03/ 14/ 2008
by Pamela Mills-Senn
Although businesses differ in the kinds of physical hazards they pose to employees, no business is entirely injury-proof. Consequently, small business owners must adopt a vigilant concern for maintaining a safe work environment not only for the sake of his or her staff, but for the sake of their company's financial health as well. Workplace injuries can cost you your entire company.
Just ask attorney Antonio Romanucci, managing partner with Romanucci & Blandin, LLC, a Chicago-based law firm that handles worker's comp and injury claims. When he tells business owners what a work-related injury could cost them, they are usually shocked. Romanucci says many employers are unaware of the hard and soft costs these claims can generate and that they can drag on from 12 to 36 months.
"Hard costs are those paid directly out-of-pocket, either by workers' comp insurance or by the employer, if uninsured," Romanucci says. "[These expenses] typically include medical, temporary total disability (the wage the employee would receive if working) and if necessary, rehabilitation costs, which can be both physical and vocational.
"The biggest component of the hard costs is the indemnity portion, or the payment that is made in compensation for the disability," he continues. "And then there are the potential legal/attorney fees and of course, higher workers' comp costs."
The soft costs associated with a workplace injury are just as worrisome, particularly since they're borne entirely by the business. And yet, says Kevin Scannell, president of Scannell & Associates, a safety consulting, inspection and training company located in Scottsdale, it's common for small business owners not to appreciate—or even recognize—soft costs.
"Small operations…think, 'What are the costs of sending a guy to the hospital for stitches?' but they don't think about the related soft costs, such as time off, overtime, scheduling changes and the time required for managing the injury, such as paperwork and OSHA logs," Scannell says, also mentioning the possibility of having to find, hire and train a replacement.
There are others ways an injury can exact a financial toll on a business, says attorney Michael Johnston, partner with King & Spaulding, an international commercial disputes litigation practice group.
Morale can be negatively impacted as work is spread out to other employees, Johnston explains. Being short staffed can increase the chances of more injuries as employees take on jobs they may have less training in. Stress levels rise as well, which can lead to claims, says Johnston.
"Stress can manifest itself in physical symptoms, such as anxiety and sleep-related problems," he explains. "And these claims can be just as costly as physical injury claims and can result in absences from the job for months at a time."
And it's not just the disastrous incidents or injuries that can have a sizable financial impact on a small business. Carpal tunnel and other cumulative trauma disorders (CTD) can rack up enormous costs. According to ergonomics expert, Susan Johnson Melat, president of Ergonomic Resources, a workplace consulting company located in Colorado Springs, the average cost for a CTD, including lost time, training replacements and retraining employees that return with physical restrictions can average around $14,000—not including surgery. With surgery, the cost can jump up to almost $30,000.
Given the workman's compensation and insurance realities, small business owners cannot afford to ignore the situation, says Bruce Kaechele, president of Target Safety, a San Diego-based consulting company. Instead, they need to develop workplace safety programs that address the risks specific to that environment, and make safe work practices as much of a priority as the other aspects of the operation.
Check out Scannell’s tips for reducing your chance of incurring injury claims:
- Play detective. Identify areas where injuries are most likely to happen. Also review safety policies and procedures to ensure they're current and appropriate for the business and its specific risks. Go over training materials to see if these need updated for safety concerns.
- Be a role model. Safe practices start from the top down. If owners exhibit a cavalier attitude towards safety, employees will too.
- Keep safety at the forefront. Every meeting should start off with a discussion of a safety-related topic, particularly if there has been an injury or accident. Address safety concerns in company newsletters, and hang safety posters/reminders throughout the business, especially in high-risk areas.
- Identify high-risk tasks. Employees must be thoroughly trained to safely perform these tasks, and they should be routinely monitored. Training should be refreshed throughout the year.
Educate employees about the causes and symptoms of CDT injuries and how to respond to these. Encourage those who experience lasting discomfort to tell you and investigate why this might be happening—before it becomes a full-blown complaint. Also provide equipment, chairs and other ergonomic tools whenever possible, and instruct employees on how to properly use them.
Small business owners who remain vigilant about safety improve their chances of establishing the kind of track record that could help lower their workers' comp costs, says Romanucci. And, for companies who have gone without workers' comp because of the expense, staying strong on safety could make this coverage more affordable.
Finally, if an employee is injured on the job and a claim results, employers can lower their costs by welcoming back the injured employee whenever possible. Although, many businesses hate to do this, Romanucci says.
"I frequently see a failure to accommodate the [injured] employee," he says. "Employers are afraid they're taking back an eggshell worker who may get hurt again. But if you accommodate correctly, you will usually get back a loyal and motivated employee, and you will increase the morale of your workforce as well. And by not accommodating them, you'll increase the value of the claim."
For more information on worker’s compensation and other safety issues, visit www.NFIB.com/page/laborIssues.html.
