1	Minnesota Workers’ Compensation John A. Kottke Berkley Risk Administrators Company
2	What is Workers’ Compensation? It is a mandatory insurance required of almost all employers. It pays compensation to employees injured while on the job. It pays benefits irregardless of who is at fault for the injury.
3	Why is there Workers’ Compensation Insurance? At the start of the Industrial Revolution, work place injuries were common and employees had little recourse in seeking compensation for their injuries.
4	Early Limits on Seeking Compensation Employees generally did not have the time nor the monetary resources to pursue compensation for work place injuries. Contributory Negligence acted as a bar to most litigation. In many cases, employees were deemed to have “assumed the risk” of their injury.
5	Over time, attitudes changed. Workplace injuries were seen to be predictable. Workplace injuries were seen as part of the cost of production that should be borne by the consumer. Compensation delayed is often compensation denied.
6	The Great Compromise In the 1920’s and 1930’s a compromise was reached between employers and employees. Employees agreed to give up their right to sue their employer for work related injuries. Employers agreed to provide defined benefits for workplace injuries irregardless of fault.
7	Who needs workers’ compensation insurance? By statute, all employers must have workers’ compensation coverage. This includes: Family Owned Businesses Family Farms Nonprofit Associations and Clubs Small Businesses Nannies and Caretakers
8	Who is an employee? An employee is defined as “any person who performs services for another for hire. This includes: Minors Legal and Illegal Aliens. Those who receive goods and services in lieu of cash.
9	Independent Contractors Independent contractors are not employees of the people for whom they do work. Words on paper do not an independent contractor make. The courts have used a balancing test to identify independent contractors.
10	Independent Contractors Employees Do not supply their own tools, materials or supplies. Usually serve at the will of the employer and are not liable for uncompleted work. Are paid a salary or wage. Are subject to strict control of their work activities by their Employer. Independent Contractors Have their own business, equipment and materials. Operate under contracts to perform specific services or do a specific job. Are paid per job and can make a profit or loss. “Employer” has minimal control over how job is done.
11	When are Benefits Payable? You need three things: An Injury That occurs during the course and scope of employment. And arises out of the employment.
12	Injury There are three major types of Injuries: Sudden onset Repetitive trauma (Gillette Injury) Occupational Disease Mental injuries unless the direct result of a physical injury are not covered in Minn.
13	Course and Scope of Employment Generally, an employee must be injured while working. Generally employees are working when they are acting to further the interests of the Employer.
14	Course and Scope of Employment Exceptions: The going and coming rule. The personal comfort doctrine. Traveling employees
15	Arises Out of the Employment Generally, the injury must arise out of a risk inherent to the employment. General exceptions include: Acts of God Idiopathic injuries Horseplay
16	Benefits Most benefits are based upon the employee’s Average Weekly Wage Generally, AWW is based on the earnings for the 6 months prior to the date of injury. Overtime is included if it was paid in more than half of the pay periods in the 6 months prior to the date of injury.
17	Benefits Average Weekly Wage (continued) Changes in income after the date of injury do not change the AWW or the amount of benefits to which the employee is entitled. Employer contributions to employee insurance policies are not included in the AWW.
18	Types of Benefits There are three different types of benefits available in Workers’ Compensation. Medical Indemnity Rehabilitation
19	Medical Benefits All medical care which is reasonable and necessary to cure or treat the work injury is covered. Bills are paid pursuant to a fee scheduled set by the State. A Minnesota doctor cannot attempt to collect more than the scheduled amount from anyone else.
20	Medical Benefits Generally the employee gets to choose his treating doctor. There is no cap on medical benefits. Generally medical benefits can not be closed out.
21	Indemnity Benefits There are four types of Indemnity Benefits TTD Temporary Total Disability TPD Temporary Partial Disability PPD Permanent Partial Disability PTD Permanent Total Disability
22	TTD Benefits TTD benefits are paid when an employee cannot work due to the work injury. Benefits are paid at the rate of 2/3 of the employee’s Average Weekly Wage. Benefits start following the expiration of the waiting period.
23	Waiting Period Minnesota has a three calendar day waiting period. The waiting period begins when the employee first loses any time from work due to the injury. Benefits are payable beginning on the fourth calendar day following the first day of lost time. If time is lost beyond the 10^th calendar day, any benefits owed for the waiting period must be paid.
24	TTD Benefits (continued) TTD Benefits end when one of the following occurs: The employee returns to work. 90 days after reaching MMI After 104 weeks of TTD have been paid. When benefits are terminated by a Judge.
25	TPD Benefits TPD is paid when, due to the work injury, the employee returns to work and is making less than his AWW. TPD is paid at the rate of 2/3 the difference between the employee’s current earnings and his AWW.
26	TPD Example The employee has an AWW of $300.00 and returns to work half time and now earns $150.00 per week. $300.00 - $150.00 = $150.00 $150.00 X 2/3 = $100.00 The TPD rate is therefore $100.00
27	TTD vs. TPD TTD Employee has an AWW of $300.00. The TTD rate is: $300 X 2/3 = $200 Employee Takes home $200.00 TPD EE has an AWW of $300 and earnings of $150.00. The TPD rate is: ($300 - $150) X 2/3 = $100 Employee takes home $150 wages + $100 TPD or $250
28	TPD Benefits (continued) TPD benefits end when: The Employee is back to their preinjury wage. (AWW) 225 weeks of benefits have been paid and in no event beyond 450 weeks after the Date of Injury When terminated by a Judge
29	PPD Benefits Permanent Partial Disability Benefits are to compensate the Employee for the permanent damage resulting from the work injury
30	PPD Benefits PPD benefits are based upon a disability rating issued by a medical provider. The rating is issued as a percentage of the Body as a Whole. The disability ratings are based on a schedule published by the State.
31	PPD Benefits PPD benefits are paid on a sliding scale. PPD benefits are paid in a lump sum Generally PPD awards are under $20,000. Examples: Simple back strain $2625.00 Single Level Fusion $12,750.00
32	Permanent Total Disability PTD benefits are paid when, due to the work injury, the employee is no longer able to work. PTD is often paid in conjunction with SSDI benefits. There are PPD thresholds based upon age and education that must be met
33	Permanent Total Disability PTD benefits are paid at 2/3 the AWW subject to a Maximum, Minimum and offsets. PTD is generally paid to age 67 unless the Employee can rebut the presumption that they would not have retired at age 67.
34	Death Benefits Death Benefits are based on the number of dependants. The minimum death benefit with no spouse or children is $60,000 payable to the estate or the State of Minnesota. Otherwise benefits are paid for a minimum of 10 years after last child is no longer dependant.
35	Rehabilitation Benefits Rehabilitation Benefits are services provided to an Employee to aid in their speedy return to work. These services are usually provided by a QRC or Qualified Rehabilitation Consultant.
36	Rehabilitation Benefits Rehabilitation Services can include: Coordination of Medical Services Assistance with Job Modifications Vocational Assessment and Placement In limited cases, Retraining may be appropriate.
37	How Premiums Are Determined There are three major factors which determine your premium: Class Code Payroll Experience Modification The formula is Class Code Rate X Payroll X Experience Modification Number.
38	Class Codes Class Codes are used to categorize the type of work being done by the employer. Class codes are set by the Minnesota Workers’ Compensation Insurers Association. Every Class Code has a rate associated with it that reflects expected losses for that code.
39	Class Codes (continued) Rates are based upon each $100.00 of Payroll for that Class Code. Examples: Class Code 8810 Clerical $0.36 Class Code 5551 Roofers $78.79
40	Payroll Payroll includes: Gross Payroll Overtime Tips Furnished Meals and Housing
41	Payroll Payroll is estimated to determine the premium at the start of the policy. At the end of the policy a Payroll Audit is conducted to determine the actual premium. Following the Payroll Audit either a refund or a bill is issued by the carrier.
42	Experience Modification Factor The Mod Factor is determined by the MWCIA. It is based on the employers loss history for the previous 3 years. The Mod Factor is suppose to be a measurement of how the employer’s losses compare to others in the same industry.
43	Experience Modification Factor In determining the Mod Factor, frequency is more important than severity. A bad year will affect your rates for the following three years. Your Mod Factor will follow you to your new insurer.
44	What Can You Do To Reduce Your Premium? Create a Safety Committee. Institute a Return to Work Program. Keep in Contact With Your Adjuster.