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Cutting Workers’ Comp Costs with Temporary Modified Duty
A good way to keep workers’ compensation costs down is to offer temporary modified duty (TMD) positions. This not only cuts down on immediate overtime costs (from requiring other workers to take over an injured employee’s shift), but it saves money over time.
Workers’ compensation laws prohibit businesses with at least 15 full-time employees from refusing to offer continued employment to an employee within the employee’s physical limitations is such employment is possible/available. The cost of violating this provision could be one year’s wages for the injured employee.
The court typically requires payment starting on the date of refusal to offer TMD employment for the same time and rate as the pre-injury rate. Some states do cap the payment due to the employee at $15,000.
To cut your workers’ comp costs and stay on the good side of the law, consider offering TMD assignments as appropriate. The criteria for employees allowed such assignments are simple: The employee must have been injured on the job (unless state law states otherwise) and be cleared by a physician to return to work on light duty. A doctor’s note should explain the employee’s limitations and abilities clearly.
Your workers’ compensation policy should have a section on TMD. This section should explain that your company has the right to assign TMD positions based on an employee’s performance history and tenure, any adverse impact on the company, and the number of employees already on TMD. Courts will understand the potential burden that may be created by too many employees on TMD.
Your workers’ compensation policy should also make it very clear that the T in TMD stands for temporary. If an employee cannot perform the essential functions of their original position in a reasonable period of time (check your state law or consult with an HR professional), you may be able to legally terminate the employee.
Remember that you can require employees on TMD to follow all policies and procedures, including the attendance policy, just like everyone else (unless they are on intermittent FMLA leave). TMD is not the same as being out on workers’ compensation leave.
It is a good idea to have each employee on TMD sign an acknowledgment form stating that they understand the temporary nature of the position.
Please note that temporary modified duty positions are not the same as reasonable accommodations for a disabled employee under the Americans with Disabilities Act.
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