Today is the third in a series of Ask Approach articles on wages, time-loss, and pensions. Here are our earlier posts on Wage Calculation and Case Reserve in case you missed them.

Look before you LE(a)P!


If you’ve managed a few workers’ comp claims, you probably know some of the lingo – “SAW” for the Stay-at-Work program, “KOS” for Kept-on-Salary, and “RTW” for Return-to-Work, just to name a few. Today we’ll look at a term that’s not as well known or understood: LEP, or Loss-of-Earning Power.

LEP is obscure, but it can have the same impact on your claim as time-loss. In other words, it’s expensive. LEP is paid when an injured employee’s earning power is reduced after the claim is filed and allowed. The typical reasons why LEP is paid are:

  1. The current job they are working doesn’t pay as well as the job they were doing before the injury occurred
  2. They had more than one job at the time of the injury and are restricted from performing one of the jobs
  3. Their hours have been reduced

Because any of these circumstances impact their earning capacity, LEP makes up some of the difference between the wages. As with payment of time-loss, medical certification must support the injured employee’s loss of earning capacity with objective medical findings.

Time-loss vs LEP

  • Time-loss: Injured employee is not released to any work by the doctor after a workplace injury. L&I pays the injured worker during this time as compensation for lost wages.
  • LEP: Injured Employee is back on the job after a workplace injury, but their earning capacity has decreased (usually the employer reduced their wage). L&I pays the injured employee as compensation for the difference in wages, if the loss is greater than 5% of wages at the time of the injury.

How does LEP impact my claim?

Put simply, LEP is in indemnity cost that will cause higher rates and lower Retro refunds. So, even though it may seem sensible to pay a worker less if the job they are working is less demanding, LEP means it’s often better to keep paying the higher wage. Whatever you decide, you should always talk it over with your Approach Retro Coordinator so we can determine potential impacts and the best path forward to mitigate costs and reduce the financial impact.

How can I reduce the costs related to LEP?

If LEP is going to be paid on a claim, you’ll need to complete the Employers Section of the LEP Application Form from L&I — be sure to get a copy as L&I and the injured employee will not always send it to you. This is very important to fill out correctly and return to L&I so that you’re not paying any more than necessary.

LEP should only be paid for the hours actually worked, so you’ll need good record-keeping. If the injured employee misses any available hours (for example: provider or therapy appointments, unrelated sickness, vacation, etc.), document it so LEP doesn’t pay out for that time.

Next week, Ask Approach looks at the big one – Pensions. Check back to find out what they really mean for your claim and the options when a pension is awarded.