Employers face complex decisions when managing workers compensation claims. One of the most impactful choices is whether to utilize a “buy back sick time agreement” or adopt a “kept on salary” approach. Understanding these options can protect both your employees and your entity’s financial health.
Hidden costs of buy back sick time agreements
When a worker misses work due to a job-related injury, they often use accrued sick time to keep their wages whole while L&I determines their eligibility for time-loss benefits. If time-loss is approved, the worker sends the compensation check to the city to “buy back” their sick time used during the waiting period.
While this process seems straightforward, it can be costly for employers. These layered expenses can impact your budget for multiple years. In effect, the employer pays for wages three times:
- Through sick time disbursement
- Through increased premiums for three years when time-loss benefits are paid
- Through reduced retro refund eligibility
How “kept on salary” agreements can help
A “kept on salary” agreement can offer a cost-effective solution. It is discretionary and can be tailored with individual policies and offered on select claims to ensure compliance with L&I eligibility requirements. With valid medical restrictions identified in the Activity Prescription Form and a return-to-work plan, implementing a minimum 30-day kept on salary policy keeps workers whole during eligibility waiting periods. Their pay remains uninterrupted and is processed on the next scheduled payroll cycle.
Key features of “kept on salary”
- Payment amount: Employers pay 100% of the wages the worker was receiving at the time of injury.
- What it covers: Payment includes full wages, and other compensation, ensuring no loss of income while the worker recovers.
- No dual payments: If an employer is kept on salary the worker cannot also receive L&I timeloss payments simultaneously.
- Medical requirement: A medical provider must certify that the worker is unable to work due to a work-related injury.
- Duration: Kept on salary continues until the worker returns or is cleared for light duty.
Your AWC Retro claims team can help!
Contact your AWC Retro claims coordinator for help navigating this option to assist you in maximizing the benefits of your Retro program.