Hidden Costs of Workers Compensation

Each workers compensation accident results in the reduction of profits due to various hidden costs paid by the employer such as:

• Time/productivity lost by the employee's supervisor and co- workers responding to the accident, providing immediate aid.
• Time lost by co-worker distractions watching and discussing the emergency response.
• Time lost by the employee for the remainder of the workday, time normally paid by the employer.
• Reduction in morale as co-workers realize and think about risks related to their jobs.
• Continuation of the employee's benefits while the employee is off work recovering from the injury.
• Supervisor, management, and witnesses' time to report the injury & process paperwork.
• Loss of production by the injured employee.
• Expense of rescheduling the employee's regular work.
• Cost of hiring and training a temporary or a permanent replacement employee.
• Cost of overtime pay to replacement employees.
• Lower productivity of the replacement employee until proficiency is reached or employee returns to work.

The employer, in addition to the cost associated with loss of production, incurs other costs:

• Increase in the experience modification factor when calculating workers compensation premiums.
• Lower profits from lower stock values for publicly traded entities.
• Damage to equipment, tools, machinery, vehicles the employee used when the accident occurred.
• Replacing spoiled work.
• OSHA/state imposed fines and/or penalties.
• Delays in purchasing new equipment or in expansion plans due to lost profits.
• Missed delivery dates due to a disruption in workflow.
• Missed sales if the injured employee is a salesperson.
• Legal expenses.

An OSHA study showed the hidden cost of workers compensation claims is 4.5 times direct cost (medical/indemnity benefits). Other studies place hidden cost between 3-10 times direct costs.

Medical providers assess the residual of an injury, and unfortunately there are times where an employee cannot fully recover.  What happens at this point of maximum medical improvement?

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For 20 years, the National Workers' Compensation and Disability Conference & Expo has been the industry's leading training event. And this year's event is taking it to the next level - making it the best ever! November 7-9th 2012.