*Steve Tade is with the Winter-Dent Agency in Jefferson City, Mo. Tade specializes in educating owners and management of feed and seed companies, co-ops, fertilizer and implement dealers and others on controlling workers' compensation costs. He grew up on a family farm in Missouri, worked in the family's agriculture and feed supply business and majored in agriculture at the University of Missouri.
EVERY day, hundreds of agricultural workers suffer a lost-work-time injury, and 5% of these injuries result in permanent impairment.
As a matter of fact, 2010 was a record year for grain bin entrapment accidents, and it's a tragic reminder of the dangerous nature of grain bins.
According to Purdue University's Bill Field, who tracks grain bin accidents, there are 35 grain entrapment accidents in the U.S. in a typical year, with the majority being fatal. In 2010, 51 people were injured in grain bin accidents, and 26 of them lost their lives.
According to Field, although there are fewer farmers today, the number of grain bin entrapments is nevertheless increasing because of factors like: more on-farm storage; farmers hanging on to grain longer, which can lead to crusting, and bigger bins, which unload much faster, creating a stronger flow.
The agricultural industry can be a perilous place for workers. Aside from quicksand-like grain, it's an environment where employees constantly encounter mechanisms that chop, cut, grind and slice. It's a dangerous world that nearly took the life of Josh Blankenship, a bin worker in Advance, Mo.
Last December, Blankenship and a co-worker were cleaning an emptied grain bin. A sweep auger was turning and collecting the last of the bin's grain through three holes in the floor. Blankenship stepped back while sweeping, and his left leg went into one of the holes. The auger blades locked on his left leg in four places. They chewed into his upper leg, severed his femur and tore through bone, muscle, nerves and tissue. His foot was nearly severed. Remarkably, through the quick work of medical personnel, Blankenship's leg was saved.
Although Blankenship has not returned to work, he is just one of many employees in this industry who have been injured on the job and collect workers' compensation, costs of which are skyrocketing and affecting employers.
Yes, by nature of the agriculture industry, workers will fall victim to the inherent dangers of their job descriptions, but there are ways agribusiness owners can start to control their costs.
First and foremost, they should start with managing both their on-site injuries and their "experience modification factor" worksheet. (The mod) These two things go hand in hand and directly affect both profit and loss and the cost of employers' workers' compensation insurance.
For example, I recently reviewed the employee injuries listed on an experience mod worksheet for a feed manufacturer in Iowa and then calculated what those injuries were actually costing the company.
For one injury, the insurance company paid out $897, and the experience mod cost the employer an additional $2,150. Simply put, this employer paid the insurance company $2,150 in additional premium because of an $897 claim the insurance company paid on behalf of the injured worker. At the same company, another injury cost the insurance company $1,999 in medical bills and lost wages, but the employer paid back $4,800 in increased premiums because of this insurance payout.
This shows how expenses for employee injuries drive up the experience mod, guaranteeing that the insurance company gets its money back.
Return to work
So, how can business owners manage employee injuries to avoid this financial nightmare? Many states, including Missouri, Illinois, Kansas and Iowa, have in place what is called an "experience rating adjustment." This adjustment allows a 70% reduction from medical expenses paid on behalf of the injured worker if the injured employee comes back to work before the insurance company makes a payment for lost wages (known as an indemnity payment).
With this ruling, if the insurance company pays for lost time, all medical expenses plus the total cost of wages hit the employer's experience mod. If no lost time wages are paid, then the medical expenses that hit the mod are reduced by 70%.
Sometimes, employers are their own worst enemy. Remember the $897 claim? When I discussed it with that employer, he mentioned that the injured employee could have come back to work that afternoon, but instead, the employer let him go home to take some time off, not realizing the financial impact it would have on his workers' compensation costs.
Needless to say, educating employers on the rules of workers' compensation, particularly when it affects their bottom line, should be foremost on any insurance agent's mind.
Each state has different rules on how long an injured employee can be out of work before lost wages kick in. In some states, lost wages begin after the injured employee is out of work for seven consecutive days; other states have different waiting periods.
This is when having a well-thought-out return-to-work program in place is imperative. The only reasons not to bring injured workers back to work immediately are if they are hospitalized, medicated or contagious. However, many employers believe they won't get the full benefit if they have to bring an injured employee back on alternate or transitional duty, so the mindset is to send the injured worker home and let the insurance company pay. In reality, it's the company's money paying the medical bills and lost wages, not the insurance company's.
Let's dig deeper into transitional duty. Transitional duty can be any type of work that's meaningful to the employee. As an employer, you can't bring injured workers back to work and have them "do nothing." The transitional duty does not have to be on the premises.
For instance, the injured employee can work at home on safety issues, maybe watching safety videos. They can even come to the office and answer the phone and file. The end game is to have that worker do meaningful work and prevent the insurance company from making the indemnity payment. The employer should do everything possible to reduce the cost of an injury that affects the experience mod by 70%.
It's important to remember that the experience mod is the heart of each employer's workers' compensation program. Think of it as an injury report card. I often run into employers who feel that because their experience mod is a 1.0, they are in good shape. On the injury report card, though, that's only a C, or "just average." Certainly, employers should strive for better than that.
Employers should calculate the minimum experience mod so they know what dollars are truly at stake in the workers' compensation program and which can be used to grow the business. It's a simple calculation but one that lets business owners know where they stand.
To be at the minimum mod, no employee injuries can appear on the experience mod worksheet over the past three years, further stressing the need to have injured employees return to work as soon as physically possible.
When aluminum processing giant Alcoa hired Paul O'Neill as chief executive officer many years ago, he stunned his first stockholders meeting by saying his top priority wasn't the company's bottom line but tracking lost-time injuries of all employees. Every plant manager had to report every injury to O'Neill within 24 hours of its occurrence. Each Friday, a report of what injuries occurred during the week and what corrective action was planned was sent to the home office and distributed company-wide. Soon, Alcoa became much more profitable.
Alcoa's CEO developed what he called a "keystone habit," which, for O'Neill, was safety. When management gets one keystone habit engrained in employees' minds, other habits change for the better. Every time Alcoa made a safety upgrade, profitability rose because the company operated that more efficiently.
So, what will the keystone habit be for your company?