A case study in HR innovation

A look at a revenue-generating solution to long-term workers’ compensation claims

Managing a long-term worker’s compensation claim, where an employee is restricted from completing her pre-injury duties, is often a challenging and costly endeavour.

Employers are often faced with two undesirable options: 1) offer the injured employee modified work that is non-revenue-generating and increases unproductive wage costs or 2) place the employee on an open claim, with no modified duties, and wait for the experience rating to be impacted — likely driving up future premiums.

Although this may be a broad and simplistic summary, it represents the reality for many employers dealing with long-term claims. Human resources and business leaders are often forced to choose between the lesser of these two evils when it comes to managing long-term claims.

In fact, there is a third option that can lead to reduced claim costs, reduced employer premiums, a faster return to work for the injured employee and even an additional revenue stream to the corporate HR department.

By choosing to view a long-term worker’s compensation claims as opportunities to exhibit an innovative problem-solving strategy, organizations can turn these challenging situations into significant organization successes.

In certain situations, employers can place an injured employee in a position with another organization and generate revenue from his work. This does not require the employee to begin working for a different employer.

Rather, his employer enters into a business-to-business relationship with another organization where it charges for the injured employee’s output as a service.

As such, the employer generates revenue to offset (or fund) the unproductive wages associated with the employee’s modified duties. As a result, the employer can provide the injured worker with long-term modified duties without having to incur unproductive wage costs or, at least, reducing the total amount of unproductive wage costs.

This creates a financially sustainable, long-term worker’s compensation claim management solution.

Furthermore, provided the modified work meets the applicable test for reasonableness, if the injured employee refuses the modified duties, she would be ineligible for wage-loss benefits because she is refusing reasonable modified work. This would disqualify the injured employee from receiving wage-loss benefits, which would help reduce total claim costs.

Although this situation may sound too good to be true, it can work (and has worked) for employers that have been willing to pursue this strategy.

Case study: Professional truck driver

A truck driver was on a long-term worker’s compensation claim for post-traumatic stress disorder (PTSD) following a workplace accident. He was restricted from working in a truck indefinitely. There were no other revenue-generating positions or duties for the employee. He was relatively co-operative and engaged in the modified duties process. The employer was highly cost-conscious as it operated in a low-margin industry.

The employer paid for the employee to become licensed as a security guard; the employer paid for the courses, exam and licensing fee. Working as a security guard was in line with the employee’s medical restrictions. The employer contacted organizations that were recruiting for security guards on Internet job boards to propose the injured employee perform security work in a business-to-business capacity.

Eventually, the employer connected with an organization that was open to this arrangement: Company A. The employer’s HR generalist attended the injured employee’s interview with Company A. With Company A interested in having the injured employee perform security work there, the HR generalist negotiated the employee’s bill rate.

The employee was presented with a formal offer for modified duties as a security guard for Company A, which he accepted. The placement lasted about four months.

Eventually, the employee was cleared to return to his regular duties as a truck driver and he returned to his pre-injury duties. And the employer suspects the placement at Company A acted as an added motivator for the employee to return to his pre-injury duties.

Key outcomes

This kind of approach provides three key outcomes:

Reduction in unproductive wage costs: Throughout this placement, the employer paid the employee his regular wage of $21 per hour and generated $15 per hour in revenue for his services as a security guard. Therefore, the employer’s unproductive wage costs dropped from $21 per hour to $6 per hour.

Workload reduction for HR team: During the four-month placement, the HR generalist who managed the claim in question saw a significant reduction in the hours required to manage the claim. Rather than scramble every afternoon to plan the following day’s modified duties, the employee was placed on a set schedule at Company A, with defined hours and a clear expectation of work. Company A took on the majority of the work involved in managing the modified duties for this claim.

Employer obligations met: By implementing this strategy, the employer met its obligations under the provincial workers’ compensation legislation to participate in the return-to-work process. The employer also met its obligation to accommodate the employee’s medical restrictions under the applicable human rights legislation.

It should be noted that a director at the provincial workers’ compensation board confirmed the following three points regarding this use of this strategy — provided the new work is deemed reasonable, meaningful and safe within the context of the individual claim:

• Is it an acceptable practice for an employer to assign work to an employee on a worker’s compensation claim that is significantly different from her normal job functions.

• It is an acceptable practice for an employer to assign work to an employee on a worker’s compensation claim that generates revenue for the employer, even if the revenue being generated is not from the employee’s normal job functions.

• It is an acceptable practice for an employer to assign work to an employee on a worker’s compensation claim that involves the employee working at a job site of the employer’s customer or at the employee’s home.

The solution will not be applicable to all workers’ compensation claims. Furthermore, there are a number of challenges involved in the execution this strategy, including: finding an organization that is open to this arrangement; obtaining the case manager’s approval for the revenue-generating modified work; and getting the injured employee to co-operate in the process.

However, when this strategy is successfully used, it is a remarkable example of human resources operating as a strategic business partner by implementing an
innovative solution to a business problem that directly impacts the bottom line. By
thinking outside the box and pushing the traditionally accepted boundaries of the workers’ compensation framework, HR can demonstrate its value to the organization.

HR departments do not need to be cost centres exclusively — this is a faulty assumption. It requires innovation and creativity, but generating revenue through the HR department is possible and, as identified in the case study, can solve some major business challenges at the same time.

Jason Fleming is director of human resources at MedReleaf in Markham, Ont., a licensed producer and distributor of medical cannabis. He can be reached at [email protected]

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