Are you struggling with how to reduce workers’ compensation costs for your business? If not, do you understand the sizeable risk that workers’ compensation claims pose to your business, and do you have a plan in place for when these claims arise?
From a simple muscle strain to more serious, long-term ailments, on-the-job injuries are no joke. As a business owner, your preparedness for these situations can determine the fate of your business.
You’re probably well-aware of the direct costs you pay in workers’ compensation insurance premiums, but you may not have considered the indirect costs of on-the-job accidents and injuries.
You may have to train replacement employees, adjust work schedules, investigate accidents and implement corrective measures. You may lose productivity, have to repair damaged equipment and property, and deal with lower employee morale and absenteeism.
For an eye-opening look at just how much a workplace injury can cost your business, use the Occupational Safety & Health Administration’s (OSHA) $afety Pays tool to calculate the direct and indirect costs to your business. You’ll see how much accidents and injuries, from a simple muscle strain to a more serious concussion, can set your company back.
That’s why controlling workers’ compensations costs is so important to your bottom line.
Here are three strategies to get you started:
1. Set up a safety program
Many injuries can be prevented before they occur.
Having a safety program helps you identify and eliminate workplace hazards that may cause accidents. The return-on-investment for such programs is well proven.
Various studies have shown that for every dollar invested in injury prevention, businesses see a $2 to $6 return, according to Safety and Health Magazine.
This strong return may explain why many states, like California, require employers to have a written safety program.
Moreover, putting standards and procedures on paper shows that your company is committed to providing a safe work environment for employees.
How to set up a safety program
Ready to start planning? The Occupational Safety and Health Administration offers many helpful tips and tools to kick off your health and safety plan. When drafting it, be sure to incorporate their seven core elements of recommended practices for health and safety programs:
- Management leadership:
Make safety and health a core organizational value, establish safety and health goals and objectives and communicate them, provide adequate resources and support for the program and set a good example.
- Worker participation:
Involve workers and their representatives in all aspects of the program—including setting goals, identifying and reporting hazards, investigating incidents and tracking progress.
- Hazard identification and assessment:
Put procedures in place to continually identify workplace hazards and evaluate risks.
- Hazard prevention and control:
Cooperate with workers to identify and select methods for eliminating, preventing or controlling workplace hazards.
- Education and training:
Train all workers to understand how the program works and how to carry out the responsibilities assigned to them under the program.
- Program evaluation and improvement:
Establish processes to monitor program performance, verify program implementation and identify program shortcomings and opportunities for improvement.
- Communication and coordination:
Make a commitment to provide the same level of safety and health protection to all workers, and communicate hazards present at the worksite.
If you’re starting from scratch and have a perceivably safe work environment, you can get some extra help designing your safety program from a variety of sources at different prices. Consider using:
- A third-party consultant
Independent workplace safety consultants typically charge about $100/hour.
- An industry-specific template
Some online companies sell downloadable safety program templates designed for different industries for approximately $100-$150.
- Your workers’ compensation insurance carrier
Many carriers provide fee-inclusive safety consultation services to their customers.
- Occupational Safety & Health Administration
OSHA’s On-site Consultation Program offers free and confidential advice to small and medium-sized businesses. Although these services are “separate from enforcement,” be prepared to commit to completing OSHA’s recommendations.
And remember, a safety program has to be more than the document. Only the support of top management and proper on-the-ground training will put it into practice (and make a real difference in employee safety, as well as controlling your workers’ compensation costs).
Once you have an effective health and safety plan up and running, you can also apply to participate in OSHA’s Voluntary Protection Programs (VPP). VPP officially recognizes employers and employees who have achieved exemplary occupational health.
In the program, management, labor and OSHA work cooperatively and proactively to prevent workplace fatalities, injuries and illnesses through a system focused on hazard prevention and control.
VPP participants undergo a rigorous onsite evaluation by a team of safety and health professionals and are re-evaluated every 3 to 5 years to remain in the programs. VPP participants are exempt from OSHA programmed inspections while they maintain their VPP status. OSHA also offers several other cooperative programs aimed at preventing workplace injuries.
2. Build a return-to-work program
Even with a sound safety program, accidents can still occur. When they do, a return-to-work program can create a direct cost benefit to the workers’ compensation claim.
It’s often the case that the longer a workers’ compensation claim stays open, the more expensive the claim. For example, when injured employees return to work later, the claim must cover more replacement income.
The goal of a return-to-work program is to proactively help injured employees get back to work as soon as possible, even if it’s on a modified basis as they recover. This could include allowing an employee to work part-time or light-duty hours, coordinated in conjunction with the employee’s medical provider.
An active return-to-work program can also have indirect cost benefits. It can help you maintain workplace ties with injured employees and avoid the alienation that can occur on both sides during a prolonged absence. And an early return-to-work lowers the chance that the employee will never return.
3. Join a PEO
Finally, joining a professional employer organization (PEO) can help manage workers’ compensation costs and claims, while also helping you navigate the safety challenges in your business.
A PEO can help you:
- Choose workers’ compensation plan coverage. A PEO can cut workers’ compensation premiums by negotiating competitive programs with insurance providers
- Evaluate the safety of your workplace and design a safety program that helps prevent injuries
- Resolve claims efficiently when they occur
- Manage relations with injured employees
- Implement a return-to-work program that increases employee morale and reduces the length and cost of workers’ comp claims
Bundled together, these efforts can make a big difference on workers’ compensation and the added, indirect costs of workplace injury. A good PEO’s safety services can go a long way toward fostering a high-return “culture of safety” at your organization. Contact us for a free consultation.