The hazards of experience rating for workers suffering occupational injuries or illnesses are many:
Undermines collective liability principle
Ontario’s workers compensation system was established based on collective liability: this means compensation costs are spread across groups of employers in the same class of industry or occupation. The “assessment rate” is based largely on the average accident rate and duration (costs) of claims for that class. However ‘experience rating’ raises or lowers the rate for individual employers within the class according to their workers’ injury claims and/or lost time involved.
Encourages claims suppression
Experience rating encourages employers to drive down claims costs, since lower claims costs equals lower premiums. This has led to many harmful practices:
- Not reporting or misreporting accidents and “soft” claims suppression measures
Some employers will simply not report accidents. They may ask a worker to take sick days or apply for private benefits such as long term disability, or simply continue to pay a worker instead of filing a claim for benefits. We have also seen instances where workers are asked to say the accident happened at home.Some employers use more covert strategies to suppress claims. For example, a company may offer an “employee reward” program for lower accident rates, where everyone gets a bonus if no one reports an accident.This leads to what has been dubbed as “bloody pocket syndrome” where a worker may hide an injured hand in his pocket rather than report it due to pressure from co-workers and management. A Toronto Star investigation found many instances of claims suppression, including misreporting claims as “no lost time” even when a worker was hospitalized, and forcing injured worker back to humiliating modified work. The investigation found instances of head injuries and fractures that had been classified as “no lost time” claims.
- Fighting worker claims through appeals
The significant financial consequences of a claim drive many employers to fight legitimate worker claims. This makes it more difficult for workers to get the benefits they are entitled to, and it also makes the system adversarial. The Board was originally set up to be an alternative to the court system and was supposed to operate as an inquisitorial rather than adversarial system. This has eroded with experience rating.
- Employee dismissal, usually for reasons allegedly unrelated to the accident
We have seen many instances where a worker is fired following a work injury. Usually, the official reason for the termination is said to be something else such as failing to follow company procedures, or failing to show up for a scheduled shift after a worker is not shown the schedule. A worker who is fired may be found not to have a wage loss resulting from the work injury, which can disentitle them from benefits. A worker who has no benefits has no further effect on the employer’s experience rating, nor does the employer have to offer suitable modified work.
Ineffective at improving workplace safety
There is no direct evidence that experience rating improves a company’s actions to actually prevent accidents and illness. Rather than investing in real health and safety changes with long-term financial benefit to the company, many employers’ resources are being diverted to seek immediate gains and protection through these “claims management” strategies.
Front-page headlines in the Toronto Star’s 2008 investigative series “Walking Wounded” and again in 2014 “Workplace Safety Board Still Rewards Dangerous Employers” drew public attention to the disconnect between experience rating and health and safety.
Discourages employing workers with disabilities
Experience rating harms the employment possibilities for injured workers and for anyone with a disability. Employers do not want to take a risk of higher costs from someone with an established accident history or the prospect of what they view as a compromised recovery rate.
Unfair to employers who play by the rules
Experience rating rewards employers who reduce their claims costs. This means that an employer who has an excellent safety record, and who has invested in the latest and best safety technology but who has the misfortune of having a workplace accident, may be paying significantly more than a competitor who has multiple safety violations. The employer who reports claims will face a financial penalty while an employer who hides or suppresses claims could be rewarded with a hefty reward (a rebate under the current system, or a lower premium rate under the proposed framework).
Among the bad apples are employers who hire workers from temporary agencies for risky work in order to avoid the experience rating consequences of unsafe work. This contributes to the growing ranks of workers in precarious work.