Do you Know The 5 Hidden Costs of a Workers' Comp Claim?

[fa icon="calendar'] Sep 4, 2015 8:00:00 AM / by Deborah Lechner

The direct costs of workplace injuries – workers' compensation costs – are fairly easy to quantify. After all, you know how much your workers' comp premiums increase in response to claims and how much you pay out when those claims are filed, including medical expenses and wage replacement. Many business owners are surprised to hear that, as substantial as those workers' compensation costs are, they amount to just a fraction of the total costs associated with on-the-job injuries.

According to OSHA, indirect costs associated with these incidents can be up to 4.5 times as much direct costs – quite an impact on the bottom line – and accounting for them can be a bit more difficult. So what are these indirect costs? Here we'll go over 5 hidden costs of a workers' compensation claim.

  • Lost productivity – A workplace injury affects productivity in several ways. First, there is the distraction these incidents cause among coworkers when an injury occurs and which may last for some time afterwards. Then there is the loss, whether permanent or temporary, of a skilled, experienced worker. Finally, workplace injuries often affect the morale of the entire workforce, which, in turn, affects productivity.
  • Costs of training replacement workers – Training a worker to replace your injured employee is costly, and if you need to hire someone new, rather than filling the position with a current employee, you'll be adding the costs associated with the hiring process to that tab.
  • Paperwork and administrative time – A workplace injury means lots of paperwork, from accident reports to workers' comp forms and OSHA reporting requirements. Then there is the administrative time involved, accident investigation and implementation of corrective measures, hiring and training replacement workers, and dealing with cleanup and any refitting necessary after a workplace accident, among many other time consuming tasks.
  • Legal issues – Workplace accidents always have the potential to become legal issues, including regulatory actions and/or lawsuits.
  • Replacement of damaged equipment, property and/or products – These issues are common after a serious workplace incident, and cleanup, repairs, and/or replacement of items and equipment affected can be costly.

Of course, there are other indirect costs – piled on top of those workers' compensation costs – when on-the-job injuries occur, but these are among the most prominent and costly. According to OSHA, the costs of workplace injuries, illnesses and deaths amount to about $170 billion per year, money that could be saved by improving workplace safety, applied ergonomic interventions, employee training in safe work practices and pre-hire Physical Abilities Testing to match the worker to the work.

Workers Compensation Webinar: Recapturing Hidden Costs

Topics: Workers' Compensation Costs

Deborah Lechner

Written by Deborah Lechner

Deborah Lechner, ErgoScience President, combines an extensive research background with 25-plus years of clinical experience. Under her leadership, ErgoScience continues to use the science of work to improve workplace safety, productivity and profitability.