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The Hidden Costs of Workplace Injuries

OSHA Workplace Injuries

Workplace injuries very much reflect the common expression, “just the tip of the iceberg”. While only a small portion of workplace injury costs are obvious, the majority (and most expensive aspects) are hidden beneath the surface and remain somewhat ambiguous from the initial injury and throughout the recovery phase. We want to help bring to light unseen costs of workplace injuries to help reinforce the importance of a safe, healthful and engaged workplace. After identifying the gaps and areas where improvement is needed, prioritizing and developing a plan of action will provide a road map to improving your facility’s safety culture.

Most employers understand what are called the direct costs of workplace injuries as these are easily visible, predictable, and directly associated with the injury. This is the tip of the iceberg. Examples of direct costs are: immediate treatment, physician and hospital bills, medicine, physical therapy, medical equipment, etc. Direct costs are typically covered by Workers’ Compensation insurance policies that employers provide.  Some studies suggest that direct costs only represent one tenth of actual costs directly related to a workplace injury while there are other studies that show the direct costs only represent one fortieth of the actual costs.

This means that there are a substantial number of indirect costs (the portion of the iceberg that is unseen) that often catch employers off guard. Examples of indirect costs are: equipment damage, lost time due to injury response, low productivity and low morale, cost of hiring and training a replacement, insurance premiums, civil and criminal penalties, lost work opportunities, etc. Indirect costs are often absorbed into the operations and are spread out over time, which is why they may go unnoticed.

One of the more helpful tools in estimating both direct and indirect costs is the Occupational Safety and Health Administration’s (OSHA) injury cost estimator. This tool calculates the direct and indirect costs of the average workplace injury. One of the more interesting – albeit rather alarming – pieces of information the tool provides is the estimated sales required to recover the costs of the injury. The tool is based on averages and limited input, and may be considered conservative, but it does provide some instant estimates. One thing to consider is that the direct costs will vary based on the Worker’s Compensation policy but the employer always pays the price of the indirect costs.

So, what is the benefit of knowing all of this information? Evidence of the effect that injuries can have on the bottom line can typically be used to encourage participation in safety improvements throughout all levels in a company. Purchasing costs of new safety equipment or implementation of new safety policies are often substantially lower than the cost of just one injury that is related to the failure to do so.  Safety is all-too-often viewed as an unnecessary cost and is the first to be cut in times of trouble.  But in the end, safety is a strong investment that not only has a good rate of return, but also increases the health of employees and their livelihoods. Braun Intertec is here to help employers increase workplace safety performance. We care about employee safety, have a wealth of knowledge, and want to help companies develop, set, and reach their safety goals.

Please give us a call or contact us if you have any questions or would like assistance in developing policies and procedures, performing audits, and other services to minimize workplace injuries and their associated costs.