When Injuries occur, one of the questions that we get asked a lot as a PEO is how should I pay an employee that is placed on light or modified duty. Light duty is an interim step in the physical conditioning and recovery of an injured employee with temporary restrictions with the goal of returning to his/her original job. Light duty work reduces lost time days, decreases the injured employee’s disability experience, maintains employee/employer relationships and improves employee morale.
Let’s say you have a worker that has been off due to a job-related injury. Their doctor says they can return to modified duty, and you have identified a job for them to perform while on modified duty. When the employees’ doctor limits the number of hours a worker can be at work, you offer work up to that limit.
What should they be paid?
You could pay the worker their normal rate while on modified duty. The advantage is they are being paid by you. If they work a normal week, insurance payments end. The disadvantage is that you are probably paying more than the modified duty is worth. It removes the incentive to return to normal work. This can affect the morale of co-workers.
Another option is to pay the rate for the job being done. This may be less than the worker’s regular pay, motivating the worker to return to their regular pay promptly. Most union contracts allow employers to place a worker into modified work. If your contract does not allow this, you may wish to bring this up at the next negotiation. The contract may address which jobs may be considered, how long they are available, and the wage while on modified duty.
How is the worker paid?
It is best to work through an example.* Let’s assume the worker earns $300 per week. Compensation benefits while completely disabled are $200. What happens when you bring the worker back? The more they earn, the more they take home and the less work comp pays!
Earnings Wage Loss Work Comp Pays Total To Worker
Week 1 $100 66% 66% of $200 = $133 $233
Week 2 $150 50% 50% of $200 = $100 $250
Week 3 $200 33% 33% of $200 = $67 $267
*Each state may have varying percentages applicable to the wage loss. State specific factors will be applied.
Early and safe return to work benefits all parties. Light or modified duty can help the injured employee stay active and involved, which contributes to quality of life. A successful return to work program also benefits the employer who regains an active member of the workforce and reduces workers’ compensation costs.
For more information on how a PEO can assist you and your company by controlling your workers’ comp exposures and expenses contact the LL Roberts Group (toll free) at 877.878.6463.