Ohio Workers’ Comp Rate Reduction in the Works

Private employers could save up to $163 million in workers' comp premiums if a reduction in premium rates goes through as requested.

The Ohio Bureau of Workers’ Compensation (BWC) recently requested a reduction in private employer premium rates by 12% beginning July 1.  If the Ohio BWC Board approves the reduction, it would reportedly save private employers approximately $163 million over this year’s premiums. According to the BWC, “the actual premium paid by individual private employers depends on a number of factors, including the expected future claims costs in their industry, their company’s recent claims history, and their participation in various BWC discount programs.”

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    The Ohio BWC Board is expected to vote on the issue on Feb. 23.

    Want to learn more about how you can participate in our workers' compensation rate reduction programs?  Click here for more information.

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    Next up: The Pros and Cons of Drug Testing
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  • The Pros and Cons of Drug Testing

    Here's what you need to know about the possible effects various drug testing policies might have on your workplace.

    A plumbing company, a mechanist, and a landscaper are all down on their luck. It sounds like the beginning of an excellent “dad joke?” But these companies reported symptoms of a middling work force: lower productivity, increased accidents, absenteeism, and higher turnover. And, as it turns out, these symptoms are typical of a gap in workplace policy, namely a bad or non-existent drug testing policy.

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    If you recall the article title, you may have already guessed that these companies were candidates to study the effects of drug testing in the workplace. The characteristics that plagued our participants are typical of underdeveloped company drug policies; they weren’t necessarily the “bad seeds,” but more of a cross-section of industries with various sized gaps in their drug programs.

    The results of this and other studies have been generally uniform in measuring drug testing’s effects on metrics like workplace happiness, safety, and profits and losses. Looking at the data for these and other companies, we can look at ways that certain drug testing policies might affect your company.

    The cost of not testing

    First, let’s discuss the price tag of not having a drug policy in place. The most common illicit substances and substance classes that employers test for include: amphetamines, opiates, barbiturates, cannabinoids (though nationwide cannabis reform is changing the discussion here), cocaine, benzodiazepine, and oxycodone. Generally speaking, chemical dependence on these substances has been linked to serious workplace accidents, missed work, loss of production, theft and turnover, as well as more pernicious problems such as poor decision making and lower co-worker morale.

    All these effects impact a company’s bottom line. From an employer’s perspective, risk of accidents translates to more workers’ compensation claims, higher insurance rates, and legal expenses. Absenteeism breeds turnover, compounding recruiting and training costs. All of this contributes to a negative public perception and can damage a company’s goodwill.

    So shouldn’t you drug test then? At first glance, there is much to be gained by drug testing of some sort, but …

    Not all testing is equal

    Not all drug testing is equally effective, nor indicative of the same risks. As a baseline, the Substance Abuse and Mental Health Services Administration (SAMHSA) sets drug testing procedural guidelines. Following these guidelines can make drug testing more cost effective and put you on firm legal footing. Beyond that, employers must decide when to test, as well as how often.

    As a rule, there are three types of drug testing: 1) pre-employment applicant testing, 2) for-cause employee testing, and 3) random testing. Each have their own benefits and drawbacks, and there is no reason why an employer can’t employ all three to varying degrees, with certain limitations.

    Pre-employment testing. One hospital study measured applicant drug test metrics. Those who tested positive for illicit drugs upon application had a 28% higher turnover rate and a 64% higher rate of disciplinary action against them. And yet, the study showed no correlation between pre-employment drug test results and job performance (meaning attendance and productivity).

    Despite the mixed results of pre-employment drug testing efficacy, this type of test is the most prevalent, likely because it’s the most obvious gatekeeping tool. But if job performance is your primary concern, pre-employment testing may not be the best option – or at least not something you should use in isolation for its low predictive ability to determine whether employees will be a negative for the company.

    For-cause testing. Justifications for cause-based testing include post-accident testing, determining fitness for a particular duty (especially safety-sensitive roles), and patterns of behavior that create a “reasonable suspicion” of drug abuse. For-cause testing seems to strike a fair balance between employer interests and worker freedom; however, it lacks the gatekeeping function of pre-employment testing and, as we shall see, also lacks benefits of randomized testing. It also can subject employers to liability risks for employment discrimination if they fail to accurately document the reasons for the test.

    Random testing. Here’s where things get interesting. The deterrent effect of a looming, random drug test is obvious, but lost in first impressions is this: the actual frequency of testing doesn’t affect the benefits of a random drug test policy. In one study, occupational groups who were randomly tested reported substantially lower accident rates than the untested groups, regardless of test frequency.

    So, it turns out you can reap the benefits of randomized drug testing without incurring the cost of frequent testing. The threat of a future random test appeared to have just as much positive effect as actually testing the employees.

    Interestingly, the study also found that the positive impact is stronger with white-collar professionals, as well as operations and technical workers. And in a meta study, ongoing random drug testing showed reduction in overall drug-positive results: from 13.6% of the workforce in 1988 to 4.4% in 2016.

    Random testing benefits are many, but random testing is also the most intrusive as it affects employee lifestyle outside of work.

    This begs the question: what do workers think of drug testing, randomized or otherwise? Does it affect workplace happiness and morale?

    A working-class hero

    Worker happiness may not be your bottom line, but it’s an extremely reliable indicator of conditions that do affect bottom line. Major characteristics of job satisfaction include: recognition of individual effort, quality and safety of physical environment, proper supervision, and connection with coworkers.

    These characteristics of high job satisfaction inversely relate to workplace symptoms associated with inefficient drug policies. Not surprisingly, then, studies have shown that employees are generally in favor of a fair drug testing policy. Those in safety-sensitive jobs prefer drug testing 95% of the time; healthcare workers, 92%; technical and mechanical workers, 81%; and even those in low safety-risk office positions support some form of drug testing 69% of the time.

    Gatekeeping against workers’ use of dangerous drugs has a significant effect on employee job satisfaction, which makes sense. Employees appreciate an environment that is safe and companionable, and an employer who works hard to maintain and improve upon the status quo.

    The Bottom Line

    Let’s return to our plumber, mechanist and landscaper. How did their testing (or lack of testing) affect their businesses? The measure there was the bottom line—and the reports were eye-opening.

    After standardizing drug testing, Jerry Morland’s landscaping company recorded an extra $50,000 per year in increased productivity. W.W. Gay Mechanical Contractors saved $100,000 on workers’ compensation premiums. Warner Plumbing saved $385,000 its first year because its work culture began to draw experienced, degreed mechanics, boosting productivity. In fact, Warner now has a waiting list for hires, saving it $20,000 a year in personnel advertising costs.

    As we’ve observed already, balance is key to a beneficial drug testing policy. From a strictly business sense, of course, return on investment must be considered. Alongside projected boosts in productivity, an employer should also consider the hard costs of testing. What methods of testing will you employ? How often? What types of drugs will you test for? More common drugs like cocaine and marijuana likely warrant screening—but what about some of those “fringe” substances that are rarer but may be more dangerous?

    It’s an exercise in number crunching and projections. But, with a bit of fine-tuning, there can be large margins to add to your bottom line in addition to the intangibles.

    State law and the ADA

    Although no federal or state law prohibits drug testing, a small number of states do have unique restrictions on the practice (Ohio not among them). Additionally, there may be drug testing requirements placed on private companies who secure government work.

    Finally, as always, you should have a good relationship with an employment attorney. Work with your attorney to familiarize yourself with employment law, particularly where drug testing affects hiring and firing decisions. Notably, under the Americans with Disabilities Act (ADA) individuals with a history of substance abuse may qualify as having a disability, so a change in employment status based on drug test results may be seen as discrimination.

    This article is meant to be utilized as a general guideline for drug testing of employees. Nothing in this blog is intended to create an attorney-client relationship or to provide legal advice on which you should rely without talking to your own retained attorney first.  If you have questions about your particular legal situation, you should contact a legal professional. Nick Weiss of The Gertsburg Law Firm can be reached at 440-528-1233 or nweiss@gertsburglaw.com.

    An audit of your policies can help you avoid the pain of lawsuits. The Gertsburg Law Firm now offers CoverMySix, a one-stop legal audit for your business, led by award-winning litigators and in-house counsel. CM6 minimizes your exposure to lawsuits, investigations, disgruntled employees and customers, and all the damage that comes with them. Learn more about how to protect your business from lawsuits at covermysix.com.

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    Next up: Reporting for Reform - How to Comply with Upcoming IRS Reporting Requirements
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  • Reporting for Reform - How to Comply with Upcoming IRS Reporting Requirements

    As part of healthcare reform, the Internal Revenue Service (IRS) added sections 6055 and 6056 to the Internal Revenue Code. Starting in 2016, the IRS requires insurance companies to collect any missing Social Security numbers for members and dependents covered by fully insured health plans. “Typically, insurance carriers have only needed employees’ Social Security numbers, not those of spouses or dependent children,” says Patricia Decensi, General Counsel at Medical Mutual. “However, the IRS will soon require that information to verify that everyone in the United States is covered.” The information will be used to enforce the part of healthcare reform that says everyone in the United States has to have health insurance—or qualify for an exemption. In addition, it will allow the IRS to verify whether certain employers offer “minimum essential coverage” for their employees. The requirements are based on two key factors. 

    As part of healthcare reform, the Internal Revenue Service (IRS) added sections 6055 and 6056 to the Internal Revenue Code. Starting in 2016, the IRS requires insurance companies to collect any missing Social Security numbers for members and dependents covered by fully insured health plans.

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    “Typically, insurance carriers have only needed employees’ Social Security numbers, not those of spouses or dependent children,” says Patricia Decensi, General Counsel at Medical Mutual. “However, the IRS will soon require that information to verify that everyone in the United States is covered.”

    The information will be used to enforce the part of healthcare reform that says everyone in the United States has to have health insurance—or qualify for an exemption. In addition, it will allow the IRS to verify whether certain employers offer “minimum essential coverage” for their employees.

    The requirements are based on two key factors.

    First is the funding structure of the health plan. Some employers are self-funded and pay their own claims, while others are fully insured through their carrier. The funding structure determines whether employers have to do their own reporting under Section 6055, the individual mandate.

    Second is the number of full-time employees. Section 6056, the employer pay or play rule, only applies to employers with 50 or more full-time employees. That includes full-time equivalents. Those employers will have to report to the IRS in early 2016 to prove they offer health coverage that complies with healthcare reform. And that applies even if they were exempt this year.

    “Fully insured employers can rely on their insurance carrier to report for them for 6055, and they will only need to report for 6056 if they are subject to pay or play,” Decensi says. “Self-funded employers, on the other hand, are responsible for all reporting to the IRS, regardless of pay or play.”

    All fully insured employers should work with their carrier to understand their responsibilities, according to Decensi. Insurance companies are obligated by law to reach out directly to employees if the required information is still missing. Plus, those employees or dependents could end up seeing money come out of their next year’s tax return if their coverage isn’t verified.

    Medical Mutual is planning to reach out to its fully insured customers, including those enrolled in COSE plans, to let them know who is missing Social Security numbers. Self-funded customers are encouraged to consult with their tax advisor or legal counsel.

    “Our goal is to comply with the new rules while keeping the impact on our members to a minimum,” says Decensi.

    COSE members with questions about the new requirements should contact their broker or call the COSE Benefits Group at (440) 878-5930. They should also watch for webinars from Medical Mutual later this fall about the actual forms and steps to take for reporting. 

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    Next up: Safety Council Recap: 5 Questions to Ask About Your Business
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  • Safety Council Recap: 5 Questions to Ask About Your Business

    Security prevention and response is more important than ever. Here are five security-related questions attendees of the July 12 COSE Safety Council were asked to consider.

    Corporations today have a greater need to be more cognizant and proactive about physical security prevention and response for their businesses. This is more important today than ever in the history of America. The COSE Safety Council provided a unique presentation to address these issues at their July 12 Safety Council meeting.

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    Here’s an overview of what was discussed.

     

    Tim Dimoff and SACS Consulting delivered the first segment by explaining the current security threats that now play into the many different businesses in America. After Dimoff’s presentation, five security-related companies explained cutting-edge counter solutions to the growing security exposures.

     

    These experts discussed the following five points: 

    1. Has your company recently conducted a complete security assessment? 

    2.Have you determined what are the most likely security risks that you face? 

    3. Do you have a strong keying or card access system? What are the advantages to each? 

    4. What non-lethal defense mechanisms can you access?

    5. What are the top three cyber security threats and how can you prevent them?

    In conclusion, it makes sense for all businesses to proactively update their preventive defensives to today's security threats. 

     

    Learn more about COSE’s Workers’ Compensation program by clicking here

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    Next up: Safety Council Recap: 5 Steps to Take After a Serious Workplace Incident
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  • Safety Council Recap: 5 Steps to Take After a Serious Workplace Incident

    Attorney and consultant William Haak spoke to the Northeast Ohio Safety Counsel Aug. 9 concerning serious workplace incidents (and how to ensure things go right after they've gone horribly wrong). Haak, the founder of environmental, health and safety legal and consulting firm Haak Law LLC, has more than 23 years of environmental experience and 17 years of occupational safety experience.  During his presentation, he provided real world examples of workplace crises and how employers should respond to protect their people, their business, and the communities surrounding their facilities.

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    According to Haak, serious workplace incidents include:

    1. Injuries and fatalities;
    2. fires, explosions, and other accidents;
    3. workplace violence;
    4. spills or releases of hazardous substances;
    5. severe weather incidents; and
    6. incidents that might not seem "serious" that become serious because of social media such as Twitter, Facebook, or Instagram

    The above-listed incidents could strike at any business regardless of size. Preparedness and knowing exactly what to do before a serious incident occurs is the key to success.

    Haak recommends having policies and procedures in place to guide your business through what he refers to as "the Serious Incident Golden Hour"—the first 60 minutes after a serious incident occurs. In addition to protecting life (including employees, visitors, etc.), protecting your property and assets, and securing the scene along with first responders such as police and fire personnel, it is important to:

    1. Establish an incident commander and an incident command post;
    2. begin early stages of an incident investigation to determine what went wrong;
    3. preserve the scene (for investigation) and collect evidence and witness statements;
    4. make required notifications to regulatory agencies such as EPA and OSHA; and
    5. communicate any facts you know to interested stakeholders including superiors and subordinates, first responders, the community (the media), and impacted family members

    All of these important steps can—and should—be practiced in routine crisis drills. Carefully crafted crisis drills can provide important insights into the strengths and weaknesses of your crisis response plans.

    Finally, as an attorney, Haak advises legal counsel be involved early on for more serious incidents.  Legal counsel can assist your incident commander in many tasks including making regulatory notifications and developing talking points. An attorney with the right background and experience can also help lead your incident investigation. Most importantly, involvement of legal counsel can help establish the attorney-client privilege (which can provide you with some important protection should an incident lead to litigation).

    For more information, please contact William Haak of Haak Law LLC at whh@haaklawllc.com or 216-772-3532.  You can also visit www.haaklawllc.com.

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    Next up: Selection Process for Hiring Star Employees
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  • Selection Process for Hiring Star Employees

    It is not new news to hear how difficult it is to attract, retain and develop talent. It seems nearly everyone agrees one of the most challenging responsibilities is to hire and onboard employees.

    It is not new news to hear how difficult it is to attract, retain and develop talent. It seems nearly everyone agrees one of the most challenging responsibilities is to hire and onboard employees.

    In fact, few dispute the pitfalls commonplace to staffing. Living with a bad hire is one of the biggest mistakes we can make. The U.S. Department of Labor estimates the average cost of a bad hiring decision can equal 30% of the individual’s first year potential earnings.

    If that’s true, then why is it that hiring practices for many organizations have changed so little during the past 50 years? Why are organizations not making better use of affordable, time-sensitive, activities that can drastically improve a company’s batting average when it comes to selecting and retaining talent? Why are companies not investing in ways to review hiring data that can predict the next star employees?

    These activities seem critical given the aging workforce and the need for organizations to improve their succession planning processes. “Companies need formal succession plans to be competitive in 2015,” says Josh Bersin, principal and founder of Bersin by Deloitte. In a 2015 HR Magazine article, Bersin wrote many organizations struggle to facilitate internal talent mobility. Fewer than one-third have formal succession plans for all but the very top levels, according to research conducted by Bersin by Deloitte and published in November 2014.

    While it can be easy to see the typical pitfalls when we step back, it is much harder to catch ourselves from making missteps when we are in the middle of filling a critical role. For example, hiring managers often admit the pressures they are under to hire, often sacrificing diligence and patience when it is needed most. Others readily point to a time when they experienced groupthink and didn’t question a peer or boss when making a poor decision after a final interview.

    Others say they overlooked, and/or justified their decisions in the face of contrary objective personality or ability data, after living with a bad hire.

    In other words, people are so busy with the day-to-day, they often do not invest the time to proactively work on their organization’s hiring process. In fact, it seems that many organizations engage the hiring process as a reflexive, knee-jerk activity in response to an opening or vacancy. All that said, many organizations have a way to go when it comes to tightening up their hiring processes. So, how do you avoid making a bad hire? Here are my five suggestions:

    1. Stop making the common errors we make under pressure to hire. For instance, mistakes such as falling for candidates who remind us of ourselves, or not having a structured interview format so that we can compare apples to apples.

    •    RELATED: Learn how adding diversity to your workforce can help your business grow.

    2. Start treating the entire hiring process as a way to collect data and then incorporate ways to review the information in a consistent manner. Many organizations do not have a common way to synthesize all of the information collected throughout the hiring process, such as interview notes, personality data, resumes, etc. In the end, many feel that there is so much data to comb through that it can be overwhelming.

    3. Pay attention to what the research tells us. For instance, new insights from Glassdoor data suggests that globally, the time required for hiring processes has grown dramatically in recent years. Based on a sample of 344,250 interview reviews spanning six countries, key findings from their survey indicate that, “Hiring policies of employers can have a large effect on the length of the interview process. Choosing to require group panel interviews, candidate presentations, background checks, skills tests and more each have a positive and statistically significant effect on hiring times.”

    •    RELATED: Check out the BizConCLE workshop: “How to Get the Right People on the Bus and the Wrong People Off.”

    4. Copy from those companies that know how to hire effectively.  Leading companies have incorporated the latest advancements in personality assessments, combining them with world-class hiring practices, to drastically improve their selection success. Instead of getting mired in too much data, top organizations have systems to assist hiring managers with making sense of the data, thereby allowing them to achieve quick consensus.

    5. Learn from mistakes.  When mistakes happen—as they occasionally do when it comes to predicting talent—the best organizations look at any missteps made along the way. And the learning is perhaps the most crucial when it comes to the outliers—those who are performing well outside of expectations. With data and systems in place, the best companies can quickly pull together data to hypothesize why and how some people are drastically outperforming their peers.

    Looking into the future, it is safe to say that attracting and keeping talent will continue to be a challenge. Paying attention to what you’re doing, as well as what others are doing (like making use of a personality assessment combined with HR best practices) is a wise way to maintain a distinct advantage relative to the competition.

    Mark Kogelnik is part of the leadership team at Watterson & Associates, Inc., in Chagrin Falls.

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