It's human nature to look for good news in the midst of bad. Unfortunately, the silver lining your customer is hoping for may not be found in their workers comp premiums by way of employees working from home.
“Once the toothpaste is out of the tube, it's tough to get back in," H.R. Haldeman, White House chief of staff in the Nixon Administration, famously observed. Half a century later, employers are finding the truth in the expression as they struggle to get their employees—many of whom were sent home to telework during the COVID-19 pandemic—to return to the office. In large numbers, those employees are saying, “No, thank you."
Before COVID-19, 23% of those with jobs that could be done from home were working from home all or most of the time, according to the Pew Research Center. As of October 2020, that percentage had risen to 71%. Nearly two years later that percentage is still 59%.
Even those who have returned are, in many cases, now splitting their work time between the office and home. Despite their frustration, employers may be looking for a silver lining in these figures. Well aware of the correlation between the number of employees working and premiums, employers may be wondering, “If an employee is working from their home, does this mean I don't have to include them in my employee counts?" Translation: “Does this mean I'll get a fat reduction in my workers compensation premiums?"
It's human nature to look for good news in the midst of bad. Unfortunately, the silver lining your customer is hoping for may not be found in their workers comp premiums by way of employees working from home. All states except Texas have a requirement that employers must provide workers comp coverage if they have employees—subject to certain exceptions, which vary from state to state, such as businesses with less than a certain number of employees and independent contractors. In Texas, an employer can choose whether to provide workers comp coverage for its employees, but noncovered employers must comply with certain workers comp requirements.
In any event, teleworkers who do not fall within any of the exceptions are not exempt from workers comp coverage. Therefore, subject to state-specific requirements, businesses with people working from home must provide workers comp coverage. So yes, those employees do need to be included in employee counts.
Even so, given that there are more teleworkers than in the past, how does that change the workers comp exposure? The 2021 State of the Line Guide published by the National Council on Compensation Insurance (NCCI) gives us clues.
NCCI estimates that the lost-time claim frequency for the 2020 accident year will be 7% lower than for the 2019 accident year. It concluded that pandemic-related shutdowns and increased use of telecommuting are likely contributors to the larger-than-average decline. It also expected that there would be a decrease in overall average claim severity. In addition, private non-fatal injury cases dropped from 2.7 million in 2019 to 2.1 million in 2020, representing a 22.22% decrease, according to the U.S. Bureau of Labor Statistics.
According to the NCCI, the types of occupations that lend themselves to teleworking tend to be office jobs, which also tend to have lower rates of work injuries and lower loss costs.
Slips and falls are the leading cause of workers comp claims, according to the National Floor Safety Institute (NFSI).However, just because the teleworker slips and falls at home doesn't mean that their fall injuries won't be covered by workers comp. Under the Occupational Safety and Health Act (OSHA), the employer is obligated to provide a safe work environment for its employee, whether or not that employee is working from their home.
However, different states may look at this obligation differently. In Florida, the case of Sedgwick CMS v. Valcourt-Williams considered whether an employee tripping over her dog was covered. The court decided not, since this risk existed whether she was at home working or whether she was at home not working and her employment did not expose her to conditions that substantially contributed to the risk of injury.
On the other hand, there have been other cases that have found that slips and falls when getting a cup of coffee or going to the bathroom are covered. This is known as the personal comfort doctrine. According to Karastmatis v. Industrial Comm'n in Illinois, “The personal comfort doctrine generally applies when a claimant is on break and sustains an injury. It encompasses acts such as eating and drinking, obtaining fresh air, seeking relief from heat or cold, showering, resting, and smoking."
Given an employer's relative lack of control over the home environment and ergonomic considerations that could lead to injuries and the blurred line between when the worker is tending to their personal comfort, will it lead to more claims?
Truthfully, most teleworkers probably aren't even aware that they may have access to workers comp benefits for injuries that they suffer while working from home, so claims may increase once they gain this knowledge. But meanwhile, the telework employer's diminished control as to when its employee is working and taking breaks may also increase the number of injuries, driving up workers comp claims from teleworkers.
So, what role does the diligent insurance agent play here? For starters, if your customer reveals that they are not counting teleworkers because they're not on the jobsite, let them know that, in most states, those working from home are still working, so workers compensation rules still apply, which means they cannot be ignored in the count.
Moreover, if your customer is looking for ways to reduce their premium, whether it's on a new policy placement or a renewal, ask the carrier in writing if teleworker status impacts premiums. If you receive a verbal response, confirm the answer given in writing. In any event, close the loop by sharing that intelligence with your customer. They may or may not like the answer to their question, but you're always better off telling a customer what they need to know instead of what they want to hear.
Caryn Mahoney is an assistant vice president, claims specialist with Swiss Re Corporate Solutions.
This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re") and/or its subsidiaries and/or management and/or shareholders.