Strategies to Reduce Workers’ Compensation Costs in Your Business
The best way to reduce workers’ compensation costs is to prevent accidents in the first place. But that’s only sometimes feasible. When employees are injured, a company must pay for their medical costs and lose productivity while out of work. That’s why developing a return-to-work program and implementing safety measures is important.
Invest in Safety
Workplace injuries and illnesses are expensive for both businesses and their employees. Employees can incur unexpected healthcare costs, prescription drug expenses and lost wages due to time off while they heal. Companies can reduce their workers’ compensation cost by implementing workplace safety programs that prevent incidents from occurring in the first place.
In addition to reducing workers’ comp costs, business owners can see a return on their investment in workplace safety measures in many other ways. Several studies have shown that for every dollar invested in workplace injury prevention, a business can expect a corresponding return of $2 to $6 through reduced workers’ comp insurance premiums and improved employee morale.
A comprehensive workers’ compensation safety program will help your business avoid costly OSHA citations and penalties. A solid program can also increase the likelihood of a smoother transition during an OSHA inspection, saving your business money on equipment repairs and attorneys’ fees.
Your business needs to encourage employee participation. Ensure your safety procedures and equipment are easy to understand, and involve employees in setting safety goals, identifying hazards and reviewing incident reports. It would help if you also considered establishing an accident investigation process to identify the root causes of workplace accidents and correct the problems that resulted in them.
Create a Return-to-Work Program
An effective Return-to-Work Program helps injured employees regain their sense of purpose and connection to the company. It also allows businesses to retain experienced workers by getting them back to work as soon as they’re medically able. A successful return-to-work program can help reduce the risk of future workers’ comp claims by improving employee morale and productivity and avoiding the high costs of hiring and training replacements.
One of the most important aspects of any return-to-work program is communication. Be sure to provide clear and consistent written policies about how the program works and update them as necessary. Also, having a designated person monitoring and updating the program is helpful. Ensuring compliance with relevant laws will optimize operations.
Another benefit of a good return-to-work program is that it provides workers with financial security. A recent survey found that 49% of Americans live paycheck to paycheck, so losing a week of income could mean financial disaster for many. A return-to-work program can mitigate this risk by allowing an injured worker to continue working at their regular pay rate while still receiving workers’ compensation benefits.
A clear return-to-work program can also help discourage abuse by deterring opportunistic workers from taking advantage of it. In addition, it will show your employees that you care about them, which can improve employee loyalty.
Train Your Employees
Employee training is key to reducing workers’ compensation costs. It is a requirement by federal law that all employees receive the appropriate safety training for their jobs and work environment. It can also improve operational efficiency, increase worker satisfaction and productivity, and reduce accidents and liability.
In addition, ensuring that each employee has an accurate and up-to-date job description can reduce workers’ comp insurance premium rates. Misclassifying an employee can lead to unnecessarily high workers’ comp premiums, which is why it is important to review job descriptions regularly.
Training employees on proper tools and equipment is crucial to prevent injuries and improve productivity. It is especially important to train new employees, as research shows that many workplace injuries occur within the first three months of employment.
Another area to focus on is musculoskeletal disorders, which account for about 33% of all workplace injury and illness claims. Unsafe work practices or poor ergonomics often causes these injuries and can be costly to your business.
Hire a PEO
Hiring a PEO to handle HR and payroll duties can help you save time and money, especially for small businesses that may need more resources to keep up with HR regulations. However, when choosing a PEO, you must carefully examine their credentials and services to ensure they are right for your business.
The best PEOs can offer various insurance products and workers’ comp solutions. They can also provide legal protections and save you time by handling administrative tasks like hiring, firing, completing tax paperwork, and managing employee records.
A good PEO can help you create a world-class safety program to reduce the number of accidents and injuries in your workplace. These programs can lower workers’ comp premiums and fewer costly claims for your business.
In addition, a good PEO can help you get back to work sooner after an injury by creating return-to-work programs that help employees transition from medical leave into modified or light-duty roles. It can help you cut your workers’ comp costs and get your employees back to work as soon as possible.
When selecting a PEO, ask for client and professional references and ensure they are licensed and insured. It would be helpful to evaluate whether the PEO provides competitive rates for healthcare, life and disability insurance, 401(k) savings plans, and other benefits to attract and retain high-quality employees.
