Worker’s compensation is basically a percentage of payroll costs for every American business. When workers comp fraud occurs, it causes the costs to go up for everyone involved. While there are multiple types of workers comp fraud, most occurrences will fit into 2 categories.
Most workers comp fraud is either claims-related or policy related, but it all has a negative impact on worker’s compensation premiums for businesses. Business owners and insurance agents often struggle to keep premiums affordable, implementing safety programs and taking other necessary precautions.
There are a few additional steps business owners can take to combat workers comp fraud and keep premiums affordable.
Vigorously Maintain Authentic Records
Since a business’s payroll costs directly impact workers’ compensation premiums, it is essential that business owners maintain true and correct payroll records. The size of a business’s payroll is used to determine workers’ compensation premiums, and accurate records are paramount.
It is also vital that employees are properly classified by employers so that the correct premiums are paid. Sometimes employers inadvertently misclassify workers and pay an incorrect premium. Although the act is not committed on purpose, it is still considered workers comp fraud. If the act is unintentional, then fines may be levied against the business, but intentional acts may result in jail time.
Refuse Lenience to Fraud Perpetrators
Workers comp fraud negatively impacts the perpetrators standing with a company, their job, and the business’s premiums. As employers clearly establish safety policies and procedures with workers, they should also communicate the company’s standards and principles. Employers are required to distribute worker’s compensation information upon hire, and they should also include anti-fraud protocols, which they outline with every worker.
Conduct Background Checks for Higher Standards
Background checks should be standard for all new hires, but they aren’t only for employees. It takes a lot of outside help to run a business and unfortunately not everyone has high ethical standards. Background checks give you a lot of information about the people you work with. Employers should conduct a background check on anyone they may potentially work with, including insurance agents, outside consultants, and even partners. Working with people with high ethical standards reduces the chances of workers comp fraud.
Establish Various Reporting Channels
Employees should feel safe reporting potential fraud or suspicious actions. Establishing multiple reporting channels gives employees several safe ways to communicate concerns about workers’ comp fraud and helps reinforce the company’s anti-fraud protocols. Employees should feel comfortable reporting workers’ comp fraud without fear of retaliation. Establishing multiple reporting channels communicates support for reporting suspicious actions.
Combat Workers Comp Fraud to Keep Premiums Low
Workers comp fraud hurts everyone. The entire system is engineered to create a safe work environment for employees and protect employers from frivolous lawsuits by workers who have been injured on the job. When business owners take the steps necessary to protect the system from workers comp fraud, it helps keep premiums low for everyone. Maintain authentic records, refuse lenience to fraud perpetrators, conduct background checks, and establish multiple safe reporting channels for employees. This is the best way to reinforce anti-fraud protocols and combat workers comp fraud for everyone.