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Controlling Workers’ Compensation Insurance Costs
Do you have a story like this one?
Bill was just returning to the showroom after walking the used car lot with a customer. Unfortunately, the customer was carrying a half-filled cup of coffee which they proceeded to spill on the newly waxed showroom floor as they passed through the door.
The customer slipped and fell… thankfully they were not hurt. But Bill could not avoid tripping over the fallen customer. Long story short… Bill experienced a painful compound fracture of his lower are.
The scene was completed with an ambulance, trip to the ER, short stay at the hospital and then a couple of weeks of rest at home. As a salesperson relying almost completely on sales commissions, Bill was hurting… and it was more than just his arm.
Can you spell “Worker’s Compensation Claim?”
Today’s auto dealership is about much more than just selling cars and providing exceptional customer service; it also requires a commitment to the safety and well-being of your employees. One of the most critical components of this commitment is ensuring that your dealership has comprehensive workers compensation insurance. In most states Worker’s Comp Insurance is required by law.
Workers compensation insurance is designed to protect both your employees and your business by covering medical expenses and lost wages for workers who are injured on the job. In an industry where employees engage in physically demanding tasks—such as driving vehicles, performing repairs, and navigating bustling sales floors—workplace injuries are a significant and common risk.
For auto dealerships, the importance of workers compensation insurance cannot be overstated. It not only provides financial support and medical care for injured employees, helping them recover and return to work, but it also shields your business from potentially devastating legal and financial consequences. By ensuring your dealership is properly covered, you demonstrate a commitment to your team's safety and foster a secure, supportive working environment.
Workers' compensation coverage is almost universally mandatory in the United States; it covers medical expenses, lost wages, and rehabilitation costs to Employees who are injured or become ill “in the course and scope” of their job.
There are ways for the dealership to mitigate the impact of both the cost of Worker’s Comp Insurance coverage and any liabilities that might accrue to the injured employee. As with many issues involving employees, consulting with your attorney is always advised.
Here are issues you can address with your attorney:
Correctly classify your Employees based on their job duties. Misclassification can increase your costs. Workers’ compensation premiums for a Receptionist are generally significantly lower than that of a technician. If you can break out Technicians’ paid time off or training time, see if your workers’ compensation carrier will classify these wages at a lower rate.
Never deliberately misclassify Employees; an audit could lead to penalties, lawsuits, or even
prosecution.
Have a safety program. Train all Employees to report potential hazards and include safety training in your onboarding processes for new Employees. If you sub-contract labor, such as vehicle detailing, ensure the company has workers’ compensation insurance, and their Employees are trained in safety per your requirements.
Provide injured workers with medical attention as soon as possible. What may seem like “no big deal” could become a much bigger problem if not taken care of immediately. Establish a protocol of when and where Employees must seek medical attention.
Detail a “return to work” program to reduce the number of days an Employee is off work. Your program would allow injured Employees to return to work part-time or on light duty until they can return full-time.
Get bids for your workers’ compensation insurance when you experience a jump in premiums. This is true for all types of insurance, but Worker's Comp has its own set of specifics that you wan to be familiar with.
The above is just a small excerpt for a more detailed DealersEdge Guide – Accounting Guide for Dealership Controllers and General Managers. In fact it is just a small part of the Chapter devoted to Maximizing Profits. Just one of many related issues explored in this chapter alone.
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