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Navigating workplace mental health and workers’ compensation claims

Discover how prioritizing mental health in the workplace can positively impact claims outcomes and employee well-being.

03/26/2024

Employee health and well-being are critical to the success of any organization — and yet mental health challenges remain an area in need of improvement for many businesses. Respondents to Mercer’s latest Inside Employees’ Minds survey ranked mental health among employees’ top five concerns, with those under 45 years old ranking it as their second most pressing concern.

Given the significant impact that mental health challenges can have on employees and their families, it is imperative that risk leaders address mental health in the workplace. Further, employers should consider how employee mental health affects their workers’ compensation programs and identify ways to improve health outcomes, get ahead of claims, and build a culture of mental wellness and employee resilience.

How mental health can affect workers’ compensation claims

A mental health disorder refers to a condition that affects a person's mental wellness, resulting from a traumatic event or ongoing stressors. It can include conditions such as post-traumatic stress disorder (PTSD), anxiety, depression, and other mental illnesses.

Psychosocial barriers can impact workers’ compensation claims, potentially increasing their cost and delaying recovery. Examples include:

  • Perceived injustice: Blaming people or circumstances for their current condition
  • Fear avoidance: Belief that physical activity may be harmful to their recovery
  • Pain catastrophizing: Thoughts that recovery from their pain is not possible
  • Recovery expectations: No plan for return to work
  • Coping: Absence of positive adaptive behaviors

Four types of claims can be impacted by mental health challenges. Understanding and addressing the challenges in each situation is important as they may affect employee health outcomes, claim management, and cost.

  1. A standard workers’ compensation claim that involves a mental injury. This arises when an employee asserts that their mental health condition is the direct result of a work-related incident or exposure, for example, if an employee develops PTSD after witnessing a traumatic event at work.
  2. A physical injury claim where the employee develops a consequential mental health disorder. In this situation, an injured worker has an accepted physical injury. Due to the seriousness of their injury, the employee develops a mental condition, which also becomes an accepted part of their workers’ compensation claim.
  3. An injured worker develops a mental health condition, which affects an existing claim. An already injured employee may develop psychosocial barriers or mental health conditions that hinder their recovery process. For example, a worker who sustained a severe physical injury that requires ongoing medical treatment and rehabilitation may develop depression or anxiety because of the pain, limitations, or emotional distress associated with their injury. This may make it more difficult for them to return to work feeling their best, which could also increase the cost of the claim.
  4. A worker with a pre-existing mental health condition sustains a workplace injury. In this case, an employee files a workers’ compensation claim related to a physical injury. However, a pre-existing mental health condition that is not directly associated with the claim adversely impacts the recovery, potentially prolonging time away from work. Even without an associated mental health claim, this scenario still affects a workers’ compensation program and claim management more broadly.

In all these scenarios, it’s important that employers provide their injured workers with an empathetic environment to communicate their needs, heal and recover sufficiently, and access clear information about their rights throughout the workers’ compensation claim process.

While mental health conditions can potentially be covered under state workers’ compensation laws, it is important to note that each state regulates workers’ compensation differently and may have unique definitions. As this issue becomes increasingly relevant, a few states recently amended their inclusion and definition of mental health injuries, including:

  • In 2023, the National Council on Compensation Insurance monitored 86 bills addressing workers’ compensation for workplace-related mental injuries, including 71 bills related to post-traumatic stress disorder — more than in previous years.
  • A new law that went into effect in Connecticut on January 1, 2024, expands the compensability for mental injuries to all employees. Under the law, a mental health professional must examine the injured worker and determine whether post-traumatic stress disorder is “a direct result of an event that occurs in their course of employment.” This new law presumes a person is suffering due to the work experience, without the worker having to prove that the incident caused the suffering.
  • Colorado now defines mental impairment as a non-physical workplace injury resulting from visual or audible exposure to a psychologically traumatic event while working.

3 actions to prioritize employee wellness

Employers have an ethical and legal responsibility to create a work environment that prioritizes employees’ physical and mental health. As you set out to prioritize employee wellness, consider taking the following actions.

1. Create a psychologically safe work environment. Prioritizing mental health at work and creating an environment where employees feel supported, valued, and understood fosters a sense of mutual trust, which is essential for a healthy and productive work environment. According to Mental Health America, the vast majority of workers who feel mentally or emotionally safe in their workplace report that workplace stress does not affect their mental health.

Another key component of creating a safe environment is understanding and destigmatizing psychosocial risk factors. As a leader, you can impact the conversation around mental health within your organization and hold information sessions or one-on-ones to destigmatize the effects these psychosocial barriers may have on employees.

2. Prioritize claim advocacy. Work-related injuries or illnesses can have a significant impact on employees’ mental wellness. Actively advocating for employees’ health and successful resolution of workers' compensation claims, can demonstrate your commitment to supporting employees’ overall health and minimizing stigma around mental health challenges. This can be achieved by focusing on:

  • Communication. Reach out and connect with injured workers regularly from the time their injury is reported throughout the life cycle of the claim.    
  • Education. Explain to injured workers how your workers’ compensation program works as well as the expectations for both employees and employers throughout the process.
  •  Transparency. Keep injured workers updated about how their claims are progressing. For example, use mobile apps and other digital tools to update workers and provide them with a platform where they can ask questions.       

3. Educate employees about mental health resources. Being aware of available resources — such as counseling services, employee assistance programs, or mental health hotlines — and knowing how to access them can lead to early intervention, timely support, and improved mental health outcomes.

Yet according to the American Psychological Association, only 29% of employees reported that their employer offers an employee assistance program. Educating employees about mental health resources can reduce the stigma surrounding mental health issues and create a culture of openness and support. Continued re-education also helps employees understand that mental health is always a priority, and that seeking support is not a sign of weakness but a step towards self-care.

 

One of the most proactive actions an employer can take is to build a culture of wellness and to prioritize mental health in the workplace daily. This includes actions such as creating a safe work environment, understanding psychosocial risk factors, prioritizing claim advocacy, and educating employees about available resources. Doing so can help minimize situations that could lead to a claim and help organizations reduce their total cost of risk.

To learn more, speak with an advisor.

Our people

Dennis Tierney

Dennis Tierney

Director of Workers’ Compensation Claims, Marsh’s Workers’ Compensation Center of Excellence

  • United States

Christine Williams

Christine Williams

Managing Director, Worker’s Compensation Center of Excellence, US Casualty Practice

  • United States

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