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What Employers Need to Know About Workers’ Compensation

By Contributor
Insurance

Avoiding a World of Hurt

By Encharter Insurance

 

If you are an employer in Massachusetts with one or more employees, workers’ compensation is a mandatory business-insurance coverage. An employer may be an individual, a partnership, a corporation, or any other form of ownership that has employees. Failure to carry workers’ compensation coverage can result in an immediate stop work order and fines for every day that no coverage was available.

Besides being the law, here’s why you need it: workers’ compensation is essentially a no-fault system designed to protect both employers and employees should a workplace injury or illness occur. Your workers’ comp insurance policy would cover payment for medical care related to the employee’s injury, and would pay wage-replacement benefits, also called indemnity payments. In exchange for these benefits, workers’ comp, rather than the courtroom, becomes the employee’s exclusive remedy.

Individual states have jurisdiction over their own systems, so specific regulations and benefits vary by state. In Massachusetts, the Department of Industrial Accidents (DIA) manages the workers’ compensation system, adjudicating any disputes or appeals that arise. Meanwhile, the Massachusetts Workers Compensation Rating and Inspection Bureau sets rates.

 

How Is Coverage Obtained?

Most employers secure their workers’ compensation from an insurance agent. Large employers sometimes self-insure but must pass several regulatory gating issues to qualify for self-insurance.

If two or more insurance companies decline to insure your organization, you may have to seek coverage in the Massachusetts residual market, also known as an assigned risk pool.

Workers’ compensation insurance can be canceled by the insurance company, but only for the reasons of non-payment of premium, fraud or material misrepresentation, or a substantial increase in the hazard being insured. Your insurance company would need to notify you of cancellation with 10 days written notice.

 

How Are Rates Set?

The cost of the insurance is based on anticipated loss experience and is comprised of two basic components.

Under manual premium, the cost for your workers’ compensation policy is determined by your payroll and the classification of the work your employees do. The riskier the work, the higher the rate for the class code. There are thousands of class codes set by the Workers Compensation Rating & Inspection Bureau (WCRIB) in Massachusetts.

Under modified premium, once you have purchased workers’ compensation for two years, if the sum of the premiums for two years is $11,000 or more, your policy will be subject to experience rating. Manual premium is multiplied by an experience rating factor (or ‘e-mod’) reflecting your specific organization’s loss history. Much like the experience rating system used by many states to develop auto insurance rates, a bad year will impact an employer for years to come, as three prior years’ experience are used to develop a workers’ compensation e-mod.

 

What Benefits Does Workers’ Comp Provide to an Injured Worker?

Workers’ compensation coverage provides unlimited medical expenses, lost wages (also referred to as wage replacement or indemnity), rehabilitation expenses, and dependent and funeral expenses up to a state’s limits

The amount and duration of wage replacement and medical benefits varies based on each state’s law. Generally, the injured worker faces no out-of-pocket medical costs.

 

What Are Your Responsibilities as an Employer?

• Obtain workers’ compensation insurance coverage. Failure to carry coverage can result in stop-work orders and daily fines for the uncovered duration.

• Show proof of that coverage by posting notice in a public and visible place that all employees use.

• Provide a safe workplace, as required by OSHA.

• If an employee is injured, send them for medical care. In Massachusetts, you have the option to choose the physician for the first appointment.

• Report a medical-only injury (one with no anticipated lost time) to your insurer.

• Report a workplace injury with five or more days of absence, or a death, to the Massachusetts Division of Insurance.

 

What Are Some Best Practices to
Minimize Costs?

You can lower your workers’ comp costs by working to the lowest possible e-mod. There are two variables that you should work to control: the frequency of injuries, or how many work-related incidents occur; and the severity of workplace injuries, or the duration of time away from work. Here are best practices to help control both and to help you attain the lowest possible experience e-mod:

• Maintain a safe and healthy workplace. The least costly injuries are the ones that never happen. Control frequency by setting the expectation for an injury-free workplace, training employees to work safely, requiring personal protective equipment, and conducting periodic walk-through audits. Your insurance company can often provide safety resources.

• Have a plan for point-of-injury response. A quick, caring, non-judgmental response to a work injury will help to set the trajectory for a positive outcome for all. Ensure that employees and managers know what to do if an injury occurs. Escort the injured worker to medical treatment.

• Partner with a nearby occupational doctor or medical clinic. Massachusetts allows employers to choose the first medical contact. Choose a top-quality physician or a clinic experienced in workplace injuries. Your insurance company may have a good network.

• Report injuries to your insurer in a timely manner. Early reporting is extremely important — numerous studies have demonstrated that the sooner injuries are reported, the better the outcome. Aim for same-day reporting.

• Prepare for return to work. It’s important to get employees back to work and on the team as soon as possible to help prevent disability syndrome. Plan for a transitional or modified job duties to help the employ re-acclimate and work-harden to their regular job.

Violations of State, Federal Wage-and-hour Laws Can Prove Costly

By Contributor
Law Special Coverage

Common Compensation Blunders

By John Gannon, Esq.

Wage-and hour-compliance is never easy for businesses, and a recent decision from the Massachusetts Supreme Judicial Court (SJC) just made things harder.

In ˆ, No. SJC-13121 (Mass. April 4, 2022), the Massachusetts Supreme Judicial Court (“SJC”) ruled that paying employees late is equivalent to not paying at all. This means employees are entitled to triple damages if they are not paid on time, because under the Massachusetts Wage Act, employers who fail to pay wages are liable for three times the unpaid wage amount (treble damages). With that case in mind, here are a few common compensation mistakes employers should avoid to ensure solid wage and hour compliance.

Failure to pay wages on time: The Massachusetts Wage Act requires employers to pay all wages, including any accrued, unused vacation time, to employees who are terminated on their last day of work. For employees who voluntarily resign, all wages are due on or before the next regularly scheduled pay date.

Too often, employers pay final wages a day or a week too late. This is especially common with unpaid commissions. The problem here is that under the Reuter v. City of Methuen case, those wages are not paid on time. Therefore, the employee is due triple damages under the Wage Act.

This is what happened to the City of Methuen; the city paid an employee her final paycheck of about $9,000 (including unused vacation time) about three weeks late. The court ruled that the employee was due almost $30,000 because the city paid the employee a few weeks late. Professional tip: Don’t make this same mistake. Make sure employees who are separated from work are paid all wages on their last day of work. If the final check is not ready the day you need to let someone go, have a process in place to suspend the employee while you work out cutting the final paycheck.

Misclassifying employees as independent contractors: It can be tempting to “contract” with an individual to provide services that are similar to what your employees do. This relationship has tax advantages, no need to worry about leave laws and other employment regulations, and a perceived sense of freedom to easily terminate the relationship if it does not work out.

“The Massachusetts Wage Act requires employers to pay all wages, including any accrued, unused vacation time, to employees who are terminated on their last day of work. For employees who voluntarily resign, all wages are due on or before the next regularly scheduled pay date.”

The problem is that classifying individuals as independent contractors (“I/C”) in this situation can be risky. This is because the I/C classification may violate the Massachusetts Independent Contractor statute, which requires workers to be classified as employees, not I/Cs, when the work being performed is similar to that of other employees.

The Massachusetts Independent Contractor statute also requires true contractors to: (1) be free from control and direction from the business (meaning, the contractors sets their own hours and performance standards); and (2) have their own independently established profession or business (meaning, the contractor has their own LLC, PC, or other established business entity). Even where an individual agrees to be classified as an independent contractor and paid via a1099, businesses run a risk of violating the Massachusetts Independent Contractor if all of the above-mentioned factors are not satisfied.

Travel time troubles: Both Massachusetts and federal law require employers to pay employees for non-commuting travel time during the day. This is commonly referred to as intraday travel. Here is the example provided by the federal Department of Labor: Barbara is a personal care aide providing assistance to Mr. Jones. Barbara drives him to the Post Office and grocery store during the workday. Barbara is working and the travel time must be paid.

What employers in Massachusetts might not know is that under state law you also have to reimburse Barbara for all “associated transportation expenses.” This means you need to pay her for costs like mileage, tolls, and parking (if applicable). It is unclear what employers have to pay for mileage, but the safe bet is paying in accordance with the IRS standard mileage rate, which is currently 58.5 cents per mile.

Meal break miscues: Massachusetts law requires employers to provide a 30-minute meal break to employees when they work more than six hours in a day. The break does not need to be paid; however, if an employee does any work during an unpaid break, the employee needs to be compensated for their time. This could be as little as answering a work-related phone call or making a few copies on the copy machine during a break.

Meal break time may be used by employees for activities other than eating, such as running an errand or taking a walk outside. The key here is that if the meal break is unpaid, workers must be allowed to use the time as they choose, including leaving the building/work premises.

Illegal deductions from pay: When it comes to paychecks, the general rule is that employers cannot make any deductions, with a few exceptions. Some deductions are federal or state mandated, such as any deductions for taxes or child support. Other deductions are consented to by employees, including money put toward insurance premiums and retirement benefits. Other than that, employers should not be deducting money from paychecks under almost any circumstances.

One common scenario where employers want to make a deduction is a situation involving a wage overpayment. In this case, a deduction might be ok if: (1) the employee agrees in writing to the overpayment and deduction; and (2) the deduction does not bring the employee’s earnings below minimum wage. Be sure to check in with employment counsel before making a deduction for an overpayment though, as it does have some potential risk. Also, be sure to never make deductions associated with damaging or failure to return company property (such as a cell phone or laptop). This is not allowed in any circumstances, and can lead to triple damages under the Massachusetts Wage Act.

 

John Gannon is a partner with the Springfield-based law firm of Skoler, Abbott & Presser, specializing in employment law and regularly counseling employers on compliance with state and federal laws, including the Americans with Disabilities Act, the Fair Labor Standards Act, and the Occupational Health and Safety Act; (413) 737-4753; [email protected].

Take a Personal Learning Inventory

By
Opinion

Opinion

By Michelle Desaulniers

 

Most everyone has been a passenger on an airplane and heard the safety talk. Very often, the ‘put your own mask on first before helping others’ analogy is used to remind people, in myriad situations, that it is OK — in fact, it is preferable — to practice self-care.

Most of us push self-care and everything that goes along with that notion to the bottom of our to-do list — and we just keep on flying. But what if, at the beginning of 2022, you decided to put yourself and your career first? Start this new year on a different note by taking a personal learning inventory.

At the Employers Assoc. of the NorthEast (EANE), we are challenging our members to bring their personal development to the number-one position on their to-do list for 2022 by asking themselves these questions:

• How will you make next year count?

• What will you do to take your career to a new level?

• How will you challenge yourself in 2022?

What will it take to get you into a personal growth mindset? Start by thinking about the last time you took a class, attended a training session, or went to a conference. Remember that feeling of accomplishment, the renewed sense of purpose and engagement that you felt afterwards? It was great connecting with peers outside of your organization and sharing ideas, wasn’t it? Wouldn’t you like to feel that again and really get into that forward-thinking growth mindset?

EANE offers a variety of formal opportunities and options to refresh your attitude and to add substance to your learning inventory. The coming year should be punctuated with your own personal learning events that will enable you to return to your daily challenges feeling refreshed, re-energized, and ready to tackle those challenges with a new outlook and armed with freshly minted skills. Not only do you owe it to yourself, but you owe it to your co-workers. They will see your example, and they will follow it.

No doubt everyone is feeling the weight of the world lately, and no one wants to poke their head up for fear of flying objects. But allowing your professional growth to stagnate for yet another year is like putting someone else’s mask on before your own. On an airplane — and in your career — that could lead to disaster.

 

Michelle Desaulniers is a member of the Learning & Development team at EANE.

PeoplesBank Named Best Place to Work, Best Local Bank, Best Mortgage Lender 

By
Daily News

HOLYOKE — Tens of thousands of voters in recent consumer polls have named PeoplesBank a winner in several categories.

PeoplesBank, the largest community bank employer headquartered in Western Mass., was a second-time winner of the Best Place to Work in one area poll.

“We are a strong work family with goals and values,” explained Christine Phillips, First Vice President, Human Resources at PeoplesBank. “Making sure our associates’ professional and personal needs are met, that’s what being a family is all about. We value them, the work that they do, and this award would not be possible without them.”

With 21 offices, including its new Ludlow office, which will open in October, another area poll named the bank  Best Local Bank for the eighth time.

“It’s not enough for us just to operate here, we are a part of the community and a part of what makes our local community vibrant and successful,” Jacqueline Charron, Senior Vice President & Chief Risk Officer at PeoplesBank. “I’m out in the community at the grocery store, and people stop me to say ‘you’re from PeoplesBank’ and it’s a great feeling for someone to say that…it really makes you proud to work here.”

Also, innovative services like mobile banking and a complete, contactless mortgage application process earned PeoplesBank the Best Mortgage Lender for the ninth time in that same poll.

Nadine Maggi, Consumer Lending Operations Manager at PeoplesBank commented, “I think it’s our focus on service and our commitment to the community. Our mortgage lenders are out doing first time home buyer seminars. We have a digital mortgage process, so if a customer wants to work with a mortgage lender they can or they can go online to their own personalized portal. At the end, they close faster, and we do what we can for the customer because it’s all about them.”

Talent Acquisition, Retention Still Top Concerns Among Employers

By
Employment

Playing the Numbers

While there is some general optimism to be found in the results of the latest Employer Associations of America National Business Trends Survey, especially when it comes to projected revenues and plans for additional hiring, the twin challenges of attaining and then retaining top talent loom large in today’s business climate.

Mark Adams said he was somewhat surprised by some of the responses in the recently released Employer Associations of America National Business Trends Survey.

For example, he thought more businesses would list paying heightened benefits costs as a serious challenge given recent additions such as paid family and medical leave, part of the state’s so-called grand bargain; 28% listed it as a considerable challenge in the short term and 44% in the long term, and Adams, director of HR Services at the Employers Assoc. of the NorthEast (EANE), thought both numbers would be higher.

The same with employers’ ability to pay competitive wages at a time when the minimum wage is going up, pay equity is now the law, and employers in several fields, especially manufacturing, are waging a pitched battle for top talent. Only 34% listed it as short-term challenge, and 43% a long-term challenge.

“With the rise in the pay-equity legislation, I thought there was going to be concern about how businesses could stay on that trajectory,” he explained, “especially when to get into compliance with some of that requires making some unilateral adjustments in pay ranges and scales.”

Mark Adams

In this challenging environment, Mark Adams says, employers trying to attract and retain talent must look beyond traditional benefits.

But what stands out in the recent report, which involved 1,200 business executives in all 50 states, isn’t what’s mildly surprising — it’s what’s not at all surprising.

Specifically, it’s that talent acquisition and talent retention top the list of serious challenges, again. Or ‘still,’ to be more precise.

It has been a challenge for some time as unemployment rates have fallen and Baby Boomers have begun retiring in significant numbers, said Adams, adding that, even as signs of the economy cooling off grow in number, finding qualified workers remains problem number one for businesses across virtually all sectors.

“Increasingly, when it comes to what it takes to be attractive to a potential candidate today, it’s not just going to be wages and benefits.”

And what employers are realizing is that, to address the challenge properly, they need to focus on more than the many facets of compensation — although those are certainly important factors — especially when it comes to the Millennial generation.

“Increasingly, when it comes to what it takes to be attractive to a potential candidate today, it’s not just going to be wages and benefits,” said Adams. “It’s going to be how a company looks culturally and how a company looks in terms of its reputation, and all this starts at the top.

“To many, especially Millennials, culture is as important as what they make,” he went on, adding that it is incumbent upon top management to put a company in the best position possible, not only when it comes to recruiting talent, but within the community.

Employer Associations of America National Business Trends Survey

As for exactly what Millennials are looking for (if not demanding), which has become the $64,000 question in business today, Adams said it varies with the individual, obviously, but what most want is a “personalized experience” in the workplace.

“They want to have more control over their career development and their career paths — they want paths that are personalized to them,” he went on. “And this gets into everything from how work is structured to how teams are formed … you’re not necessarily doing the same job day in and day out, and you might be working with different people on different projects at different times.”

For this issue and its focus on employment, BusinessWest goes beyond the numbers in the latest National Business Trends Survey for a deeper dive into the ongoing challenges of talent acquisition and retention, and what employers must do to address them.

Hire Power

But first, the survey results.

They show a decent amount of optimism, said Adams, adding that the amount expressed is likely a function of the timing of the survey — last fall, before the stock market began a significant tailspin that culminated in its worst Christmas Eve in 90 years (it has obviously bounced back since) and far greater use of the dreaded ‘R’ word (recession) among economists.

Indeed, 60% of those surveyed expect the overall outlook for 2019 to be roughly the same as 2018, and nearly a third (28%) expect things to be better. Meanwhile, 73% of those polled project slight to significant increases in sales and or revenues, and 57% of the executives surveyed plan to increase staff in 2019, while another 36% plan to maintain 2018 staff levels during 2019.

Overall, 92% of the respondents said they will be replacing staff due to voluntary turnover, and 77% said their hiring will be to fill newly created jobs.

“Timing is everything when it comes to these surveys,” said Adams, referring to how the numbers might be different if the polling was done a few months later. “But at the roundtables that I chair, when I put those specific issues as agenda items and say, ‘has anything given you pause to take a step back and reassess what your projections were for 2019?’ most said the answer is ‘no.’”

Meanwhile, when it comes to hiring, most employers are still looking to hire into their own payrolls, rather than using temporary help, due to rising benefits costs and other factors, said Adams, which is still another positive indicator when it comes to the overall confidence level among area employers.

But while those numbers — and those answers at EANE’s roundtables — are encouraging, the harsh reality is that many employers will face a steep challenge as they go about filling these positions, said Adams — and for many reasons.

Part of the problem is simply a lack of talent, an issue in many fields, especially manufacturing, a sector with a proud history in this region but one that has struggled mightily to attract young people in recent decades.

But another component of the challenge is attracting those who do have the talent to your company, he went on, swinging the discussion back to that concept of culture, Millennials, and how employers have to be focused on much more than salary and benefits.

But when they do focus on benefits, they should do so with an eye on being innovative, said Adams.

“It’s not enough anymore to offer health and retirement, and, yes, paid time off is always an issue, and they’re looking for more of that than ever before,” he noted. “It’s about being innovative and perhaps helping them with their student-loan challenges and things of that nature.

“They want to be well-compensated, but they’re really looking for benefits in a working arrangement that allows them to achieve more flexibility and more of a personal allocation of their time in the workplace that meets their needs,” he went on, adding that many companies are not responding quickly or profoundly enough to these relatively new wants and needs, and this goes a long way toward explaining why they are struggling to not only attract but also retain talent.

But he acknowledged that responding isn’t easy, and it involves looking beyond the traditional when it comes to everything from benefits to schedules to the overall culture of the company.

“It comes down to how much companies are willing to change how they do business to meet those needs,” he told BusinessWest. “Companies have these traditional schedules and shifts, and are today’s young people going to want to work on those timetables?” he asked rhetorically. “Or do we need to adapt to what they’re looking for?”

“It means looking at your business model down to the core,” he continued, “and not just say, ‘OK, we’ll add a couple of extra personal days or change our health plan design or change the matching on our 401(k).’ If you’re talking about changing culture and providing innovative benefits, and changing scheduling to make things more flexible, it means going much deeper than that, and that’s a challenge for some companies.”

Raising the Stakes

Indeed it is, but as the latest National Business Trends Survey reveals, finding and retaining talent is the most pressing issue confronting employers today, and will be for the foreseeable future.

Behind those numbers, Adams explained, lies a need for businesses to dig deep, be innovative, and look not at what’s worked in the past, but at what is likely to work today and in the future.

That’s the only way those numbers are going to change.

George O’Brien can be reached at [email protected]

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