Recent media coverage on bullying has
focused on tragic cases like that of Amanda Todd, the British Columbia teen who
ended her life after years of bullying. But the analysis and discussions over what
we can do to prevent bullying has not been extended beyond the school system to
a broader community: the workplace.
A
simple Google search shows that news stories on bullying in the workplace amount
to less than a tenth of the volume of stories on bullying in
schools. The relative silence on the issue of
workplace bullying is somewhat surprising. Does the incidence of bullying
dramatically decline after graduation? Maybe. However, there may be other explanations worth
exploring.
One possibility relates to a societal
tolerance or resignation that there is nothing that can be done about about
workplace bullying. In 2008, WorkSafeBC did a survey on
workplace bullying. While more than 54 percent of the 800
British Columbians surveyed agreed with the statement: “workplace bullying is a
serious problem in British Columbia today," a much higher percentage (62
percent overall, 66 percent of women) said: "workplace bullying is an inevitable
part of life in the workplace."
Another explanation may be the words
we use to discuss this issue. A colleague and I looked at claims for
workplace stress not involving a single traumatic event. What we found was a tendency for women
to use the term “bullying” to describe behaviours male victims might describe as
“harassment.”
The legal term may be
“vexatious conduct”; HR records might speak of “personality conflicts”;
a colloquial definition might include
“hazing” for acts that are more physical or “razzing” for more verbal ones.
Perhaps the diversity of language is masking a problem that is much larger than
media reports suggest.
Whatever words we
use, the issue of bullying and harassment is not confined to the K-12 education
system. Workers’ compensation systems are
increasingly recognizing workplace injuries arising from
bullying/harassment. This is not to say bullying is on the
increase; it's an affirmation that workplace
bullying and harassment can have serious consequences for the
victim. It's also a wakeup call for all
workplace participants to pay attention and stop thinking about bullying as
something that stops when you reach 18 years of age.
The issue of workplace bullying and
associated disability due to stress or mental injury comes up more often than
any issue of traumatic injury or specific occupational disease from conference
audiences I present to and from participants in courses I
facilitate. Those who specialize in DM and RTW for
employers almost universally report situations within their experience that meet
the definition of bullying. They also report the challenges they
face in accommodation and RTW in these cases. Having a policy that says, “thou
shalt not bully” is not enough. A growing number of companies now carry out risk
assessments, craft and enforce corporate policies against harassment, and
provide training on the issue. Whether or not such actions are mandated by law
or policy, they're the right things to do.
Acts
of bullying or harassment extend beyond school and work
environments. Playgrounds, sports venues, and even
streetscapes are locations where the victimization of individuals
occurs. Eliminating bullying and harassment in
school settings and the workplace may not solve the greater societal issue but
it is a step toward changing the perception that bullying is
inevitable.
|
Sunday, December 23, 2012
Sunday, December 2, 2012
What is the “right” premium rate for workers’ compensation?
Most people would agree that workers’ compensation is an important form of social insurance. How should it be administered, what benefits should be offered, and how permanent partial and total disability ought to be calculated are all matters of debate. Every jurisdiction makes up its own rules on workers’ compensation through public policy, legislation, and practice. The unique combination of these public policy positions and how they are administered set the stage but work-related injuries are what drive the financial cost of workers’ compensation in each jurisdiction. And costs are mainly met by premiums paid (almost) exclusively by employers.
Premium levels and the cost of workers’ compensation have been in the news a lot lately. The Oregon Workers’ Compensation Premium Rate Ranking study and the National Academy of Social Insurance’s publication on Workers’ Compensation Benefits, Coverage and Costs are perhaps the highest profile studies to hit the headlines, but there are many jurisdictions where workers’ compensation premium levels have been the focus of attention. Morley Gunderson’s report, The Impact of High Worker's Compensation Premiums on Newfoundland & Labrador, WorkComp Strategies’ Consultation Services on Workers’ Compensation Laws, Processes, and Costs in Tennessee, and the recently announced external review by Paul Petrie on Workers’ Compensation Process for Setting Employer Rate in Manitoba are but a few of the many examples recently garnering attention.
At the basis of all this attention is the fundamental question: “What is the right premium for workers’ compensation?”
As with all insurance, premiums must ultimately cover benefits and administration costs. There are other costs in workers’ compensation that may be included in premiums (reserve funding, second injury funds, uninsured employer protection, insurance guarantee funds, prevention, oversight, appeal bodies, and more) although many jurisdictions pay for these through additional assessments. Premiums may also be adjusted up or down to cover changes in funded status, investment returns, or changes in actuarial valuations. These costs generally pale to the main financial costs of medical, indemnity, rehabilitation, and permanent disability benefits.
In the best possible world, workers and workplaces are safe, healthy, and free from work-related injury, illness, disease, and death. In that world, a workers’ compensation premium at or near zero makes perfect sense. However, in the real world of today, workers and their families pay a huge personal cost for work-related injuries and the total cost of compensation is significant. Without slashing benefits or externalizing costs to others, what is the right workers’ compensation premium?
Perhaps the best way to approach this question is to first look at the extremes, while assuming the true benefit cost is somewhere in between. Suppose workers’ compensation premiums paid by an employer to cover one employee were greater than the payroll cost of that employee for a year —don’t laugh, this sort of premium has existed for certain classifications in certain states in the recent past. What sort of behaviour would we expect this high rate to incentivize?
On the positive side, such high rates may spur technological innovation, training, investment in new plant, improved supervision — all aimed at reducing the costs associated with workplace injuries in this sector. On the negative side; however, the extremely high premiums set up conditions where underreporting of payroll, hours of exposure, and injuries may have extremely high payoffs. Think about it: if I have to pay $100 in premium for every $100 of payroll, then for every $100 of payroll I pay under the table I cut my effective labour cost at least in half.
On the other hand, what if premiums were effectively $0.00 per $100 of payroll? The employer pays nothing, zilch, nada. Some classification are close to that. In B.C., for example, the Interior Design classification’s base premium is $0.10 per $100. On the positive side, there would be no incentive to hide or suppress the report of a workplace injury. We would have, perhaps, a more accurate grasp of what is happening in the workplace. On the flip side, extremely low premiums could lead to under-investment in health and safety. In the extreme case, a very uncaring (and unethical employer) would ask, “why buy safety equipment, invest in safety training, or purchase safer technology if the cost to the employer of workplace injuries is essentially zero? Assuming replacement labour is readily available, why not spend money elsewhere on expansion or other initiatives to raise profit or shareholder value?”
I’ve presented the moral hazards at the extremes to make a point. The “right” workers’ compensation premium is not necessarily the lowest possible one. High variation in competing jurisdictions may be an issue for concern but a relatively low dispersion rate among nearby competitors may simply indicate that the employers and workers in these jurisdictions are facing similar risks and cost structures. The right base premium, in my view, should always be close to the total benefit cost. It's at that point where the investment in safety, health and return-to-work/stay-at-work initiatives will have their greatest impact.
Premium levels and the cost of workers’ compensation have been in the news a lot lately. The Oregon Workers’ Compensation Premium Rate Ranking study and the National Academy of Social Insurance’s publication on Workers’ Compensation Benefits, Coverage and Costs are perhaps the highest profile studies to hit the headlines, but there are many jurisdictions where workers’ compensation premium levels have been the focus of attention. Morley Gunderson’s report, The Impact of High Worker's Compensation Premiums on Newfoundland & Labrador, WorkComp Strategies’ Consultation Services on Workers’ Compensation Laws, Processes, and Costs in Tennessee, and the recently announced external review by Paul Petrie on Workers’ Compensation Process for Setting Employer Rate in Manitoba are but a few of the many examples recently garnering attention.
At the basis of all this attention is the fundamental question: “What is the right premium for workers’ compensation?”
As with all insurance, premiums must ultimately cover benefits and administration costs. There are other costs in workers’ compensation that may be included in premiums (reserve funding, second injury funds, uninsured employer protection, insurance guarantee funds, prevention, oversight, appeal bodies, and more) although many jurisdictions pay for these through additional assessments. Premiums may also be adjusted up or down to cover changes in funded status, investment returns, or changes in actuarial valuations. These costs generally pale to the main financial costs of medical, indemnity, rehabilitation, and permanent disability benefits.
In the best possible world, workers and workplaces are safe, healthy, and free from work-related injury, illness, disease, and death. In that world, a workers’ compensation premium at or near zero makes perfect sense. However, in the real world of today, workers and their families pay a huge personal cost for work-related injuries and the total cost of compensation is significant. Without slashing benefits or externalizing costs to others, what is the right workers’ compensation premium?
Perhaps the best way to approach this question is to first look at the extremes, while assuming the true benefit cost is somewhere in between. Suppose workers’ compensation premiums paid by an employer to cover one employee were greater than the payroll cost of that employee for a year —don’t laugh, this sort of premium has existed for certain classifications in certain states in the recent past. What sort of behaviour would we expect this high rate to incentivize?
On the positive side, such high rates may spur technological innovation, training, investment in new plant, improved supervision — all aimed at reducing the costs associated with workplace injuries in this sector. On the negative side; however, the extremely high premiums set up conditions where underreporting of payroll, hours of exposure, and injuries may have extremely high payoffs. Think about it: if I have to pay $100 in premium for every $100 of payroll, then for every $100 of payroll I pay under the table I cut my effective labour cost at least in half.
On the other hand, what if premiums were effectively $0.00 per $100 of payroll? The employer pays nothing, zilch, nada. Some classification are close to that. In B.C., for example, the Interior Design classification’s base premium is $0.10 per $100. On the positive side, there would be no incentive to hide or suppress the report of a workplace injury. We would have, perhaps, a more accurate grasp of what is happening in the workplace. On the flip side, extremely low premiums could lead to under-investment in health and safety. In the extreme case, a very uncaring (and unethical employer) would ask, “why buy safety equipment, invest in safety training, or purchase safer technology if the cost to the employer of workplace injuries is essentially zero? Assuming replacement labour is readily available, why not spend money elsewhere on expansion or other initiatives to raise profit or shareholder value?”
I’ve presented the moral hazards at the extremes to make a point. The “right” workers’ compensation premium is not necessarily the lowest possible one. High variation in competing jurisdictions may be an issue for concern but a relatively low dispersion rate among nearby competitors may simply indicate that the employers and workers in these jurisdictions are facing similar risks and cost structures. The right base premium, in my view, should always be close to the total benefit cost. It's at that point where the investment in safety, health and return-to-work/stay-at-work initiatives will have their greatest impact.
That’s my perspective. I would be interested in hearing yours.
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