More than 12 workers die on the job every day. That’s over 4,500 employees a year. And, each year, more than 4.1 million employees suffer a serious job-related injury or illness. Workplace injuries, and deaths cause financial hardships to both workers and employers. The number and costs of workplace injuries, illnesses and fatalities are unacceptably high.
A serious injury, or the death of an employee can have a devastating financial impact on a company. In fact, any workplace injury may have a major impact on an employer’s bottom line. For an employer, the cost of an on the job accident is more than just medical costs. Employers are affected by the substantial expense and business disruptions that come along with occupational injuries and deaths.
One widely cited source regarding the magnitude of these costs is the 2016 Liberty Mutual Workplace Safety Index, which reports the most serious workplace injuries cost U.S. Companies 62 billion dollars a year. Employers pay almost one billion dollars a week for direct workers’ compensation costs alone.
The costs of workplace injuries and illnesses include direct and indirect costs. Direct costs are easily trackable and include Workers’ Compensation payments, medical expenses, lost time wages, and costs for legal services.
In addition to these direct costs, employers deal with a variety of other expenses that or hidden or less obvious when an employee is injured or ill. In most cases, these indirect costs involve large expenditures of budget or time. They are also a big portion of the overall expense of an on the job accident and can vary depending on the industry and individual business. It’s imperative to be aware of indirect costs, because they’re usually uninsured. In other words, these indirect costs are unrecoverable.
Indirect Costs Can Include:
- Wages paid to injured employees for absences not covered by Workers’ Compensation
- The wage costs from time lost through work stoppage
- Administrative time spent by supervisors following injuries
- Employee training and replacement costs
- Lost of productivity due to new employee learning curves and accommodations for injured employees
- Repair and replacement costs of damaged material, machinery and property
- Accident investigation and implementation of corrective measures
- Costs associated with lower employee morale and absenteeism
- Increased insurance premiums
- Potential fines from regulatory agencies
OSHA has free Interactive software available online that enables employers to assess the impact of work-related injuries and illnesses on their profitability. It uses a company’s profit margin, the average costs of an injury or illness, and an indirect cost multiplier to estimate the amount of sales a company would have to make to cover those cost.
The multiplier OSHA used for these indirect cost estimates is based on a study by Stanford University’s Department of Civil engineering. The study states that the less serious an injury, the higher the ratio of indirect to direct costs – so, the indirect costs of a less serious injury can be four to five times the amount of the direct cost.
Additional studies show that a good safety and health program can save $3 to $6 for every $1 invested. An investment in safety is valuable and worthwhile; and you’re protecting the most important asset to any business—your employees.