Cost Control Gone Wrong

According to California prosecutors, some former managers at a Smurfit-Stone Container facility in Salinas went too far in their efforts to hold down Workers Comp costs. Those managers have pleaded no contest to charges that they deprived workers of their rights under California Workers Compensation law.

Reportedly, an incentive program at the facility led the managers to deny some 20 workers their statutory rights. The full story is here.

"Statewide, this is getting to be a bigger and bigger problem," Managing Deputy District Attorney Ed Hazel said of the rising number of workers' compensation violations. "There's the pressures of trying to keep medical and insurance costs down. Sometimes, people figure they can cut corners and take shortcuts."

A lesson here for all those who are straining to control Workers Compensation costs: be careful that financial incentives contain controls to make sure that managers aren't inadvertently encouraged to cross the line into illegal activity.