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How Workers Comp Claims Affect a Company’s Bottom Line

Posted on by pbfycom
23
Jan
operation-resizedWorker’s Compensation is the law. You must carry coverage under Worker’s Compensation if you have employees. Your premiums vary depending upon your industry and how many employees you have. This insurance may be the single most expensive premium your company pays. This is the first impact on company profits margins, but what happens when an employee makes a claim? If your company is large enough to qualify, your annual premiums can and will be affected by the payment of employee claims. This is not the only cost. The truth is, there are other indirect costs affecting your bottom line related to Workers Comp coverage. The combination of these indirect costs in addition to what monies are replaced by the insurance coverage in some cases can actually exceed the cost of the injury. A fracture for example may cost $50,000 and the indirect costs of this type of injury and subsequent claim can add up to $55,000. This is the true cost of Worker’s Compensation claims. Indirect costs may include:
  1. Wages paid to the employee for their absences that are not covered by Workers Comp., sick days, medical leave, vacation days and PTO.
  2. Costs related to any work stoppages that occur as a result or at the time of the injury.
  3. Cost of hiring and training a replacement for the injured worker.
  4. Overtime costs.
  5. Loss of productivity due to the learning curve of training a new employee into the team.
  6. Time spent by HR, supervisors and administrators in handling the claim and related paperwork.
  7. Loss of productivity and hours related to accommodating an injured employee and job modification.
  8. production-resizedCosts to clean up, repair or replace any property or equipment that may have been damaged in the accident. This can run into huge costs, especially if company vehicles or assembly/production line equipment was involved.
  9. Possible OSHA fines for safety violations.
  10. Legal fees or third party liability costs, even pain and suffering (punitive damages).
Another very important indirect cost to your company in the event of an employee accident/injury and claim is to your reputation,  to employee morale and goodwill amongst your colleagues. What can you do? The solution? Accidents WILL happen,  but if you do everything you can as an employer to train and enforce safe practices **and provide ergonomic work stations you will reduce your risk of employee claims for on the job injuries. It’s crucial to your success as an employer and as a company to take employee safety very seriously. Some very simple and inexpensive changes such as ergonomic chairs, rubber floor mats or safety gear can mean the difference between a comfortable, protected employee and a Wk. Comp. claim. It’s recommended that you do a twice-yearly review of your policies and procedures including best practices for safety in your workplace. Your Human Resources department should include these happy employeepractices in every new hire packet. On-the-job safety training should be mandatory, not only for new employees, but for long-standing employees as well. All employee workstations should be reviewed for your employees’ comfort and safety. You can go online to OSHA and create written safety plans for use in employee training. If you will make safety and prevention a priority you will encourage your employees to do the same. This can include signs and posters in your production space, a running tally of your safety record and incentives for the departments who maintain the best safety records in a given month or quarter.Safety is everyone’s job. Continuing education and a demonstrable positive safety record will keep not only your Worker’s Compensation premiums low, but your employees healthy and happy on the job.      
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