The bottom line cost of a workers’ compensation claim can be shocking. U.S. employers pay nearly $1 billion per week for direct workers’ compensation costs, according to the Occupational Safety and Health Association (OSHA). Indirect costs like lost productivity, training temporary employees, accident investigation, and equipment repair, may exceed direct costs and can result in huge out-of-pocket fees.
Four steps for cutting workers’ compensation costs
Offering workers’ compensation is, of course, vital to running a legally compliant business in Hawaii, yet many companies are unsure of how best to curb costs. Below are four simple tips for cutting your workers’ compensation costs and reducing injuries at your worksite.
1. Establish a safety program
Encouraging safe work habits and establishing an accident prevention program is your first line of defense against accidents and injury. Educate and train every employee on proper safety procedures, how to properly use equipment, and what types of workplace behaviors are strictly prohibited. You must maintain safety awareness at all times; post reminders, hold frequent training seminars, keep employees and managers accountable, and address potential issues immediately.
2. Double-check employee classifications
Each job classification code is associated with an assigned level of risk necessary to perform the job. Assigning job codes that have more risk than your employees face can contribute to higher workers’ compensation insurance premiums. Take the time to properly classify each of your employees and always use the most recent edition of the Hawaii classification codebook to do so.
3. Get injured employees back to work
If an employee is injured, make it your goal to get the individual back to work as quickly as possible—even if it’s on a modified basis while the employee recovers. A return-to-work strategy can have both direct and indirect cost benefits for your company. For one, the longer an employee is out of work, the longer the insurance company will be required to provide claims benefits, the result of which is often an increase in workers’ comp premiums. A return-to-work program also helps ensure that both you and the employee avoid any feelings of alienation due to a prolonged absence. This reduces the chance that the employee will never return.
4. Work with a Professional Employer Organization
Partnering with a professional employer organization (PEO) can save a great deal of money and time when it comes to managing your workers’ compensation. A good PEO will keep your workers’ compensation rates down, manage injury claims, and help you avoid getting hit with huge premiums all while keeping you compliant with both state and federal laws. Furthermore, a PEO can help your company navigate safety at the worksite by providing safety inspections, consultations, and OSHA support.
As Hawaii’s most trusted provider of outsourced payroll and HR services, simplicityHR helps get workers’ compensation off your plate so you and your team can focus on serving your customers and finding new ones.
Read also: A Better Way to Handle Workers’ Compensation Insurance
This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.