Workers’ compensation insurance can be a large cost center for a business, and if your employees are regularly injured on the job those costs can quickly become a financial burden, even in this period of low rates.
Companies in industries with high rates of workplace injuries are especially vulnerable, particularly if an employee suffers permanently disabling injuries or worse. But even a relatively safe business can see its premiums surge if it has a few costly claims.
Fortunately, employers can take steps to get a better handle on their workers’ compensation costs.
While the steps look easy on paper, they require management buy-in, a focus on preventing injuries, and getting injured workers healed and back on the job. Here are three things that employers can do to better control their workers’ comp costs.
Focus on accident prevention
There are as many ways to keep a safe workplace as there are workplaces. However, certain components of a safety strategy are universal:
- Keep workspaces clean and free from clutter. Slips and falls can happen in an office, a factory or warehouse floor, a store, or a construction site. Post warnings of slippery surfaces and immediately clean up spills. Ensure your floors are clear of power cords and computer cables. Don’t obstruct walkways and keep all work areas free from tripping hazards.
- Keep equipment in good condition. This is especially important on construction sites, where injuries can be particularly severe. Ladders, tools, power equipment, and other materials should be maintained, in order to minimize the risk of injury.
- Provide appropriate protective equipment. This varies depending on the workplace. Workers should wear gloves and hard hats on construction sites, burn protection and slip-resistant shoes in restaurants, masks, and gloves in medical offices, and so on.
- Train workers on safety. Make sure they know how to safely perform their tasks. Do this during new employee orientation and hold regular safety training or tailgate meetings. The more hazardous the work environment, the more frequent training you’ll need to provide. All workplaces where frequent injuries are occurring should also have them.
- Create a safety culture. Model safe work practices and let employees know they are expected to do likewise. Recognize and reward safe practices, but don’t discourage or retaliate against employees if they file a claim.
Limit claims costs
Ensure that the injured employee gets prompt medical attention. Be proactive and stay in contact with your worker and your carrier throughout the duration of the claim. Also, be sure to complete all required documentation in a timely manner to avoid unnecessary delays in the claims process.
Ask for second opinions on expensive surgeries or treatments. Have in place a return-to-work program to allow injured employees to work in lighter-duty roles until they are healthy enough to resume regular work.
Keep detailed employee records
Documentation is extremely important in workers’ compensation, the costs of which are based on the number of employees, how much each of them is paid, and what kind of work each worker performs.
You’ll need to keep detailed and accurate payroll records to back up the numbers you submit to your insurance company. If you don’t, they’ll find them through the regular audits they conduct and if you underreported, they’ll ask for an additional premium.
Example: Suppose a business has 10 employees, with eight of them doing hazardous work and two of them administrative employees. Without records segregating the payroll of the clerical workers from the others, the insurer will assign the high-hazard classification to all 10 employees, forcing the business to pay more than necessary.
The takeaway
Workers’ compensation ensures that injured employees have a reliable and speedy source of funds to replace the lost income and that the medical expenses for their industrial injury or illness are covered.
Employers who don’t keep safe workplaces, are not engaged in their workers’ claims, and keep sloppy records, end up paying more for coverage. Those that do the opposite, don’t.
