Keeping problem employees on staff can increase workers’ compensation costs

Nearly one of every four workers’ compensation lost-time claims involves problem employees.

These typically are employees with:

  • Histories of attendance problems
  • Low productivity
  • Quality issues
  • Difficulty relating to others.

Left unmanaged, these issues can have a significant and costly impact on a workers’ compensation claim. That’s why addressing performance issues early is so important.

Under state law, employees who are injured on the job are entitled to workers’ compensation benefits until they are medically able to return to work.

That means even if you fire these employees, they will continue drawing workers’ compensation benefits under your policy, even though they are no longer your employees. These wage-replacement benefits get expensive fast, ultimately impacting your workers’ compensation premium.

Firing an injured employee could result in lawsuit

In addition, it is not uncommon for an injured employee who is fired to sue an employer for retaliatory discharge.

By law, an employee cannot be fired for claiming a work injury, or for absenteeism prescribed by a doctor to recuperate from a work injury or for a medical disability.

Retaliatory discharge is now the most frequent charge against employers, exceeding charges of sex, race, disability and age discrimination.

What employers can do to prevent problems with poor performers

There are a number of things employers can do to avoid these types of challenges, including:

  • Deal with performance issues early. 
    This is the first and most important step you can take. This helps you avoid a situation where an employee has both ongoing performance problems and a workers’ compensation injury. The workers’ compensation claim undoubtedly will complicate your ability to manage this employee. Work with your supervisors to address performance situations. If termination is necessary, take care of it before it becomes entwined in the legalities of a workers’ compensation case.
  • Follow written policies and procedures. 
    Have a written and well-documented performance management plan that includes disciplinary steps to be taken in cases of misconduct. Follow your policy to the letter.
  • Document everything. 
    It can save you from expensive litigation. For example, document contacts with the employee, employee performance issues and remedial actions taken.
  • Think before you fire, especially when workers’ comp is involved. 
    You may be faced with a frustrating situation, but an impulsive decision could make the problem drag out longer and become more costly in the end. Discuss your options with your claims representative and your employment law attorney for assistance making the best business decision possible.

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

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