An employee is injured on the job and cannot immediately return to work. Whether to offer salary continuation or permit temporary total disability compensation to be paid under the workers’ compensation claim is a question many employers face at this time. 

Temporary Total Disability Compensation

Temporary total disability compensation (TTD), is a benefit available to injured workers who temporarily cannot return to his or her former position of employment because of a work-related injury. In order to be eligible for TTD compensation, an injured worker must miss 8 or more days of work as a result of the work-related injury. 

Salary Continuation

Salary continuation allows an employer to pay an employee his or her regular full wages and benefits in lieu of TTD compensation. However, an injured worker has the option to accept or reject salary continuation payments, unless there is a collective bargaining agreement that states otherwise. And, salary continuation must be paid before TTD compensation is awarded, otherwise, it is forever barred from being paid in the claim.  If an employer is planning to pay salary continuation, it should follow the instructions on Bureau of Workers Compensation (BWC) form C-55.

One advantage of salary continuation is the potential to reduce your workers' compensation costs and future premiums. If TTD compensation is paid under the workers’ compensation claim, it raises the claim costs which could impact an employer’s future premiums and/or group status as the claim costs rise.  However, if salary continuation is paid from the outset of the claim, there are no claim costs attributable to lost time, and therefore, cannot negatively impact an employer’s future premiums or group impact. 

Example: Claimant sustains a broken leg as a result of a work-injury and is expected to be out of work at least twelve weeks. Consider each of the following scenarios:

• Twelve weeks of TTD compensation paid under the workers’ compensation claim by the BWC would increase claim costs by approximately $15,000, and it will increase the employer’s premiums by approximately $12,000 over the next four years (i.e. increase of workers’ compensation premiums each year by $3,000). Total, paying TTD compensation under the claim will cost the employer approximately $27,000, $12,000 of which is paid out-of-pocket (the $15,000 is paid by the BWC under the workers’ compensation claim as part of previously paid for coverage).
• If salary continuation is paid, Claimant will receive approximately $18,000 of full wages over the twelve week period. Since it is not paid under the workers’ compensation claim, there are no associated claim costs and will not impact the employer’s premiums to all. Total, paying salary continuation, the claim will cost the employer approximately $18,000 out of pocket. 
• Based on the above two scenarios, from purely a financial standpoint, it is likely salary continuation is the better option if the employer can afford to continue paying wages while the claimant is not working. However, one slight change to the above scenarios and this analysis changes. If the $15,000 paid under the claim via TTD compensation is not going to negatively impact the employer’s premiums and/or group, the better option, from a financial standpoint, is to pay the claimant through TTD compensation because there are zero out-of-pocket expenses to the employer and zero negative effects to its future premiums and/or group status.

Accordingly, it is important for employers to be aware of how many workers’ compensation claims they have and whether the associated claim costs are nearing a pivot point at which salary continuation may, or may not, be helpful. 

If you are an employer that is faced with the decision between salary continuation and temporary total disability compensation, contact your workers’ compensation attorney to help you make a decision that is best for your situation. 

[View source.]