We’ve seen it. We’ve certainly heard it before. Perhaps some of your employees have thought of it. “If only I could get hurt, or better yet, fake an injury, to collect workers compensation and not have to actually work.” What a leisured, stress-free life that would be, right!?
As an employer, this type of attitude from your employees is enough to make your blood boil. The typical employee does not understand the costs associated with workers compensation insurance. It’s one of those grueling expenses an employer has when it comes to payroll taxes and benefits. Some employees are all too naive as to where this “magical money” comes from. If only they knew better. Perhaps we’d see a decline in exaggerated claims, where the employee exaggerates the severity of the injury to collect more. Perhaps we’d see a decline in employees working other jobs while collecting work comp benefits. Perhaps we’d see a decline in false claims, whereas the injury never even occurred.
But what about you, the employer? Or better yet, what about your commercial insurance agent? What kind of ploys are you doing to work the system? While those devious employees have their own ways, are you so sure that you’re playing by the rules? I’m talking about policy-related fraud. While the word “fraud” can seem severe and harsh, the truth is that it can relate to the following three scenarios involving the employer and/or the agent:
Under-reporting Payroll
Defined as, inaccurate reporting of payroll to your insurance company, paying employees off the books or the notorious hiring of an “independent contractor.”
Misclassification of Employees
“Why can’t we just put our machine metal stamper (or construction laborer, landscaper, etc) under the clerical class code?” Putting a high-risk employee in a low-risk classification willingly may seem like a good idea, it’s not.
Experience Modification Evasion
Companies that decide to start a “new” company for a fresh experience mod. This is seen with companies that have higher loss history. On paper, they are a new company. Off paper, operations remain unchanged and it’s business as usual. A clean slate! Think again.
If any of the above-mentioned are ringing a bell, don’t be alarmed. It occurs within businesses all over this great nation. Is the employer always to blame? Not so much. What about your “trusted” advisor, your insurance agent? Is this one of his or her games used strictly to earn or keep your business? Unfortunately, these are the industry professionals that abuse the game and contribute to giving the industry a bad rep. Believe me, we could use less of that.
So, the next time your workers compensation insurance comes up for review, keep in mind that fraudulent activity is constantly looming and surrounding us. Do the right thing. Avoid them. What can you do? Work with a reputable agent, one that carries a clear moral compass. Work with an agent that works for YOU.
