Keeping problem employees on staff can increase workers’ compensation costs

Employees with poor performance often have more costly and challenging workers’ compensation claims than the average employee.

These typically are employees with:

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

Many times, these employees should have been disciplined or even fired before they reported work injuries. But once a workers’ compensation claim has been filed, disciplining or firing an employee can become much more complicated, and costly.

For example, you may still be required to pay injured workers benefits for lost wages, even if you fire them. These wage-replacement benefits get expensive fast, ultimately impacting your workers’ compensation premium. If you’ve fired the employee, you no longer have access to an important tool to control these costs — offering light-duty transitional work.

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

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, do it without delay to lessen the risk that 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.

More information on dealing with problem employees

For more information on dealing with problem employees, see our:

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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