10 Steps to Reduce Workers’ Compensation Costs
Promoting a safe work environment can reduce work-related injuries and costs.
Workers’ compensation insurance guarantees that employees who suffer a work-related injury or illness receive prompt medical attention, wage-replacement and other benefits while they are out of work recovering from an injury or illness. Although necessary, the costs of workers’ compensation insurance can be significant for employers.
However, there are some ways to help reduce the expenses associated with work-related injuries and illnesses. These efforts require managers to commit to demonstrating the importance of workplace safety. By promoting a safe work environment, promptly addressing work-related injuries, and investigating fraudulent claims, employers can help to control costs.
Below are 10 steps for promoting a safe work environment and helping to reduce workers’ compensation costs:
1. Establish a safety and health program. Safety and health programs can promote a safe work environment and may result in fewer lost workdays and decreased on-the-job accidents. An effective safety and health program should include upper-management support, frequent worksite evaluations, hazard prevention and control, as well as mandatory safety training. Many workers’ compensation carriers provide on-site consultation and assistance to employers in identifying and correcting specific hazards, as well as developing and implementing injury and illness prevention programs.
2. Consider a safety committee. Members of a safety and health committee oversee the development of safety and health programs, monitor and help implement program elements, and evaluate program success. Safety committees should meet regularly, review worksite inspections and investigations, and develop plans for preventing work-related injuries and illnesses. Several states require employers to establish safety and health committees. Be sure to check your state law to ensure compliance.
3. Require safety training. To ensure all employees understand how to practice safety in the workplace, provide regular training on safety procedures, hazard prevention, and emergency response measures. Consider incorporating this training into your new-hire orientation and mandating regular safety training annually thereafter.
4. Offer safety incentives. An incentive program is another way employers can promote safety and secure employee commitments for a safe work environment. Consider eliciting employee feedback for improving workplace safety. Winning suggestions can be rewarded with a “Safe Employee of the Month” award, an extra day of paid time off or other forms of recognition.
5. Establish injury reporting protocols. Employers should have written and clearly communicated procedures for reporting injuries and illnesses. All employees should be instructed to report a work-related injury or illness immediately, no matter how seemingly insignificant. These rules and procedures should be covered during new-employee orientation, included in employee handbooks, and incorporated into your safety training curriculum.
6. Ensure prompt medical treatment. Following an injury, it’s critical to ensure that the employee receives proper medical attention. To help contain medical costs, employers should establish a relationship with a network of high-quality medical providers, and to the extent possible, send employees to in-network providers. It is important to note, however, that some states (e.g., California) permit employees to pre-designate a provider for the treatment of work-related injuries. This permits the individual to seek care from his own health-care provider following a work-related injury.
7. Investigate promptly. Conduct a thorough investigation of any incident that results in lost work time or medical treatment as soon after the event as possible. Interview the employee(s) involved and any witnesses, gathering as much information as possible. Thorough accident investigations can help to uncover the cause of an injury and enable plans for preventing future occurrences. Employers should also consider investigating near-misses (incidents in which an employee barely escapes injury). Near-miss investigations may be able to reveal whether procedures need to change or whether additional employee training is needed.
8. Document the incident. Covered employers (those with 11 or more employees operating in specified industries) must document work-related injuries and illnesses using OSHA Form 301 within seven days of receiving knowledge of the incident. Employers may also be required to submit an incident report to their insurance carrier within a specified period of time. Check with your workers’ compensation carrier for more information concerning these deadlines.
9. Implement effective return-to-work practices. An effective return-to-work program can reduce the number of lost workdays and potentially deter fraudulent claims. To encourage employees to return to work as soon as possible, consider offering modified or light duty (if cleared by a physician). Employers should also consult their insurance carrier to determine whether there are any incentives available for injured workers to participate in rehabilitation and vocational counseling. Participation in these types of programs may help to speed recovery time.
10. Investigate suspected fraud. While the vast majority of workers’ compensation claims are legitimate, employers should still take steps to guard against fraud. Employees should be notified that every work-related accident and injury will be investigated. They should also be made aware that there are severe penalties for filing fraudulent claims. Any doubts about the validity of a workers’ compensation claim should be immediately reported to your state workers’ compensation agency and to your insurance carrier.
Employers may be able to decrease workers’ compensation costs by promoting safe work environments and taking appropriate steps to reduce work-related injuries.
Rebecca Morris is the content development manager for ADP HR411. Whether it’s human resources, payroll or benefits, ADP provides the services and insights that let you focus on what matters: growing your franchise. For more information, contact ADP Vice President, Franchises Joe Francis. Find him at fransocial.franchise.org via the directory.
Disclaimer: This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice or other professional services. ADP does not give legal advice as part of its services. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. This material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable law in your jurisdiction and consult experienced counsel for legal advice.