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The Baylor Crane Construction Company is a Virginia-based builder with 1,750 full-time and 300 part-time employees. The company provides all the social insurance benefits required by law and most other employee benefits plans. Last year, Baylor suffered high severity of losses when the top five floors of a high rise collapsed in Virginia Beach during strong winds. Three workers sustained severe injuries and Johnny Kendel, the 64-year-old supervisor, was killed. All of the injured workers are back at work except for Tom Leroy, who is still on disability; his prognosis is not good.
Lorenzo, a construction worker, was hit by a car while working alongside a busy highway. His average weekly wage before the accident was $500. The state he lives in provides workers’ compensation benefits at a replacement ratio of 66.7 percent, with a maximum benefit of $400 a week.
As risk manager for Titanic Corporation, you want to embark on a stringent work safety program that would cost the business at least $500,000 per year for the next three years and $300,000 per year thereafter. Workers’ compensation losses average about $600,000 per year, and you estimate that you can reduce them by one-third. Your plan is opposed by the financial vice president as a “bleeding heart” program that is not even close to being cost efficient.
Jeanne quits her job because her boss continually makes advances directed toward her. She applies for unemployment compensation benefits while she looks for another job, but her former employer challenges her benefits on the grounds that her unemployment was voluntary because she quit her job with his firm.
Franco Chen, a production foreman for Acme Machine Company, was discussing an unusual situation with Bill Johnson, a line supervisor. “Bill, I’ve got a bit of a problem. That new applicant for the number 7 drill press job seems to be just the person we need. He has the skill and experience to handle the job. The fact that he has sight in only one eye doesn’t affect his ability to perform adequately. Yet I am worried about two things. First, he said he lost his sight in the bad eye because of a steel shaving from a drill press ten years ago. That bothers me about this job, with a possibility of a reoccurrence. Second, I know that management would be upset if he lost his only good eye because he would be totally blind and the workers’ compensation settlement would be much higher for him than for a less experienced worker with two good eyes. It’s a hard decision for me to make.” Bill replied, “I don’t know much about the technical aspects of that problem, but I think I would hire the experienced fellow. In fact, the Americans with Disabilities Act requires that we not discriminate against him.”