State of California M E M O R A N D U M TO: PERSONNEL MANAGEMENT LIAISONS DATE: May 21, 1993 Reference Code: 93-33 THIS MEMORANDUM SHOULD BE DISTRIBUTED TO: ALL DEPARTMENTAL PERSONNEL OFFICERS RETURN TO WORK COORDINATORS FROM: Department of Personnel Administration Workers' Compensation and Safety Program 1515 S Street, North Building, Suite 400 Sacramento, CA 95814-7243 SUBJECT: Workers' Compensation Cost Data, Fiscal Year 1991-92 Enclosed is the workers' compensation cost data (Exhibit A) for all of State Government for the period July 1, 1991 to July 1, 1992. The most significant data, as compared to the previous year, are: o Workers' compensation costs total $268.3 million and represent 3.22% of payroll. While this percentage has increased over fiscal year 1990/91 by 11% (3.22% v 2.895%), the average paid by all employers in California during the same period is 5% of payroll. o Wage continuation program payments (Industrial Disability Leave and Labor Code Section 4800) increased by almost 35% over FY 1990/91. This is the second year in succession that increases in these continuation payments outstripped any other increase. Over the last two fiscal years these payments increased by 60%, from $29.8 million to $47.7 million. Exhibit B lists in descending payment order the costs of all departments which spent over $1 million during FY 1991/92. These 27 departments account for 96% of all expenditures. During the last twelve months, departments which sustained the greatest percentage increases in their programs were reviewed by the Department of Personnel Administration (DPA) staff. The key pattern observed is that departments with managers who maintain active participation in the program have more effective programs than those with managers who take a laissez faire approach. PML 93:33 May 21 1993 Page 2 Other cost containment issues that departments must address are: Employees must be returned to work in a more timely manner. As the dramatic increases in the cost of the State's wage continuation program indicate, employees are not being expeditiously returned to work. When one considers that total payroll for State employees was flat due to the pay decrease, the rise in payments is even more disturbing. Besides the direct cost of wage continuation, there are even higher indirect costs involved. Studies indicate that the longer employees remain off work, the odds increase that they will never return to productive employment. Departments must improve their injury and illness prevention activities. Labor Code Section 6401.7 requires all departments to have operative and effective injury and illness prevention programs. The closer departments come to an ideal program, the closer they get to having greater control over workers' compensation costs. The injury or illness that never occurs is a cost which never has to be paid. This report is the fourth annual report DPA has released. Each department can easily identify its own trend line and evaluate how well or poorly its program is performing. Unless there is strong management commitment to safety and early return to work costs will continue to rise. Those departments with trend lines on an upward plane should immediately and critically assess their programs. Changes consistent with the general policy direction outlined in this memorandum should be made. If a department is unable to locate its statistics for the previous years, please call Linda McCarthy at DPA on either (916) 327-4021 or CALNET 467-3021. Patricia Pavone, Chief Benefits and Training Division