision has been made, that is fine as well.   But documentation is key, and it always will be.  You have to constantly tell the workers the responsibility to come tell you when something does not feel right, and an injury may have occurred.  And if the employees do not do this then they face the consequences that can affect the claim's compensability.  Make it a reminder phrase every week.
2. Perform an exit interview
If a worker resigns from a position, or is laid off, chat with them a bit.  Chances are the worker will come to you anyway to ask why it was them anyway. So now is a good time to see if the employee  pulls out any angles to try and keep getting some income coming .  Flat out ask if the worker is hurt, or had a workers comp claim, or is experiencing pain for example.  
Common knowledge will reveal that this is a way to increase your own claims, since if it is not mentioned then why stir the pot?  Actually, if employees are going to come forward and try being deceptive, better to confront it now versus 6 months from now.  A claim will result regardless. Granted, most people will say “No” and move on, but there is always that handful of people that will  try to claim an injury.   Call the claim in to the adjuster, and let them handle it.  That way you have performed your duty, and your responsibilities of reporting it are over and done.

3. Have a medical exam performed by an occupational medicine doc or a local clinic doctor to be safe
In order to be ultra-aggressive, get a doc to do an exit-exam.  This will weed out all the fakers.  It is not going to be free, but weigh the costs.  If this is something to do to prove a point, then do it.  Take  time finding a doc that is also legit, and willing to do this.  In the grand scheme of things I guess it is not fantastic to be laying off people due to expenses, and then have to spend $4,000 to have a doc say these workers are fine and show no signs of disability. This is about protecting your company from the unknown future of compensation claims, some of which can become incredibly costly no matter how insignificant they seem.  So it is an option if that is preferred. Just make sure to have a credentialed doctor performing the exams in a private, professional setting (does this go without saying?), and that it is all HIPPA compliant.

4. Ask the employees to sign a release waiving liability (if legal in your jurisdiction)
Probably the most common is just the legal paper stating that the worker is not claiming any disability at this time.  Depending on the jurisdiction, try inserting the word “future disability' as well.  But my advice is to thoroughly check with the employment counsel, as well as the workers comp counsel on permission.  Or better yet have counsel draft the letter. Again it may cost something up front as far as expenses go, but it is all about protection down the road.

5. With a witness present, ask if the worker was or is  hurt, or experiencing symptoms, and has been to the doctor for this. Ask is this is related to work or not.
This is similar to the doctor, but not as expensive.  Have another HR person present for the exit interview, and ask the person about any disability relating to work.  This will prevent the worker from coming back saying there were some problems swept under the rug and ignored. Check again with counsel on what can be and cannot be done, and then go from there. (WCxKit)
With any type of employee reductions in the workforce, there are going to be some bitter feelings and resentment when reducing your number of workers.  This article is about protecting your company, and protecting the future of potential comp claims.  Any way to reduce exposure is always one worth researching, and implementing, sooner rather than later.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20-50% Contact:


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact

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