Every Tree Care Company Needs a System to Manage Workers’ Compensation By Mark Shipp, CIC
Workers’ compensation insurance is a vital component to the health of your business. Many companies have stated to us throughout the years that next to payroll, workers’ compensation is their top expense category. This is why a workers’ compensation program should be managed much like your profit and loss statements. The follow- ing is a guide that will assist in helping you create an overall process for the management of your workers’ compen- sation critical success factors. KNOW YOUR EMR The experience modification rating (EMR) is one of the ways that the pub- lic can view the safety of your opera- tion versus your peers. On this scale, 1.00 or 100% is average. Anything above means that you are worse than average, anything below means you are better than average. I have seen EMRs as high as 420% and as low as 30%. Most states are signatory to the Nation- al Counsel of Compensation Insurers (NCCI). States like California, New Jer- sey and Pennsylvania have their own rating systems that are very similar to NCCI’s. The EMR is created by using statistics of payroll-by-class codes and loss data specific to your company for the prior three years compared to ex- pected losses based on actual loss data from peers in your industry. Fluctuations in payroll and claims can cause significant changes in your EMR. A key driver for escalating experience modifications are frequent, smaller claims. Large claims are capped at varying dollar amounts for each state. Smaller claims count dollar for dollar against your EMR and are based on your size.
When hiring highly skilled workers, there must be a skills-verification test to provide a true baseline of knowl- edge, along with a training program to support the growth and development of your workforce. It is key to take ad- vantage of modern techniques that are less labor intensive than older systems. Fatigue reduction by utilizing new climbing systems, mechanization and technologies can reduce injury and in- crease productivity.
HIRING PRACTICES Solid hiring practices are key to pre- venting injuries. The lack of skilled workers presents challenges for many tree care companies. Hiring the wrong person can be very costly. We suggest having a process that in- cludes background checks, post-offer physicals, driving record verification and drug testing.
38 | ArborTIMES Summer 2023
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