But for small businesses, a few workplace injuries or a single costly one can quickly reverse that trend. While larger companies have the resources to set aside significant funds for managing their workers' comp costs, small firms often don’t have that luxury.
However, there are several low-cost steps small firms can take to reduce the chances of injuries and prepare for an employee being injured on the job.
Build a strong safety culture
The foundation of any workers' compensation cost-control strategy is a workplace safety program that is tailored to your operations, regularly updated and consistently enforced. It should also have management support to help get employees onboard.
A strong safety program starts with identifying hazards before they lead to injuries.
Start by conducting regular risk assessments to evaluate work areas, equipment, procedures and employee tasks. Look for common causes of injuries, like:
- Slippery or cluttered floors that may cause slips and falls,
- Workers performing the same task repeatedly, which can increase the risk of repetitive-motion injuries,
- Not using proper lifting techniques or equipment when lifting objects, or
- Failing to lock out and tag out equipment that’s being serviced, which can lead to severe injuries such as lacerations and amputations.
Safety training is equally important. Employees should receive training when they are hired and periodically throughout the year. Training should cover workplace hazards,emergency procedures, injury reporting requirements and safe work practices.
Managers and supervisors should also be trained to recognize unsafe conditions and address them before accidents occur.
Good documentation demonstrates your commitment to safety and may prove valuable if questions arise after an injury or regulatory inspection. Keep records of safety meetings, training sessions, inspections, corrective actions and employee acknowledgments.
Manage claims diligently
Even businesses with excellent safety programs may experience occasional workplace injuries. How you respond can significantly affect the ultimate cost of the claim.
Report injuries promptly and stay involved throughout the claims process. Delayed reporting can increase claim costs and complicate treatment decisions. Employers should communicate with the injured worker, insurance carrier and medical providers to help ensure the claim moves forward efficiently.
After an injury,conduct an investigation to determine what happened and how to prevent a similar event in the future. Document findings and implement corrective measures.
Employers should also consider return-to-work programs that provide modified or transitional duties as soon as it is medically safe. Bringing employees back to work in a limited capacity can help maintain productivity, reduce indemnity costs and keep workers connected to their colleagues.
Understand the importance of X-mod
Workers' comp premiums are affected by your company’s claims history. Once your firm reaches a certain size, based on premiums paid, it may qualify for a workers' comp rating called the experience modification factor or X-mod. This rating compares a company’s loss experience to that of similar businesses in the same industry.
A mod of 1.00 is considered average. A mod below 1.00 means your claims costs are lower than average for your industry and can result in lower premiums. A mod above 1.00can increase costs.
The takeaway
All of the above,while not cost-free to implement, often require little investment in physical equipment. It takes time and requires management commitment to safety, staff training, effective claims management and returning injured workers to productive employment.
The fruits of your efforts could be reflected in lower claim frequency, improved loss experience and more favorable workers' compensation rates.
