Vigilant Blog

News, trends and analysis in employment law, HR, safety & workers' comp

Nov 10, 2020

The Case for Kept on Salary: a Strategic Tool not a Mandate

Featured Worker’s CompWorkers’ Comp 

As the COVID-19 pandemic continues, we are all realizing that business decisions aimed at the future cannot wait for the pandemic to be over. We are eager to shift from surviving the current climate, to thriving into the future. It is with this spirit that we have resumed our e-mail series focused on helping companies make well-informed business decisions within the context of the complicated Washington Workers’ Compensation system. Here on our website you’ll hear us explain how we help companies lower upfront workers’ compensation premium as well as produce consistently large Retro refunds. This email focuses specifically on the pros and cons of Kept on Salary (KoS).

Employers in Washington State have the option to continue to pay an injured worker’s full pre-injury compensation in lieu of Labor & Industries (L&I) issuing time loss payments (aka KoS). Not only does this keep the injured worker earning his/her full compensation, it keeps the claim from becoming a time loss claim. This is important because time loss claims have a disproportionately negative impact on an employer’s future premium for three years and loss ratio for Retro refund calculation!

At face value, this seemingly straightforward tool sounds like a positive practice. Why then does it draw the ire of so many employers? Because it is so often applied as a mandatory blunt object by Retro programs without considering how it holistically impacts the employer. Broad brush KoS policies inflate Retro refunds for groups, but aren’t always in the best interest of the employers subsidizing those increased refunds. Furthermore, a mandatory KoS policy doesn’t leave room for employers to consider other important factors significant to their businesses, people, performance, and cultures. Rather than adopting a KoS mandate, Vigilant has invested countless hours and resources to understand how this tool can be strategically applied on a claim-by-claim basis for the benefit of our members. Think scalpel versus axe.

Because of this investment, we can not only show the premium impact of implementing KoS but also the breakeven point, so members know exactly when KoS is (or is not) the best path forward. As employer advocates, we don’t mandate that a member use KoS. Rather, we lay out the upfront cost of KoS wages against the long-term premium savings and allow the member to make the call based on their business dynamics. We do this leveraging both our proprietary data analytics as well as our 30+ years of Retro program management experience.

Applied strategically, KoS is an effective tool to control annual workers’ compensation costs. Applied as a blunt object it will almost certainly confuse, frustrate, and cost employers unnecessary money. We’d welcome the opportunity to talk with you more about our philosophy, experience, and tools - give us a call at 425-349-4477.

This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.