How Much is Workers’ Compensation Really Costing Your Business
If you want to know how much your company is paying in Workers’ Compensation premiums, obtaining that number is as simple as picking up the phone and speaking to your bookkeeper or HR department. It is important to note however, that premiums are only a small part of the equation. Whenever an employee makes a claim through Workers’ Compensation, there are a number of direct and indirect costs that can have a significant impact on your business.
What is Workers’ Compensation?
Workers’ Compensation is a type of insurance (which may go by various names depending on what province you’re in: WSIB, WorkSafeBC, etc.) that helps pay for medical expenses and a portion of lost wages when there is an accident on the job. The insurance company will also pay for certain expenses of the employer such as legal fees if the claim becomes litigated.
Just like with car insurance, once a claim is made, premiums go up – sometimes significantly. Increases in insurance premiums are the direct cost of Workers’ Compensation claims, but there are several indirect costs as well which can be more challenging to calculate.
The Indirect Costs of Workers’ Compensation Claims
- The company loses an employee – when an employee is injured and has to take time off work, it can result in a loss of productivity for a business. Training a new employee takes time and resources, making it more costly for the business than if the first employee had not been hurt.
- Takes time away from management – whenever there is an accident on the job, management must spend valuable time investigating the matter, dealing with insurance companies, and possibly retraining staff on safety protocol.
- Reputation – if your company obtains a poor reputation as one that has frequent accidents, it can seriously harm your bottom line. Not only will it be more difficult to attract and retain the best employees, but it could also result in the business losing contract bids because of its poor reputation.
- Damage to property – a workplace accident can cost the company additional expenses if it damages products or equipment which will have to be replaced.
How to Control Your Workers’ Compensation Costs
The best way to keep your Workers’ Compensation costs under control is to take preventative measures to keep accidents from happening in the first place. This involves staying up to speed on all relevant legislation and reviewing past claims to see where any problem areas may be so that you can ensure that proper safety protocols and training are in place.
When accidents do happen, it will pay off if you can get the injured employee back to work as soon as possible – even if it is with modified duties. The sooner you can get an employee back to work, the more you can mitigate both the direct and indirect costs of the Workers’ Compensation claim.
If you would like help putting a program in place to help control the costs of Workers’ Compensation, contact TeksMed today.