Reducing your workers’ compensation cost can directly affect your company’s profitability. For some firms, cutting these costs can make the difference between success and failure.
If your company has employees that fall into high-risk categories, workers comp (WC) premiums can add up to 15 percent to your payroll costs. Two key factors – the skyrocketing cost of healthcare and a hard insurance market – are likely to cause WC costs to increase even more in the next few years.
Although you can’t control financial markets and other factors that influence insurance costs, you can take steps within your organization to keep your WC premiums as low as possible.
No. 1: Implement a Comprehensive Safety Policy
Having (and enforcing) a safety policy is important for a variety of reasons, not the least of which is how it may help control WC costs.
Your safety policy should provide detailed directions intended to eliminate workplace accidents. Incorporate required training and periodic policy review and, above all, lay out clear penalties for violating safety policies.
Document your safety training and require all employees to sign off on policies, updates and training.
No. 2: Implement a Substance-Abuse Program
Many workplace accidents involve employees who use or abuse drugs or alcohol. In fact, rampant substance abuse problems among your employees can double your WC costs.
If you aren’t willing or able to implement a periodic or random drug testing policy, consider implementing mandatory testing as a condition of employment and in response to any workplace accident.
Even if you don’t implement a testing program, consider implementing a mandatory education program your employees and provide them easy and confidential access to counseling and other substance abuse resources.
No. 3: Revisit Job Descriptions and Workers Comp Classifications
Are all your employees categorized properly for workers compensation purposes?
Revisit your company’s job descriptions for accuracy, or write them up if they don’t yet exist. Review each position with your WC carrier to ensure your policy accurately reflects the risk your company faces.
It’s tempting to classify as many employees as possible as low-risk but, if your low-risk employees ever perform high-risk tasks, you could find yourself facing huge premium increases or even policy cancellation if you have a substantial claim.
For example, if a member of your IT department climbs on his desk to change a light bulb above – but steps wrong and falls while getting down – that claim could haunt you for years with increased premiums.
No. 4: Use a PEO to Help Reduce Workers Compensation Costs
Working with a PEO can help you reduce your WC premium costs substantially.
A PEO can assist you with implementing and enforcing safety and substance abuse policies and ensuring the correct risk classifications for your team. They can work with you to improve communication with your employees about safety, reducing false or frivolous claims and getting hurt employees back to work more quickly.
Your PEO will also help ensure your firm complies with all governing laws and regulations, reducing your risk exposure and – as a result – your workers comp cost.
WTA Inc. assists clients in Salt Lake City and throughout northern Utah with HR services, benefits administration, payroll and tax administration, recruitment, hiring and retention. Our comprehensive service offerings and exceptional client service set us apart in the industry.
Contact us today to learn more about how we can help you reduce your workers compensation costs and potential risk.