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Santa Monica's Rise in Workers' Compensation Costs Due to Aging Workforce, Officials Say

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By Jason Islas
Lookout reporter

March 25, 2014 -- As employees get older, City Hall is seeing a spike in overall workers' compensation costs, according to a report released Monday.

From last June to January, the City has dolled out nearly $4 million in lost wages and medical treatment for employees injured on the job, a result of a 22 percent increase in the number of injury claims filed in financial year 2011-2012, the report said.

“Claim frequency began spiking in FY 2011-12 and has yet to ease,” the report said.

“Many claims appear to be the result of an aging workforce (particularly in Police and Fire); a natural cycle over which the City has little control,” it said. “Reversing this trend in the short-term will be challenging, if not impossible.”

Some of the increase in claims filed coincided with major operation overhauls at the Big Blue Bus (BBB), officials said.

Around that time, the Big Blue Bus reorganized work schedules, changed its attendance and leave policies and introduced new job performance standards, the report said.

“Based on the nature and timing of the injuries in BBB, which coincided with restructuring, and also drawing from industry experience, employees may be opting to file claims if they are unhappy with changes in their scheduling and absenteeism policies,” Director of Finance Gigi Decavalles-Hughes told the Lookout Monday.

According to the report, however, officials expect that trend to level off as employees adjust to the new standards.

With the City facing a potential multi-million dollar budget shortfall in the next five years, officials have focused much energy to reduce personnel costs, which account for more than 70 percent of expenses to the City's $300 million General Fund. (“Facing a $9 Million Deficit, Santa Monica Tightens Its Belt,” August 19, 2013)

“Despite these discouraging trends, staff’s efforts to control costs have made a positive impact,” the report said.

The City's Risk Management Division has kept “temporary disability costs in check by returning injured employees to modified positions while recovering from injuries,” saving the City roughly $300,000, the report said

“This is a significant achievement in light of regular state-mandated increases to the maximum weekly temporary disability rate, a large increase in new claim filings, and increasing claim severity due to an aging workforce,” according to the report.

“The City also revamped the medical bill review process and staff selected a new medical bill review provider this past year,” which could save Santa Monica an additional $200,000 a year, the report said.

“Further, the Risk Management Division implemented a pilot pre-placement functional testing program for bus drivers,” the report said.

“Under this program, bus driver candidates are put through a battery of job specific physical tests to determine whether they can safely carry out the essential functions of the position,” according to the report.

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