4 Ways Workplace Injuries Cost Your Business More Than Cash

Workplace Injuries

~by Brooke Chaplan~

When a worker is injured on the job, employers may be held responsible for a wide variety of costs. There are direct costs associated with workplace injuries, such as the payment of worker’s compensation, legal fees and medical care for the employee. Businesses also incur indirect costs, such as finding a temporary employee, lost productivity and decreased profit margins.

Consider these four ways in which workplace injuries cost businesses more than just cash.

1. Decreased Profit Margins

Many businesses operate on a tight profit. When an experienced and skilled employee becomes injured on the job, this decreases the company’s profit margin. There may be a time when that worker’s job is not performed or must be taken over by a less skilled worker. A less skilled worker may do the work inefficiently or even incorrectly. According to the Safety Management Group, a business that operates at a 10 percent profit margin may have to increase their revenue by $2,400,000 in order to make up for an injury that has a combined direct and indirect cost of $240,000. Boosting revenue by this amount may be a considerable obstacle for many businesses.

2. Lost Productivity

The loss of productivity of an injured employee also costs employers. As explained by the American Society of Safety Engineers, the median number of days off of work for an injured employee is nine. Up to 25 percent of workplace injuries result in at least 31 days off of work for the injured staffer. These missed days of work lead to a considerable amount of lost productivity. In some businesses, employees are not cross-trained. If the injured person is the only worker who can do a specific task, a business may have a great deal of hardship in maintaining a high enough productivity level. Even when other workers are cross-trained, they will still have their own tasks to perform. Overworked employees are at a higher risk of becoming injured themselves, which could snowball the effects of a singled injured worker.

3. Legal Costs

When an employee is injured on the job, employers may incur considerable legal costs. The business will need to hire a defense attorney in case the injured employee files a lawsuit. Even if a workplace injury case is settled out of court, which can take many months, the lawyer will still need to be paid for their services.

When an injury case does go to court, the employer could be faced with paying for their own legal defense as well as the legal costs incurred by the injured worker. These fees are in addition to any medical claims and pain and suffering awards by the court or the jury. Employers should also be aware of any local or regional laws by consulting with lawyers in their area. Finding local lawyers is as simple as performing a search such as “personal injury lawyers Las Vegas” or “accident attorney San Diego”, and should be one of the first things a company does when an injury occurs.

4. Hiring and Training Temporary Staff

An injured worker who will need more than a few days off of work may need to be temporarily replaced by another person. Hiring and training a new employee takes both time and money. Human resources staffers and managers will have to create a job opening, post the position, wait for applicants, screen and background-check applicants, and set up interviews. Once a person is finally selected, he or she will have to be trained on how to do the job. Every job has a learning curve, and it will take time for the temporary staffer to learn how to do the work efficiently and correctly.

Workplace injuries are extremely costly to all types of employers. Even a moderate injury to one employee could result in losses of hundreds of thousands or even millions of dollars. And the losses of productivity and profitability are difficult to measure. Employers can work to prevent occupational hazards and purchase liability insurance for increased financial protection.


Meet the Author: Brooke Chaplan

Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most her time hiking, biking and gardening. Contact Brooke via Twitter @BrookeChaplan.

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