How Does Workers’ Compensation Claim Affect An Employer?

Workers’ Compensation Claim

Worker’s compensation is insurance that helps both the business and employees in case of an injury or accident at the workplace. The insurance protects the business from paying the medical bills of an injured employee out of pocket. Medical expenses include costs of medicines, surgery, disability, and final rehabilitation. Besides these costs, worker’s comp claims can affect employers in many ways.

Noted below are some of the indirect expenses your business might incur when one of the employees files this insurance claim:

#1: Increases Premium of Worker’s Comp Insurance

To know how a workers comp claim affects the employer, start with the premium. Once an employee receives the compensation, the insurance premium would increase for the employer. The insurance premiums would be calculated utilizing an algorithm, which considers the OSHA filings of the business. As the number increases, the insurance premium also shoots up above average.

Claims remain on the business records for at least three years. As a result, you can experience high premiums even after the claim is paid out.

#2: Productivity Loss

Immediately after an accident, business productivity may suffer. The business not only misses an injured employee but also stops the process of production to determine how a worker met with an accident and what necessary safety measures were taken to prevent an accident.

Employer morale also impacts productivity. When employees are worried about meeting the same fate, they may slow down the work and avoid hurting themselves, which might further interrupt the workflow.

#3: Increase in Material Cost, Product, and Equipment

If the workplace accident injured an employee and also damaged products or equipment, the business would spend time and money to replace the same. This could impact the overall productivity as well as output. You may be one machine down or short of some products till the time it is replaced.

There could be some additional costs of materials too. Depending on how the accident occurred, repair and cleaning could be extensive. The business may even need additional materials for improved safety.

#4: More Administrative Time

Once the injured employee files a worker’s compensation claim, the insurance company contacts the injured for a review. The insurance company reviews the medical records, accidents, and other relevant things. Depending on the nature and scale of that accident, the process could take a lot of time for the HR department to conduct meetings with lawyers and insurance companies for the necessary paperwork.

#5: Brand Reputation

Worker’s compensation claim could potentially harm business brand reputation. The accident may become headlines in local newspapers, which could harm the reputation of the company.

The claim can also diminish the safety record of the company to affect the ability to obtain bidding for extensive and high-profile projects. Loss of business reputation can also reduce the ability to hire new employees.

Protect Your Business from the Negative Impact

Although there are many ways in which the claim could impact the business, it is possible to mitigate any damage to the reputation, financial viability, and morale of employees.

Firstly, it is important to create a safer workplace to prevent such accidents. While this may not be avoidable, fostering a safe workplace culture through proper employee training and adhering to safety protocols can prevent such incidents.

Heather Breese
Heather Breese is a qualified writer who fell in love with creativity and became a specialist creator and writer, focused on readers and market need.

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