Could Integrity Testing reduce WC Claims?

The best workers’ comp claim is the one that never happened.

Generally speaking, workers’ compensation is designed to protect an employee who is injured or harmed due to job-related duties. This could be anything from a back injury to an illness. When this is genuine, we appreciate the support both financial and medical in getting the worker back to their job as quickly as possible.

But, what about those claims we know are not genuine? As an employer they are frustrating and expensive often having an effect on future premiums. It also has a longer term impact on the business and the team. You can’t necessarily replace the person, there are risks associated with terminating them and morale and productivity can be significantly impacted.

In particular are the many recent examples of claims made relating to psychological injuries. We have seen and been working with many of our clients on a larger than ever number of claims made by workers, who are claiming psychological injuries that are bought about due to performance management processes. Processes that are well documented and evidenced – and unfortunately through the workers compensation process here in NSW, these claims are being accepted.

No one is arguing that an employee won’t have feelings of anxiety or fear about their future job prospects given these types of discussions, but when you are not performing, surely there is a moral obligation on the employee to address their own performance or behaviour, make an adult decision and do the right thing. Not take advantage of a system that is designed to help and support genuine injury or illness. Even the Fair Work Commission says that “the impact on the employee cannot by itself establish whether or not the management action was carried out in a reasonable manner, and some degree of humiliation may often be the consequence of a manager exercising his or her legitimate authority at work”.

Is there not a need for there to be a far better process from our workers compensation administrators to address this behaviour, certainly when the evidence of performance management is presented to them. Why are these claim simply not accepted instead of stretch this out for weeks and months with investigations where they appear to simply ignore the evidence.

On July 28, 2020, the Sydney Morning Herald published an article “Australia’s $60b workers’ comp gravy train needs urgent review”. There is no doubt many employers and workers would agree with this sentiment and we have certainly seen our fair share of claims where employees have had to fight for their rights and receive much needed treatment. However, as an employer, there are limited options and no doubt a lack of fairness and consistency in a system that sees higher premiums every years due to these types of claims and sub-standard claims management.

So we looked overseas to see what Employers could do. In the USA, employers who need to reduce workers’ compensation claims are turning to claims prevention through better hiring practices. In recent years, integrity testing has gained significant acclaim as an effective initial screening tool, particularly in certain industries.

Integrity testing identifies job applicants who are at high risk for counterproductive behaviours in the workplace such as illegal drug use, theft and workers’ compensation fraud. Integrity testing can also point out job performance behaviours like poor work ethic, risky behaviour and lack of moral decision making.

Is testing someone’s integrity the partial answer to reducing workers compensation claims?

Published in 2012 (Oliver, Shafiro, Bulard, and Thomas), a study was conducted to examine whether the use of integrity tests in recruitment would reduce the cost of worker’s compensation claims in organisations representing four different industries. The test scores of employees making workers compensation claims were then compared with those not making claims. In addition, the cost of claims was compared across groups.

The findings came as no surprise. In all four industries studied, a higher proportion of the unscreened group of employees made worker’s compensation claims than in the screened group and the dollar value per claim was higher in the unscreened group.

They summarised the study and its results by suggesting that introducing integrity testing into the selection process can result in fewer worker’s compensation claims and that those claims made by members of the screened group cost far less money than claims by unscreened group members.

It has been suggested that depending on the type of test used, a typical, effective integrity test should identify up to 20 percent of job applicants as high risk when used in specific placements. Companies who identify high risk job applicants before a recruitment decision is made, are then able to avoid potential costly claims and subsequently the impact on the bottom line. The company can then focus their attention on applicants who are likely to improve the quality, productivity, and performance of the organisation.