There are obvious costs associated with a Workers’ Compensation claim. These can be evidenced by the medical expenses and wage replacement payouts when the claim occurs, as well as the impending increase in Workers’ Comp premiums in response to the claim. However, as significant as these costs are, they make up only a portion of the actual costs associated with an on-the-job injury. There are also additional hidden costs that can impact any business; some of which may have long term effects. Some of the most prominent are listed below.

Loss of Productivity

The loss of an experienced, skilled employee can directly impact the efficiency and throughput of an organization. That individual is no longer there to do their job, which leaves other (and possibly lesser-skilled or lesser-experienced) people to handle the absentee’s responsibilities, in addition to their own duties. This can result in delays or missed sales. Productivity is also reduced at the time of accident, as distraction is caused when an injury occurs and which may last for some time afterwards. Injuries also affect the morale of the entire workforce, which can also hamper efficiency and productivity. Depending on the accident’s circumstances, other employees may now be worrying about their own safety in the workplace.

Hiring and Training Replacement Workers

It can be difficult and expensive to find a substitute worker with adequate knowledge or skills to replace an injured employee. Training an employee requires time and resources; there is typically a learning curve with any new job. If you need to hire someone new, then you’ll be adding the expenses associated with the hiring process. If that employee has specialized skills or is particularly productive, temporary labor costs may exceed the injured employee’s typical salary in a given period.

Administrative Burden

A workplace injury means filling out and filing lots of paperwork, including internal accident reports, Workers’ Compensation claim forms, and OSHA reporting requirements. Additionally a workplace injury requires accident investigation, implementation of corrective measures, and retraining of supervisors and subordinate employees. This adds strain to both HR and legal departments, and it also may require additional billable hours for businesses that use outside consultants.

Replacement of Damaged Assets

Depending on the severity of the accident, there may also be damage to company property; including tools, equipment/machinery, vehicles, premises, or work product. These issues may require cleanup, repairs, and/or replacement of items. This can be a significant drain on financial resources, time, and manpower.

Once a workplace injury has occurred, some or all of the aforementioned hidden costs will compound the direct costs of a claim. As mitigation of these expenses may not always be an option, employers should look to controlling the indemnity (time lost from work) portion of a claim. In my next article, we’ll look at the value of a Return to Work program, and how it can help reduce or eliminate time loss.