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The How and When of Getting Back to Work

Matt Palmquist

Matt Palmquist is a freelance business journalist based in Oakland, Calif.

 

Bottom Line: Employees who get injured or sick on the job are returning to work much sooner than they did in the past, but companies have varied reasons for accommodating their injured workers.

Over the past two decades, companies have taken steps to accommodate employees who get injured or become ill on the job, rather than placing them on subsidized leave. When people whose work-related illness or injury has rendered them unable to work to their utmost capacity are nonetheless ready to do as much as they can, more and more firms are seeking to modify their job tasks, cut back on their hours, or temporarily assign them to less demanding projects. In fact, a 2010 study found that injured employees come back to work substantially earlier if their company has a specific program that helps reintegrate them and ease their transition.

According to a new analysis of data conducted by researchers at Swarthmore College and Tufts University, the number of workers with moderate to severe occupational injuries and illnesses who were accommodated by their company shot up by more than 400 percent between 1987 and 2010, across most major industries. Researchers have so far failed to determine the reasons behind this growth, but this new study, based on work performed by the Bureau of Labor Statistics (BLS) and the nationwide Health and Retirement Study (HRS), merges multiple databases to form a comprehensive view of the factors that lead U.S. firms to implement early return-to-work programs.

Many observers have speculated that the increase in worker accommodation can be explained by rising workers’ compensation (WC) costs, which give companies a powerful financial incentive to bring injured employees back before they’re fully recovered. But the authors’ analysis of several variables — including changes in WC rates, individual state policies, firms’ experience rating based on previous claims, fluctuations in the insurance market, and the specifics of individual employees’ injuries and cases — reveals a far more nuanced picture.

For example, many states have passed legislation that creates financial incentives, positive and negative, for introducing accommodation policies. California, for instance, implemented its Return to Work program in 2004, which partially reimburses companies for accommodating employees with both temporary and permanent disabilities. Conversely, since the early 1990s, many states have levied fines at large firms that don’t provide work for employees who have physical limitations.

The increase in managed care companies (MCOs) since the early 1990s has also had a significant effect on WC expenses, because MCOs allow employers and insurance carriers to more closely track claims and oversee the treatment of injured employees. MCOs also limit the consumer’s choice of providers, and those providers, in turn, have become accountable for determining when employees can return to work and suggesting activities well suited to their on-the-job recuperation. Finally, state laws that require residents to get healthcare insurance through their companies, if it’s offered, have transferred much of the financial responsibility for treatment from the worker to the firm. When these factors are considered, the rise in accommodation becomes much more understandable, the authors suggest.

Most significantly and surprisingly, the authors found no evidence that the increase in on-the-job flexibility for injured workers results primarily from firms seeking to mitigate rising WC costs. Although WC expenses do affect accommodation rates, the economic impact is very small. The doubling of employers’ WC costs that the authors observed from 1992 to 2009 correlated with a mere 0.55 percentage-point rise in the number of injuries or illnesses accommodated by the related firms. Indeed, although the aggregate costs of WC to firms, in terms of insurance payout per hour of employment, escalated during the early 1990s, they actually decreased shortly thereafter as accommodation rates climbed.

Certain demographic factors also played a role. The workers most likely to be eased back into work typically worked at larger firms in the manufacturing or retail sectors and had sustained moderate physical injuries such as sprains, fractures, or dislocations, the authors found. The type of injury played a significant role in how likely it was for that employee to receive accommodation, as did age: Older workers were far less likely to be eased back into work early than their younger colleagues.

Older workers were far less likely to be eased back into work early than their younger colleagues.

The study also showed a clear delineation between how large and small firms handled their injured workforce. Big companies tended to implement accommodation programs across the board, because the sheer size of their workforce discourages managers from basing their HR decisions on the costs associated with each individual employee’s case. In contrast, smaller companies potentially have much more to lose by absorbing the fixed costs that come along with instituting a formal accommodation policy, and as a result typically evaluate employees’ injuries or illnesses in an ad hoc manner.

Given the variety of policies that exist, as well as the variety of the reasons behind those policies, the authors encourage companies to analyze their accommodation plans and determine the extent to which they’re actually benefiting employees — a topic outside the purview of this specific study. Although it’s obvious that companies see value in accommodating their injured or ill workers, the definitive short- and long-term health and productivity outcomes are less clear.

As the authors point out, workers who aren’t given the chance to come back in a part-time or flexible capacity have more time to recover fully from their injuries or illness. On the other hand, accommodated employees may stay more connected with their professional activities, retain their social networks at the office, and remain up-to-date on changes in their workplace. At the very least, the authors argue, we need a better understanding of how accommodation of injured or sick workers affects their future earnings and employment opportunities, as well as the likelihood they’ll reinjure themselves or fall ill again if they come back to work too soon.

Source:What Determines Employer Accommodation of Injured Workers? The Influence of Workers’ Compensation Costs, State Policies, and Case Characteristics,” by Erin Todd Bronchetti (Swarthmore College) and Melissa P. McInerney (Tufts University), ILR Review, May 2015, vol. 68, no. 3

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The How and When of Getting Back to Work