For employers, workers compensation insurance coverage is all about controlling costs and effectively managing risks. No secret there. As critical as reducing the cost of workers compensation coverage is, however, many employers don’t participate as actively in making that happen as they could. In fact, many companies and organizations are either unaware of the many tools available to manage workers comp expenses or are unwilling or unable to devote the resources necessary to utilize those tools. Paying for workers comp coverage is a necessary and unavoidable cost of doing business; paying more than you should is not.
Here are some of the more effective tools available to control workers comp costs and effectively manage risks:
- The Prime Directive (with apologies to Star Trek). An employer’s primary responsibility is to provide a safe working environment for employees. Failing to do so will impact your workers compensation costs, and not in a good way. It’s impossible to have a workplace that is 100 percent safe, of course. However, if you take certain steps, you’ll go a long way towards coming close to that goal. Consider these factors:
- Choose wisely when you hire. Faulty equipment and other unsafe circumstances cause on-the-job accidents. So too do employees, either by injuring themselves or by creating or starting a series of unfortunate events that lead to a coworker’s injury. When interviewing, ask candidates about their prior workplace safety records, and make sure to check their references.
- Educate, train, coach. All employees should be trained on such components of workplace safety as proper use of equipment and machinery, risk-averse work practices, the importance of keeping work areas clean, and other workplace safety procedures.
- If you don’t have a formal safety program and don’t know where to start, contact your insurance agent or workers comp carrier – they’ll have all you need to develop a program that will meet your needs. Establish an in-house continuing safety education program to ensure that your people are kept current on new developments and provided necessary reminders.
- Distribute safety manuals. Providing employees with written guidance regarding safety practices will not only help reduce the number of accidents that lead to injury – it will also help protect you in the event that your employees disregard those written instructions.
Show me the money! There are factors aside from workplace accidents that can increase the cost of your workers comp coverage, some of which have nothing at all to do with how your employees work. They include:
- Incorrectly classifying job titles and/or job descriptions. Don’t impute high risk work to a low risk position.
- Reporting wages accurately. If possible, use only regular hours (not overtime) when reporting payroll. The higher the reported payroll amount, the higher the calculated workers compensation insurance premiums.
- Monitoring your program. Closely. Is your workers comp experience modifier accurate? For example, are closed claims being reported as such? Is the data being reported to NCCI correct?
- Adding insult to injury. As in, unnecessarily high workers comp costs because of improper or inadequate procedures when an injury occurs. Require all injuries to be reported to a supervisor (no matter how minor). Provide medical attention as required, when required (i.e., right away). Delay can lead to complications, complications can lead to increased medical costs, and increased medical costs can lead to higher premiums.
- Staying connected. Much as nature abhors a vacuum, so too do injured workers hate being made to feel that they don’t matter. If you don’t communicate information to your injured employee, their friends, family members and personal injury lawyers on TV will. Get your employee back to work as soon as possible, with or without restrictions. Once that worker thinks you don’t care, the window of cooperation will probably shut quickly thereafter and potentially for good, meaning the claim isn’t likely to close anytime soon, which will certainly not reduce your workers comp costs.
While there is no way to avoid paying for workers comp coverage, there are ways to control what this coverage costs you. Follow the tips listed above to gain control over your workers comp costs this year!