As the novel coronavirus (COVID-19) continues to disrupt work ecosystems, complicate IT, and shift work cultures, there's a looming aura of uncertainty for HR and legal teams. Will you have to manage an influx of workers' compensation claims from COVID-19? Walmart, Amazon, Tyson, and hundreds of small businesses are already contending with wrongful death lawsuits. This may be the tip of the iceberg.
For businesses, these lawsuits can carry weight. While proving the point-of-infection may not be easy, many businesses will experience suits related to workplace conditions. These will likely trigger OSHA audits — which bring actions, penalties, and fines to the table. By preparing today, you can save yourself time, money, headaches, and significant legal issues should your business face a lawsuit due to COVID-19.
Preparing for COVID-19 claims requires cross-collaboration between your HR and legal teams. Employee workers' compensation insurance will cover most COVID-19 claims. Lawmakers are also fighting to have them go to trial. California's Workers' Compensation Insurance Rating Bureau data suggests that up to 15% of workers could end up filing workers' comp claims, costing the system over $33.6 billion over the course of the pandemic. This comes days after California Gov. Gavin Newsom issued an executive order that all remote employees are "on-the-job" regarding COVID-19.
Working through this upcoming avalanche of paperwork will be difficult enough, but trying to understand how to process these claims will be a thorn in business owners' sides — especially smaller businesses without substantial human resources. Pandemic guidelines vary from county to county and state to state. Between the ever-changing CDC advice and the swarm of local legislation, employers are going to be hard-pressed to create the right systems to process all of these new claims.
Even more worrying, data out of China suggests that there's a chance that up to 14% of patients never fully recover. In fact, the WCIRB report specifically mentions permanent disabilities due to the pandemic, which they expect to cost upwards of $100 million. How can you prepare? You and your human resources team will still have to process claims on your end.
To prepare, employers need to focus on the following three things:
Let's start with the biggest pain point, claims administration. You need to have a system to deal with an influx of claims. Interview each employee (in this case, remotely), record all claim details, fill out the claim, and submit the claim all within a specific timeframe. Usually, this process takes around 14 days. Remember, OSHA has filing requirements, your insurer has filing requirements, and there are local, state, and federal filing requirements. So, you need to have a human resources team that's familiar with claims management.
For many smaller businesses, this may be a problem, and there's a good chance you already have your hands full. The average small business owner spends 1 day a week dealing with HR administration and 5 hours per payroll period dealing with payroll. Adding a wave of claims to that workload is probably unfeasible. Add in the fact that improper claims' management brings a host of fines, and dealing with unexpected claims can be a disaster.
The average cost of a workers' comp claim is $40,051. That's a chunk of change! You need to process them correctly. These claims also risk hurting your Experience Modifier (EMR) and rates — both of which can damage your business financially.
What happens when a sizable portion of your team gets sick? Productivity plummets, right? Now imagine what would happen if some of those sick people had to deal with post-virus recovery for a few months before returning to work? Research shows that the longer an employee is out of work, the less likely they are to return. That's a big problem. The average cost to onboard an employee is over $4,000. Plus, it can take new employees up to two years to become fully productive.
This is where return-to-work programs come in handy. By pairing injured employees (or those returning from an illness) with nonprofits or other businesses, you can help them return to work faster. Typically, this involves paying part (or all) of their wages. However, you get to minimize their impact on your comp rates and EMR.
Let's cut to the chase: You may deal with fraud. We all want to believe that our employees would never stoop to workers' compensation fraud, but it happens. The National Insurance Crime Bureau estimates that businesses lose $30 billion to fraudulent workers' compensation claims. Trying to identify fraud while simultaneously dealing with a rush of claims isn't easy. For some businesses, succumbing to the fraud may just be a reality.
Imagine having an outsourced HR partner that could handle all of your workers' compensation responsibilities. Professional Employer Organizations (PEOs) can help with these workers' compensation claims. Instead of hiring expensive HR pros, PEOs completely take over your HR administration. From payroll to compliance, return-to-work programs, and workers' compensation, PEOs provide peace of mind with human resources.
PEOs can handle the influx of workers' compensation claim workloads. They can also handle it all without requiring you to take time away from your business. Business owners should be growing their business, not dealing with a flood of repetitive and labor-intensive workers' comp claim forms. There's a reason that businesses using a PEO grow faster and are less likely to close. PEOs reduce HR pain points for business owners around the country.
Creating the right systems to deal with workers' compensation claims is only half the battle. You still need to implement post-pandemic policies and guidelines to both mitigate legal risk and prevent these types of situations from happening again. Most businesses are in the middle of creating pandemic response guidelines. Gartner suggests that businesses treat pandemics as "an operational risk that must be managed at the highest levels."
You need the right policies in place to both mitigate worker lawsuits and worker illnesses due to pandemics. Chances are, you didn't have a policy addressing that before this. That's ok! Most businesses didn't. However, the recent COVID-19 pandemic has put a spotlight on the need for preparedness. Whether you are a big or small business, you need policies to protect your business.
Again, the right PEO can help your small business. A reputable PEO will have experience navigating the ever-changing legal landscape at both the local and federal level. They can help you implement the right HR strategies and policies to reduce your risk burden. This is incredibly valuable outside of a pandemic, but it's even more relevant now that we've seen the damage that a perfect storm of illness can do to America's workforce.
Businesses are struggling. Between the economic damage of shutdowns and these new waves of workers' compensation claims, we're all in unprecedented territory. PEOs have been helping companies across the country deal with nuanced, local, and fluid regulations for years. A PEO team is well-equipped to not only handle an influx of claims but to create systematic and holistic policies that will pilot your business into the future.