Handling Time Off & Benefits When a Workers Compensation Claim Happens

Authored by Steve Holden. Published in the Sacramento Business Journal September 2012.

When a workers compensation claim happens it can be a very trying time for the employee and the organization. If you aren’t prepared, it can be stressful, emotional and confusing. If you think that your workers comp carrier is going to handle your injured employee’s claim and you have nothing to worry about, think again! Your carrier is managing the claim from the medical stand point; everything else is up to you. Being prepared and knowing how to handle workers compensation time off or leaves and the employee’s benefits during a claim will aid the organization to hopefully a smooth claim and transition of the employee back to work.

There are two key areas that employers need to manage while the insurance carrier manages the employee’s medical treatment: leaves and benefits. While you manage these areas consideration needs to be given to: your organization’s policies – what is in your handbook or what has been your practice, if you don’t have an employee handbook and what is mandated that you do. Both of these areas will need your attention quickly after the initial claim has been reported and the employee is receiving medical treatment.

Typically the first thing employers will need to address is how to handle time off or a leave once the injured employee has presented a doctor’s note to you requiring he take time off. If the organization has policies on medical or personal leaves of absence, the employee’s leave should be designated as such if he qualifies and the employee notified of this designation(s). Writing it in a letter is the best way to notify the employee and keep a copy for documentation. A clear time line of how long the leave will last should be outlined and what may happen after the leave expires. However, if the organization is a covered employer under the Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA), you will be required to do more than simply notifying the employee of how long the organization’s leave will last.

To determine if the organization is a covered employer and the employee is an eligible employee, you can access the federal regulations at www.dol.gov (compliance assistance, by law, FMLA). Following are some questions as a general guide: Does the organization currently have 50 or more employees, for the last 20 or more calendar weeks, or in the preceding year? Has the employee been employed for at least one year? Has he worked at least 1250 hours in the last 12 months? Is the employee at a worksite within 75 miles of 50 or more other employees? If the answers are yes, then the leave for the employee should be designated as FMLA/CFRA leave. (By designating the employee’s leave as FMLA/CFRA you protect the organization from having to grant additional leaves at a later date for qualified reasons.) The employee must be notified in writing and the rights and responsibilities of both the employee and organization stated. A clear time line of how long the leave will last should be included. It is typically twelve (12) weeks, but may be different depending, if previous leave was taken or it is being used intermittently, as needed. The designation letter in a workers compensation FMLA/CFRA leave should also discuss what may happen if the leave is exhausted before the employee is ready to fully return to work.

If the leave is exhausted or if the employee is not an eligible employee, how much time should you allow? You should refer back the organization’s policies on leaves, first. If the organization has no policies, or prior claims to use as a guideline, think carefully about what you do since this may dictate how future claims are handled. An injured worker may be entitled to as much time as they need in order to recover and the organization may be required to keep the position open. If however, business necessity indicates, you may be able to show that holding the position open would cause an undue hardship on the business – such as if the injured employee is a key employee. Be careful here though, since it will be a judge and jury who will have the last call on whether it really was a business necessity to lay off the injured employee. Notifying the employee that he is a key employee should be noted in the designation letter as well. The designation letter will also contain information on the employee’s benefits while he is on his leave.

How do you handle the benefit question; how long do I keep the employee’s benefits in place? Benefits for injured employees will be continued depending on: your organization’s policies, your health insurance contract and what you are mandated to do based on FMLA/CFRA coverage. First, if your organization’s policies state that health insurance benefits will continue for the duration of the leave, then you should follow your own policies. If you don’t have policies regarding leaves or it isn’t directly stated, you may not be required to continue benefits. Second, if your health insurance contract dictates that employees can only have a 30 day absence before COBRA begins, you need to adhere to that or risk breach of contract with your carrier. Lastly, if the employee’s leave is protected by FMLA/CFRA, group health plan benefits must be maintained on the same basis as coverage would have been, provided the employee had been continuously employed during the FMLA/CFRA period. Any share of group health plan premiums which had been paid by the employee prior to FMLA/CFRA leave must continue to be paid by the employee during the FMLA/CFRA period. This should be outlined and made clear to the employee, in the letter that was sent when the leave was designated. The employer has a number of options for obtaining employee payments: the employee can have payroll deductions just as they did, if the leave is paid, the employee can make payments to the employer at the same time the deductions would normally occur – per pay period, monthly, etc. or at the same time the COBRA payments are due or lastly, prepay the amount through a cafeteria plan. If the employee misses payments or is 30 days or more late on payments, advanced written notice must be given to the employee at least 15 days before cancelling coverage and the employee be given 15 days to make payments before cancellation occurs. Coverage for the employee may be terminated at the end of the 30-day grace period, where the required written notice has been provided. The employer will have to reinstate the employee upon his return to work without regard to waiting periods or pre-existing conditions. If the employee fails to return to work after the leave has expired and the employee quits, the employer may be able to recover the cost of the benefits while the employee was on leave. That however, is a whole other topic for discussion at a later date. For now, being prepared for and knowing how to handle benefits and leaves for an injured worker are all that will be discussed.

Being aware of what your responsibilities are and being prepared as an employer is the key to a smooth claim and transition back to an efficient working employee. When a workers compensation claim happens it can be a very trying time for the employee and the organization. But, it doesn’t have to be yourself and the employee and know what to do before you need to do it. You will eliminate allot of stress, emotion and confusion.