Managing Workers’ Compensation & Temporary Layoffs

No portable restroom operator wants to lay off employees or have a workplace injury. But preparing for the unexpected is the best way to improve outcomes. In this two-part article, we’ll cover the basics of managing workers’ compensation claims and temporary layoffs.

What is Workers’ Compensation?

Workers’ compensation is primarily a state-based insurance system for persons employed in the United States. However, the U.S. Department of Labor Office of Workers Compensation Programs (OWCP) oversees the program. Workers’ comp provides medical benefits and compensation if an employee is injured or develops a job-related disease. It protects your company from liability and reduces the risks of being sued for workplace illness or injury.

While benefits and laws vary by state, most share these similarities:

• Wage-loss benefits provide one-half to two-thirds of the worker’s average weekly wage
• The insurance doesn’t consider who is at fault when determining coverage
• Workers forgo the right to sue the employer when they accept workers’ compensation benefits
• Employees can sue a negligent third party, but employers may request reimbursement from proceeds

Understanding Workers’ Comp Requirements

State regulations determine when businesses must buy coverage, worker eligibility, and how and when to report accidents. These laws also penalize companies that fail to report accidents within the set timeframe. State agencies provide information and assistance to help employers comply with workers’ compensation requirements.

Most states require portable restroom operators to purchase workers’ compensation insurance if they have one or more employees. However, there are exceptions. For example, companies with five or more workers must retain insurance in Tennessee, Missouri, Mississippi, and Alabama. In Texas, insurance is optional for most companies.

Differences also exist regarding who must be covered under your policy. Some states require coverage for corporate officers and members of multi-member LLCs (limited liability companies). Others specify that businesses must provide proof of contractor status or show that 1099 workers have liability insurance.

The National Federation of Independent Business (NFIB) has a state-by-state comparison with links to the state’s agency, commission, department, or board responsible for workers’ compensation.

Covered Injuries or Illnesses

Workers’ compensation covers claims for injuries that happen on the job and occupational illnesses or diseases. The business must have insurance to make a claim, and the claimant must be a covered employee as defined by state law.

Workers’ compensation doesn’t normally cover:

• Injuries during the commute to or from work
• Harm incurred while under the influence of alcohol or drugs
• Trauma caused by horseplay or fighting
• Stress or other mental health injuries
• Injuries sustained while violating company policies

Managing Workers’ Compensation: An Overview

The bottom line is that accidents happen. Every PRO should be prepared to manage an injury and subsequent claim. Preparation can reduce indirect administrative costs and help prevent fraud.

Your company handbook and administrative documents should include the following:

• State rules and deadlines for filing a claim
• Insurance policy information and contact details
• State and insurance incident report forms
• An explanation of workers’ comp medical, wage, and rehab benefits
• A list of healthcare providers that your insurance company covers
• Employee job descriptions that note the scope of work
• Return to work release forms
• Your company’s light-duty policy (if you have one)
• Guidance for adhering to the Family Medical Leave Act (FMLA) and Americans with Disabilities (ADA) laws

1. Employee Reports Injury and Receives Treatment

An employee who suffers an injury while working should inform you immediately and go for treatment. If possible, take photos to document your worker’s injury and any surroundings that may have contributed to the accident.

Depending on your workplace policy, you may request that injured personnel take a drug test. While registering at the hospital or clinic, the registrar will ask if the employee was injured at work and how it happened. They document those details and use them for billing purposes. For an injury that occurs over time, such as carpal tunnel syndrome, the worker should notify the employer as soon as possible.

2. The Business Completes an Incident Report

Portable restroom operators should document accidents and injuries that occur to staff on and off the property. This action is a best practice, even if the team member doesn’t require medical assistance or file a workers’ comp claim.

State agencies may provide claim forms for injured employees to complete. Also, some state workers’ compensation boards require employers to submit a first report of injury document. Besides completing an accident report, you must provide the employee with information about their rights, workers’ compensation benefits, and return to work protocols.

The incident report should include the following information:

• The affected employee’s name, job title, and other relevant details
• Date and time that the incident occurred
• Location of where the accident or injury happened
• The injury’s nature and severity
• An explanation of how the injury occurred
• Names, job titles, and statements of witnesses

3. You File an Official Workers’ Comp Insurance Claim

You submit the official claim form on the employee’s behalf. The state’s Workers’ Compensation Agency Office (WCAO) and insurance company receive documents. Remember to include any supporting information, such as photos and witness statements. The physician will also send medical reports to the proper agencies.

4. Workers’ Comp Insurer Approves or Denies the Claim

Your claims adjuster reviews the facts and decides whether to approve or deny the claim. In some cases, the state WCAO will require further investigations. Regardless of the decision, you and your employee will receive a written notice from the insurance carrier.

If approved, your worker must accept the terms. The employee can request a reconsideration or appeal to the state’s workers’ compensation commission or board if denied.

Depending on the severity of injuries, your employee may be off work during this process and likely incurring medical bills. Typically, workers’ comp wage replacements start after the employee misses three days of work.

Company policy and state guidelines determine whether the staff member can use sick time or paid time off (PTO) while their eligibility status is under review. However, if you let the employee use accrued time and the claim is approved as a work-related injury, you must restore leave time and request payment from the employee, or some insurers may reimburse your company.

The affected employee may have concerns about the medical bills they’re receiving. Speak with your claims adjuster to determine the best way to handle these. Once a claim is approved, the claims adjustment service processes disability payments and medical bill reimbursements. After this point, the employee can ask healthcare providers to send bills to the insurer.

5. The Company Monitors Employee Progress

Proactive case management is crucial to managing workers’ compensation claims. Regular communication with your employee and claims adjustor can keep things running smoothly. In addition, you should document all conversations and details. You can use a spreadsheet to monitor the process and communications.

Throughout the process, you should work closely with your insurance adjustor to examine fraud claims. This may include reporting any co-morbidities or prior accidents that could impact the claim. Also, confirm that your employee is following the recommended treatment plan.

6. Return to Work Process

Your employee should update you regarding their potential return to work date. In the meantime, you may need to hire temporary help to fill their role. The worker should not come back until they have a doctor’s release to work. The form will outline any restrictions. You and your insurance company will keep the written notice on file.

Workers’ Compensation Best Practices

Workers’ compensation claims impact your company’s financial health. Indeed, the indirect costs can be as much as four times more than direct expenses. Costs stem from case management, temporary worker training, and lost productivity. Preventing accidents and injuries is the best way to reduce workers’ comp claims.

The following steps can help your business manage workers’ compensation:

• Ensure proper employee classification and get legal advice if you’re unsure
• Complete thorough reviews of long-term workers’ comp cases
• Analyze workplace risks to identify potential hazards and corrective actions
• Use past claims history to find areas for improvement
• Pre-screen job applicants for positions involving heavy lifting
• Implement a workplace safety program
• Drive home the importance of reporting injuries and accidents immediately
• Verify emergency contact information for all employees annually
• Encourage workers to report unsafe conditions at customer sites or the workplace

Managing Temporary Layoffs

Many industries reduce workforces seasonally. However, letting go of staff, even temporarily, is never an easy decision. Although temporary layoffs are a last resort for PROs, seasonal or economic circumstances may warrant it. Proper planning can reduce the business risks of layoffs and improve employee relations.

Temporary Layoff Definition

A temporary layoff typically lasts six months or less. While it differs from firing workers, a layoff still requires PROs to remove laid-off workers from the payroll and complete other separation actions. A mass layoff refers to companies letting go of 50 or more employees.

Business Owner Responsibilities for Unemployment

Unemployment insurance, otherwise known as unemployment benefits, is a state-provided service. It covers some of a terminated employee’s short-term income. Unemployment funding comes, in part, from employers paying Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) taxes.

FUTA taxes remain constant, whereas SUTA varies by state. The amount your business pays may vary based on your time in business, industry, and state tax rates. To this end, unemployment claims may increase your tax burden for up to three years following a temporary layoff.

Besides paying unemployment taxes, PROs must keep accurate employee records and correctly classify statuses (full-time, part-time, or contractor). Doing so will help disprove fraudulent claims and ensure laid-off workers receive compensation during the layoff.

Legal Considerations for Temporary Layoffs

Laws differ by country, but U.S.-based businesses must abide by federal and state laws. For instance, many U.S. states have default rules regarding paying out vacation pay. But you can establish different rules in your employment contract or company policy. Therefore, PROs should be aware of temporary layoff regulations and work with a legal advisor to construct clear policies.

Consider the following rules and regulations:

• Worker Adjustment and Retraining Notification Act (WARN): PROs with 100 or more employees must notify staff in writing at least 60 days before a mass layoff occurs. There are exceptions to this rule and additional reporting requirements.
• State-specific “mini-WARN” laws: At least 19 states have mini-WARN regulations. These may impact businesses, even in cases where the federal rule doesn’t apply.
• Older Worker Benefits Protection Act (OWBPA): This law protects people aged 40 and over from being targeted during a layoff. To avoid age discrimination claims, PROs should review OWBPA and Age Discrimination in Employment Act (ADEA) requirements and clearly define their staff reduction selection process.
• Staff on protected leave: Consult with legal advisors if you have employees on leave when you conduct a layoff. Certain rules apply to workers on leave under FMLA, ADA, and the Uniform Services Employment and Reemployment Rights Act (USERRA).
• Discrimination laws: Well-defined layoff policies can prevent your business from discrimination claims. Title VII of the Civil Rights Act and the Genetic Information Nondiscrimination Act (GINA) don’t let companies lay off people for discriminatory reasons. Specific actions may require more documentation, such as laying off a pregnant staff member but retaining another person in an equal position.

Preparing for Workforce Reductions

Although the Fair Labor Standards Act (FLSA) doesn’t require advance notice before a layoff or termination, state labor laws may differ. In addition, informing staff ahead of time is a best practice when you want those workers to rejoin your team in a few months. Establish policies and assemble information well before you need to lay off employees.

Create a Temporary Layoff Policy

For fairness, transparency, and legal compliance, every portable restroom business should have a temporary layoff policy in their employee handbook. It outlines why and how you select workers and details the affected employees’ rights and obligations.

If you already have a policy, consider reviewing it annually. The document should be up-to-date with employment law changes and reviewed by a legal advisor. Remember to provide new copies to staff if you make any changes.

Develop an FAQs Handout

While addressing concerns when speaking with employees is vital, you should also create a scannable handout. Written answers to frequently asked questions (FAQs) can reduce the number of calls, texts, and emails you get down the road. Where applicable, reference your policy or handbook with page numbers for further information.

Typical questions may include:

• How did you select workers for temporary layoff?
• Can I use PTO while I’m laid off?
• What happens with my health insurance?
• Is my retirement plan affected?
• Can I apply for unemployment?
• Will I have to reapply for my job position?
• When can I come back to work?
• Can I take another job while I’m laid off?
• Who do I call if I have questions about my work or benefits status?

Assemble Employee Termination Packets

Informational packets ensure you meet labor law obligations and provide resources for laid-off workers. In addition to employee information, put a checklist in each file listing the required steps. That way, you can ensure that you completed employer obligations and document receipt.

Employee separation packets may have mandatory and optional resources. For instance, Massachusetts requires businesses to give copies of the Department of Unemployment Assistance (DUA) pamphlet “How to File for Unemployment Insurance Benefits.” In Illinois, employers must provide the pamphlet, “What Every Worker Should Know About Unemployment Insurance” to any employee laid off for seven days or more.

As a show of goodwill and out of genuine concern for your employee (and their family’s) wellbeing, consider including the following:

• Contact information for benefits-related questions
• Unemployment eligibility guidelines and application information
• Local financial and household assistance programs
• Details about free learning opportunities

Step-by-Step Process for Temporary Layoffs

Consistency and transparency build trust. By communicating clearly and following a documented process, you can help workers navigate temporary layoffs and increase their likelihood of returning to work.

1. Decide Who Will Get Laid Off

Some PROs (especially those in cold climates) winterize restroom units and halt operations during the deep freeze. Others maintain a skeleton crew to manage a limited number of rentals and equipment repairs. Explain the selection criteria in your policy and document your reasons for each layoff.

2. Draft Employee Notices

When reducing your workforce, each terminated employee should receive a layoff letter. You can personalize an online template and save it to your computer for future use.

The termination notice should include:

• A short explanation of the circumstances
• That the layoff is temporary
• An effective release date
• An estimate for how long you expect the layoff to last
• When they will receive their last paycheck
• How payment for accrued vacation or PTO will be handled
• Benefits-related information
• Any company property that needs to be returned
• A statement of appreciation for their hard work
• Contact details if they have further questions

3. Meet with Employees

It’s a best practice to meet with terminated employees individually and face-to-face. Speak with staff and be honest about the circumstances behind the temporary layoff. Ask them if they have any questions, and be prepared to answer them. Give each person a termination packet and verify their contact details. After laying off workers, notify your remaining employees.

Establish HR Processes Before They’re Needed

Managing workers during the slow season and handling workplace accidents is challenging. However, robust communication and recordkeeping processes help PROs improve employee relations and reduce business risks. Consult with legal advisors and insurance representatives before a layoff or injury occurs.

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