Beyond Workers’ Comp: Understanding the True Cost of Workplace Injuries

You have a program in place to help prevent injuries in the workplace. That’s a benefit to your employees as well as your bottom line. But the truth is, most employers don’t really understand just how much an employee accident or illness really costs.

The first thing you think of is a workers’ compensation claim. According to the National Safety Council, the average cost for worker’s comp claims combined in 2019-2020 was $41,353. That’s a hefty chunk of change, but the reality is that it’s only a fraction of the true cost.

Additional Costs of Workplace Injuries

Understanding the true cost of workplace injuries means looking beyond the obvious. There are a number of hidden ways that money is lost when someone gets hurt on the job. Here are a few to consider:

Workers’ Comp Insurance

Workers’ compensation is the first thing that comes to mind when an employer imagines a workplace injury, and for good reason. The average cost for all claims is more than $40,000, as we mentioned above.

Time Lost

When an accident occurs, the first thing that happens is everything comes to a screeching halt. You have to find out what happened and assess the affected area and machines before you can continue working. The people who respond to help the injured worker, as well as the worker who is injured, are all on the clock and that’s time lost.

OSHA Fines and Enforcement Actions

Depending on the nature of the incident, there may be an OSHA investigation. If OSHA finds that your company was not safety compliant, this could lead to hefty fines. The standard fine for a safety violation is just under $14,000, but if OSHA finds more than one, that number can escalate quickly.

In 2019 a forklift driver at a wholesaler in Texas was injured on the job. OSHA looked into it and found significant safety violations including improper training for forklift operators and failing to ensure that daily forklift inspections were performed. By the time OSHA was done, the company was facing a $164,802 fine.

Recovery of Lost Production

When one of your workers gets hurt, that means they can’t stay on the job and be productive. Business must go on, though. Hiring and training temp workers to fill that position, paying overtime for others to cover, or simply accepting lower production volumes all create added costs for the employer.

Secondary Human Resources

Some workplace injuries are more complex than others. If a claim is disputed it could lead to more expenses. Legal counsel could be brought in to help with a court case. You might need 3rd party consultants to help out. Or, an independent medical examiner could be needed to verify the injury. These secondary human resources can add up very quickly and become a major cost factor for the employer.

Staff Administrative Time

How much time does your human resources team spend working on the claim? Your supervisors have to inspect the area, rework schedules, hire and train more help. There is also documentation to complete and possibly an investigation. All these things create unplanned employee man-hours which means more money peeling away from the bottom line.

Bump in Workers’ Comp Premiums

A business’s workers’ compensation premiums are based on an algorithm that essentially rates the business’s safety score called your experience modification factor. Essentially, it looks at the cost of your claims over the past three years and compares them to other similar businesses. If you’re showing fewer claims and lower costs, you’ll be rewarded with a lower premium. More claims and higher costs lead to higher premiums. So, every workplace injury can potentially contribute to higher worker’s compensation premiums for the future.

Make a Safety Investment in Accident Prevention to Reduce the Cost of Workplace Injuries

Workplace accidents are expensive any way you look at them. While you can’t eliminate them entirely (we’re all human, after all) you can reduce them by implementing a solid safety program. That means making a minor investment in safety signs, proper PPE and signage, and personnel hours to create a safety program that keeps your employees protected, healthy and on the job. It’s a lot more affordable and a lot less stressful than dealing with repeated workplace accidents. When you consider the true cost of workplace accidents, it’s worth a little money now to avoid the full cost of workplace injuries later.