Your client comes to you with two new slip and fall cases. One is a slip on the factory floor, and the other is a slip and fall in the parking lot. It seems straightforward, right? You’ve got two covered workers who fell at work.
Well, not so fast. Not every incident that happens at your clients’ business is work-related. And work-relatedness is critical to the validity of every single claim. If it’s not work-related, then the insurer doesn’t need to fund the claim.
As a broker, you want to encourage insureds to get the most from their policy and avoid getting wrapped up in workers comp fraud. So, you should know what does and doesn’t count as a work-related injury so you can guide clients through the claims process.
Let’s dive into this complex topic.
Workers comp is a no-fault system relying on the concept of work-relatedness. The basic premise: if an employee gets hurt at work, then their employers’ workers compensation policy covers their treatment, recovery, and missed paychecks (after a period passes).
Work-related injuries and illnesses happen in a work environment, but work-relatedness isn’t as simple as if an employee is on the premises.
Four factors come into play when determining whether a worker and their injury fall under the policy umbrella. These include whether the worker was:
Let’s break these down one by one.
The first hurdle in work-relatedness is payroll. Payroll employees qualify for workers compensation claims; volunteers typically do not.
In today’s world, there are fewer payroll employees than ever. Independent contractors made up 6.9% of all employment in May 2017. And the number of people on contracts or working in the ‘gig economy’ continues to grow every year. So, what does the payroll rule mean for them?
Your client’s policy may cover subcontractors if the subcontractor doesn’t have insurance and if they’re under the direct control of your client.
We see the subcontractor issue pops up across the economy, particularly among our construction partners, who rely on subcontractors to complete projects. However, the subcontractor issue also rears its head in unexpected ways that you and your clients should prepare to tackle
Here’s a great example. A restaurant hires Friday and Saturday night singers to draw bigger crowds. Because they need them one night a week and many singers and bands are self-employed, your client will typically employ them on a 1099 basis as an independent contractor — no muss, no fuss.
However, if the restaurant pays an entertainer on a 1099 and controls the entertainer’s movements, the restaurant may need to provide cover if the entertainer gets hurt.
So, suppose the restaurant requires the entertainer to leave the stage and walk around the restaurant while playing music, and the entertainer slips in a spilled drink and falls. In that case, the entertainer could have a work-related injury and a claim on your client’s workers comp policy.
Broker Tip: If your clients operate in a safety-critical vertical, you should help them understand what subcontractors fall under their policy umbrella. Better yet: encourage all your clients to work only with other contractors who can prove they have their own workers compensation insurance.
Once your client determines whether the injured party qualifies for coverage, clients need to consider when the accident happened.
In most cases, the employee needs to be on the clock when the accident occurs. Commuting from home to work doesn’t count. However, driving from one work location to another during working hours does count.
The bottom line: if an employee is on the clock, then their injury usually counts as work-related.
Keep in mind that an employee being off-the-clock won’t always disqualify them from a claim. An incident may still be work-related if they’re on-site or on employer time, which leads us to qualifier number three.
Not all injuries happen during shifts. In some states, work-relatedness also applies to employer events or employer direction.
Most of the time, you’ll find it applies to sponsored activities where the employer expected the employee to attend. A company softball game or a team-building rope course activity can count towards work-relatedness in those states.
But running errands, traveling for a meeting, and generally following an employers’ directions can also count even if the worker has yet to punch their card.
So, your client has a payroll employee who was off the clock when the incident happened. Is it still work-related?
Work-relatedness includes more than the immediate area where the employee’s work happens and whether they were at their work station. Work-relatedness also includes other spaces under employers’ control, including parking lots, stairwells, and occasionally in break rooms or canteens.
In this way, a work-related injury can occur even off-the-clock if it happens in the parking lot. For example, if an employee slips on a big patch of ice outside the building’s front door on their way to clock in, they can potentially file a claim.
Not every accident will be work-related, even if the worker is a salaried employee who is on-the-clock and on the shop floor. Work-relatedness focuses heavily on the ordinary course of work, which assumes everyone was doing what they were supposed to — or at least trying to.
Some states won’t cover injuries that occur as a result of rule-breaking or serious violations. Here’s a quick example: a worker forgets the LOTO policy because they are intoxicated at work. They get hurt, but their injury may not be work-related because the employee egregiously violated workplace rules.
Fighting and horseplay usually aren’t covered either. Workers comp covers the normal course of work — and there’s no fighting at work unless you’re Conor McGregor.
However, these exceptions don’t always extend to all employee misconduct.
If an employee gets hurt because they violated the safety program guidelines, they still likely have a work-related claim. It’s up to the employer — not the employee — to provide a safe space to work. If they violated the safety policy intending to cause a self-inflicted injury, their injury wouldn’t be work-related.
Similarly, an employee who drives to their workers comp doctor and smashes their knee with a hammer in the parking lot will see their claim swiftly denied.
Keep in mind that non-work-related injuries may not be compensable, but clients may still pay benefits for disability or leave under FMLA. So, it’s essential not to disregard non-work-related injuries/illnesses altogether. Plus, your clients may still need to log these injuries on their OSHA 300 form, even if they’re not compensable.
Check out our guide on the difference between OSHA-recordable vs. workers compensation compensable for more info.
Work-relatedness determinations occur via investigation. The initial investigation begins with the insured, and ideally with their safety or risk management team. You can help them complete the work by providing them with this checklist or running through the list when consulting with them on their claim.
The checklist is a simple way of gathering all the information you need to make a preliminary determination. Be aware that the insurer will make its determination based on the information provided and potentially through further evidence-gathering and investigation.
Broker Tip: Often, clients run into scenarios where an injury looks work-related, but one piece of information puts their final determination into question. If the injury is very likely work-related, it is better to file a claim and see it denied than not to file the claim at all. Failing to file legitimate claims only creates chaos, so it is better to allow the insurer to make the final call.
Want a copy of the checklist to keep at hand? We have it for you in PDF format! Print it off and refer to it as needed.
According to OSHA, the most common workplace injuries with the highest incident rates per 100,000 workers include
Grab more insightful workers compensation statistics in our 2020 Workers Compensation Statistics Guide.
Common injuries like these are often cut-and-dry, especially if all the incident meets all the work-relatedness conditions. If a factory worker gets electrocuted in an accident while working on a job site, it’s work-related. If a construction worker suffers a hand laceration because a machine malfunctioned, it’s work-related.
Someone often saw a sprain, cut, or fracture happen in real-time, so the evidence is clear.
However, some injuries require more data because they happen slowly over time. These typically include:
In most cases, the insurer will then ask for some medical records (but not necessarily the patient’s full history), witnesses and expert witnesses, occupational experts, and anyone or thing else that can shed light on whether the injury was the product of the employee’s job duties.
Remember that clients only have a limited time frame to file a claim, and insurers can deny claims right away after the timer runs out, even if the injury is work-related.
Having a pre-existing injury or condition doesn’t automatically preclude a new injury from work-relatedness. For example, if a worker has a healed shoulder injury, then an incident that exacerbates or re-injures the shoulder injury can still be work-related. These injuries are highly contextual and rely on a wealth of evidence.
Employers should not worry about the potential for pre-existing injuries or conditions during the claim filing process. Filing the claim and providing the work-relatedness data is their only concern. The insurer will identify potential issues in its investigation.
The Bottom Line: A typical workplace injury or illness still requires an initial investigation and, if warranted, a claim, regardless of the employee’s injury. Encourage clients to investigate all claims, even if convinced the injury isn’t work-related.
Efficient claims management improves return-to-work outcomes and reduces the cost of a claim for everyone involved. Plus, denied-to-accepted claims always cost insurers more, which ultimately hurts insureds in the long-run.
When you manage a claim well from the start, your clients will have better outcomes.
How can employers help insurers better manage claims?
Three essential tips apply:
Risk management technology is ideal for collecting and maintaining accurate records for incidents and injuries and safety and risk across the board. If your clients still run paper systems and stick strictly to compliance measures, they will take longer to submit claims and increase the process’s effort. In other words, inefficiency creates more work for everyone.
Brokers can help their clients find the right risk management partners and technology. You should also encourage clients to come to you if they have questions about workers comp employer obligations or the workers compensation claims process.
Broker Tip: Remind employers that failing to submit valid injury/illness claims is a form of workers compensation fraud. Not only is it fraud, but skipping the insurer and trying to manage claims in-house never works out well for employers. Suppressing legitimate claims is not only a violation of the law, but it’s almost always more costly to the employer in the end, either through out-of-pocket costs, premiums, or a loss of business. It’s just not worth it.
So, when is an injury work-related? If we go back and think about all those winter slips and falls, it starts to become more transparent. If a worker slips and falls on the factory floor during their shift, then there’s a strong chance it’s a work-related incident. They’re an employee, in their place of work, and very likely on-the-clock.
And if the employee falls in the parking lot? It’s not so simple. The determination may come down to state law, the policy language, and ultimately the insurer’s investigation. But that doesn’t mean your client shouldn’t file the claim!
Running through an incident investigation checklist will help your clients file faster, detailed claims, even when work-relatedness is unclear. When they aren’t sure where to go, remind them that you’re always available to help manage the claim and help them sort through the potential evidence.
At Foresight, we understand that the world of commercial insurance can be a chore to navigate for brokers and insureds alike. That’s why we wrap our state-of-the-art risk management technology into every policy. Our tech helps clients respond to incidents faster — and avoid them altogether.
Are you ready to learn more? Take a few minutes to get appointed as a Foresight broker today.