The Safe Way to Slash Workers’ Comp Costs

Zeroed in on curbing supermarket injuries, Safeway’s risk manager advises CFOs to install peer-to-peer safety systems to cut workers' compensation expenses.

In one essential way, Safeway Inc. and Bill Zachry, the food and drug retailer’s vice president of risk management, are an ideal match. In the companies’ 1,406 stores, the potential that a fair number of its 171,000 full-time employees will slip and fall, hurt their backs or cut themselves exists every day. And Zachry is a well-respected workers’ compensation expert.

He’s so highly thought of, in fact, that he was one of the five people in the room hammering out the final details of Senate Bill 863, a massive overhaul of California’s costly and underperforming workers’ comp system. Besides Gov. Jerry Brown, who signed that bill into law in September 2012, Zachry worked closely with former governors Arnold Schwarzenegger and Gray Davis on previous bills. “I’ve got the original bills on the wall at the office, signed by the governors,” he told CFO.

The Safeway executive feels that his involvement in the legislative process gives him an edge. “Having an absolute understanding of what’s in the law, understanding the rules and regulations, is a competitive strategic advantage in terms of us achieving better results than many other people in the system,” he says. “Many of my peers do not participate on legislative or regulatory efforts. And I think, because of that, they don’t achieve the same kinds of results that we do.”

Zachry is particularly proud of how his programs have held costs down at the self-insured supeprmarket chain, and he advises CFOs to provide strong safety incentives to their companies’ managers and employees. In an interview with CFO, he gave some details of Safeway’s program and why it works. An edited version of the interview follows.

What do you see as the biggest workers’ compensation challenge at Safeway?

William Zachry, VP of risk management, Safeway

William Zachry, VP of risk management, Safeway

The biggest current workers’ compensation challenge we have is implementing alternative dispute resolution [instituted under SB 263]. We’ve negotiated an agreement with the United Food Workers and other unions representing all Safeway workers in southern California to proceed with alternative dispute resolution (ADR). In California, if you’re a unionized employer, you’re allowed to opt out of the workers’ compensation litigation system and go through an alternative dispute resolution program with an ombudsman and mediation-arbitration programs.

Implementing that program is going to be a big challenge, a complete change of procedures, policies and operations. We’re trying to work with the unions to do this, and it’s just a lot of work.

Are many employers in the state attempting to opt out?
It’s being done, primarily in the construction trades [which were permitted to opt out before the law was passed].  But it’s not really been done on the scale of a large retail company yet. And so we’re breaking new ground. There are certain opportunities for hiccups, but generally speaking I’m pretty optimistic it will be just fine.

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