Accidents cost all employers and employees more than just the financial impact of medical bills and increases in insurance. Both the business and the workers involved face numerous direct and indirect costs.
In 2012, there were close to 3 million non-fatal workplace injuries reported to the Bureau of Labor Statistics (BLS). Fatal injuries amounted to 4,628. The construction industry accounted for 19.3 percent of these deaths, with the highest cause of death coming from falls. With the high occurrence of accidents leading to injury and death, the construction industry must recognize the significant financial impact that accidents have.
Workers’ Compensation and Insurance Cost Increases
Employers will often pay for minor medical bills and lost job time out of their own pockets. This becomes a direct expense. When workers’ compensation pays claims, employers can face an increase in the premiums they are required to pay.
The same increase in premiums can occur for an employer’s liability insurance for property damages that occur during an accident. In the construction industry, damage to the site, vehicles and tools must be considered. Some of these costs may not be covered and must be paid out of pocket.
Time Lost on the Job
A major cost to any employer is the productivity of a trained worker. Skilled trade workers are not easy to replace and job progress will suffer. Employers must find and potentially train replacements or put other workers into overtime situations. If deadlines are not met, companies can face fines, which add to the cost of accidents.
Investigations and Inspections
Accidents often lead to investigation or inspection by OSHA or insurers. The construction industry is high on the list for OSHA investigations due to the number of accidents in general. A business facing an inspection will need to spend time and money to ensure that the facility or site is up to standards. Time will be required of company personnel during the inspection. In any operation, this time is money.
Legal and Managerial
Each state has specific guidelines for workers’ compensation claims. Not all workplace accidents are covered by workers’ compensation in all states. An employee not following employer-established safety procedures, or under the influence of alcohol or drugs, may not be covered.
Regardless of the outcome of any investigation, the business is required to produce documents regarding the accident, safety policies and proof of training. A considerable amount of paperwork is involved when processing medical claims. The time of the employees handling the paperwork must be included when considering the total cost of the accident.
Injured workers also have the option of not accepting workers’ compensation benefits, which then allows the injured party to file suit against the employer. In this case, the business will face legal costs for defending the company in a court of law.
When an employer has reported an accident, the state workers’ compensation authority may require the completion of additional training programs. For example, in the state of Ohio, employers receiving group-rating plans must complete an extra two hours of training per year to continue in the plan for just one accident in a calendar year.
The number of hours of training, and the requirements for who must complete the training, can increase with an uptick in accidents. While the initial training program would be required to continue to receive a group-plan cost, continued accidents might require training in order to receive any type of affordable coverage.
Costs to Employees
Each state sets the amount of compensation awarded per week, month or injury. This amount is normally two-thirds of the usual wages. For lower-wage workers, the maximum benefit is usually sufficient. Skilled trade workers may receive less than their normal weekly wages, especially if overtime is often included.
However, the cost to the employee is much more than just the wage loss. In most cases, a worker will experience pain and the inability to enjoy normal non-work activities. Depending on the severity of the injury, a worker can face a permanent full or partial disability. A trade that an employee spent years perfecting may no longer be an employment option.
Even with minor injuries, the employee must make frequent trips to doctor’s offices or therapy appointments; the transportation is the responsibility of the worker. Workers’ compensation only covers medical bills, wages and job re-training — pain and suffering are not included in the calculations. When a worker accepts compensation benefits, he or she gives up the right to sue the employer.
When all of the hidden costs of an accident are considered, it is easy to see the significant financial impact. The indirect costs can be several times the actual medical costs. The amount that a company invests in safety is far less than the cost of an unsafe work place.
This is a guest blog post from Minerallac, a family-owned manufacturer and distributor of electrical construction and safety equipment. Since 1894, they have been getting the proper equipment into the hands of construction workers.