Worker’s compensation is basically an insurance program that provides guaranteed benefits to workers for injuries or illnesses that happened at work, while protecting employers from costly lawsuits. In exchange for guaranteed benefits, workers waive most of their rights to sue. Worker’s comp programs are generally administered by the state and most businesses with one or more employees are required to participate.
Worker’s comp overhead is more than just the money spent on insurance premiums—it’s also the time spent on paperwork, the cost of legal fees and the challenge of trying to keep up with changing regulations. Worker’s comp insurance may not cost much compared to a worker’s salary or other benefits, but there are still potential savings.
Here are five ways you may be able to reduce your company’s worker’s comp overhead:
Develop and implement workplace safety protocols—Make a careful survey of your workplace. Are there any particular places or job functions that lead to higher injury rates? Figure out why and come up with a plan to make that area or job safer. Don’t be afraid to ask your employees for ideas. Keeping your workers from getting injured in the first place will yield the biggest savings.
Make sure your employees are classified correctly—Mis-classifying an employee as higher risk than their job actually warrants increases your worker’s comp insurance premiums.
Come up with ways to bring injured workers back to work more quickly—Can you offer them a temporary desk job, reduced hours or a reduced workload? When employees are able to work, even just part-time, your worker’s comp costs go down.
Check your state’s overtime laws—Though you pay employees time and a half for overtime, you may be able to use just the regular wages to determine your worker’s comp insurance premiums.
Hire a Professional Employer Organization (PEO) such as HR Support, Inc. to handle your worker’s comp insurance. PEOs typically provide insurance at a competitive price, with the added benefit that the PEO takes care of the administration and paperwork and also assumes the risk if an employee has an injury or decides to sue.
Tags: Business Management, Workers Comp, Workers Compensation Insurance
I have 14 years experience in workers comp with PEO’s as Risk Manager. I have seen some strange things happen to employees, that had the employer not been with a PEO or not had WC, the company would have been forced out of business.
1. An employee was nearly cut in half by a strap connected to a frontend loader. $3,000,000.
2. An employee backed off the roof at the Atlanta Airport, breaking both heels. $600,000.
Had the client not been with a leasing company, the carrier would have dropped them both on the spot. Neither company would have been able to manage the increase in their WC Mod Factor.
Am I a firm believer in PEO’s, you betcha.