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Federal Way adjusts workers' compensation for city employees

City workers who are injured on the job will now be paid their regular salary, rather than workers’ compensation, for the first 30 days of their leave of employment.

The Federal Way City Council unanimously voted Feb. 15 to adopt the “kept on salary” policy. The measure could save the city $130,000 in a five-year period, city attorney Pat Richardson said.

The policy is just one of many measures citizens can expect Federal Way to pursue as a means of cutting costs while retaining services, said spokesman Chris Carrel.

“There will be others,” Carrel said. “It’s a continuing examination, continuing discussions.”

Federal Way’s savings will come as a result of decreased insurance premiums. Premiums are based on a Department of Labor and Industries formula that takes into consideration the number of job injury hours a city typically claims, Richardson said. Lowering the number of claimed hours will lower Federal Way’s premium, she said. The policy is expected to save the city $26,000 per year.

According to the Association of Washington Cities (AWC), employers are eligible to receive a claim-free discount if they have no claims that require wage replacement, a pension, or a partial permanent disability payment. The discount may reduce an employer’s workers’ compensation rates by up to 40 percent, depending on the number of hours the employer reports.

Historically, when an employee was injured, a claim was filed with the state Department of Labor and Industries. If the department determined the injury was suffered on the

job, the worker would be paid a salary by the state until the employee returned to work.

The “kept on salary” policy changes this. Now, a claim will be made with Labor and Industries immediately so the agency may determine if the injury is job related. But payments to the worker will not start right away.

Instead, Federal Way will keep the employee on salary at the normal wage, being paid for a typical work week, with benefits available and sick and vacation day accruals, for 30 days. If the staff member is unable to return to work after the 30 day period, his or her wages will then be paid by Labor and Industries.

Because Labor and Industries does not pay 100 percent of an injured worker’s typical salary, the city will offer employees a way to earn their full paycheck. After the 30-day period, staff members who remain on leave may participate in a “buy back” program. They can use sick leave, assuming they have this banked, and thus continue to receive their city salary. However, they will forfeit their workers’ compensation paycheck to the city, so as not to collect double pay.

The recommendation to adopt the policy came from Seattle-based Sedgwick CMS, an AWC consultant, in 2010. The consultant examined AWC membership cities’ claim histories and found that most employees who were injured at work were able to return to their job within 30 days, Richardson said. AWC is a private, non-profit, non-partisan corporation that represents Washington’s cities and towns before the state Legislature, state executive branch and regulatory agencies. Federal Way and several other regional cities are members of the association.

Federal Way has considered the “kept on salary” option before, Richardson said.

“We looked at it a while back but didn’t think it was a cost savings,” she said.

Now, with more history to consider, the option is preferred. The policy is retroactive to Jan. 1, 2011. It applies to all city employees, but was negotiated through the Police Lieutenants’ Association.

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