How Small Businesses Can Manage Workers’ Comp Costs

Required for most employers, workers’ compensation insurance is a valuable benefit for employees who become injured in the workplace. For employers and their workers in the state of California, CA workers’ compensation covers expenses associated with medical care, rehabilitation, and lost wages, allowing injured employees to rejoin the workforce as quickly as possible. Businesses must control the costs of workers’ compensation plans. Controlling claims costs is a risk management approach that is just as important as CA workers’ compensation benefits themselves.

Direct and Hidden Costs in CA Workers’ Compensation Insurance

Many small businesses that obtain workers’ compensation plans for their employees discover that there is more to these plans than the direct costs of providing financial support for injured employees. In fact, so-called “hidden costs” of workers’ comp plans can derail even the most financially-stable small business. According to one study conducted by the Occupational Safety and Health Administration, hidden costs may exceed direct costs by as much as 4.5 times. Some of these hidden costs include:

• Attorney fees associated with legal claims against the business
• Lost time and productivity
• Business interruption
• Insurance premium increases resulting from frequent or high-value claims
• Safety violations and subsequent penalties

Workers’ compensation plans offer many benefits to both employer and employee. Unfortunately, excessive claims can result in skyrocketing premium costs. This is perhaps the most common hidden cost for small business owners, yet the easiest to address, as we will explore in the next section. In general, failure to account for or manage hidden costs represent the biggest factors employers face when administering a CA workers’ compensation plan.

Safety-Oriented Workplaces: Key to Saving on Workers’ Comp Expenses

It should go without saying that reducing the frequency and severity of workplace injury claims is the leading way that small business owners can save money on CA workers’ compensation. There are several steps businesses can take to implement or improve safety-oriented programs in the workplace. First, safety begins with training. Employee and staff safety training should include:

• OSHA regulations specific to your industry.
• Safe use and maintenance of equipment.
• Safe lifting practices.
• Hazard identification and reporting practices.
• Incident reporting – who to call and when to call if an injury incident occurs.
• Proper use of personal protective equipment (where applicable).

Safety training is always an important part of onboarding new employees, but training should also be conducted on a regular and ongoing basis for all company stakeholders.

Managing injury claims is another important aspect of controlling CA workers’ compensation expenses. While a claim-free workplace should be the goal of every small business owner, the reality is that at some point, an employee can and will become injured. To manage claims, industry best practices include:

• Seeking medical care for the injured worker immediately.
• Collecting and maintaining documentation related to the injury.
• Reporting the claim to insurance carriers promptly.
• Provide options for light-duty work once a worker is released from medical care, allowing the injured worker to return more quickly.

After an injury incident, it is crucial to conduct a safety audit to uncover the circumstances leading up to the injury. All hazards or unsafe workplace conditions must be identified; armed with this information, employers can correct these conditions to help prevent a subsequent employee injury from occurring. With safety-oriented practices, claims management, and the valuable benefits of CA workers’ compensation insurance, small businesses can maintain control over insurance expenses while helping to ensure a safe workplace for their employees.

About Coastal Oak Insurance Services

At Coastal Oak Insurance Services, we strive to protect your personal and business assets from coast to coast. When you work with us, you’re family. Contact us today at (949) 519-3738 to learn more about how we can provide you with comprehensive and tailored insurance coverage.