14 proactive strategies to avoid workers’ compensation claims

Most employers are well aware of the taxing cost of workers’ compensation insurance and how this burden can increase exponentially with claims. The Occupational Safety and Health Administration (OSHA) estimates employers pay $1 billion per week for direct workers’ compensation costs. When factoring in indirect costs, such as training replacement employees, investigating the accident, and taking corrective action, the cost to an employer is a staggering amount.

So what can an employer do? The easiest fix is to not have any employees. However, this is not likely a viable strategy for most employers. Accepting that workers’ compensation costs are a necessary component of employing individuals, there are several strategies that can result in direct and indirect benefits to the employer. We’ve identified 14 proactive strategies to help employers influence workers’ compensation costs.

  1. Conduct hazard analysis. Typically this starts with an observation — are employees modifying their equipment or work area? Is anyone shaking out their hands, rolling their shoulders, or otherwise seem to be in discomfort? These may signify immediate problem areas. In addition, an analysis should be performed to evaluate whether there are any other risk factors relative to the tasks being performed. Additional resources are available on OSHA’s website.
  2. Design jobs to reduce hazards. Where risks are identified, further analysis can be used to develop cost-effective strategies to modify or eliminate the risks. These strategies include the use of personal protective equipment, administrative controls (e.g., job rotation), and/or engineering controls (e.g., the use other equipment). For example, a scissor lift table may cost a few thousand dollars, but if it eliminates one injured back claim, it has the potential to save a company $20,000 to $120,000, or more. Additional resources are available on OSHA’s website.
  3. Create job descriptions. While not legally required, job descriptions provide many benefits for an organization, such as identifying essential job functions for purposes of evaluating accommodations and minimum qualifications, as well as setting an expectation regarding performance. Employers without job descriptions may use O-net as a starting point for development. 
  4. Draft clear job advertisements. Advertisements should be specific, clear, and realistic. This helps manage expectations up front and can focus the quality of applicants that apply for the position.
  5. Include safety questions and disclaimers in applications. Make sure the application requires the applicant to certify the truthfulness of the statements made in the application. Give applicants an opportunity to provide information about their safety history, such as any safety awards or incentives they received.
  6. Ask safety-based interview questions. The interview provides an occasion to ask more pointed-questions and follow-up. This is an excellent opportunity to ask situational questions about safety in your own workplace.
  7. Conduct background checks. Many employers conduct “due diligence” on an individual before making the final hiring determination. Just be sure your practices comply with the laws. 
  8. Assess candidates. Pre-hire assessments allow the employer to further evaluate the applicant. Honesty tests can gauge a person’s tendency to be trustworthy and dependable. Personality tests, if done correctly, can assist in finding a better fit for the organization and even for the position itself.  
  9. Perform physicals or physical capability testing. Physicals may be able to evaluate someone’s ability to safely perform the functions of a position, but since physicals are actual medical evaluations, laws restrict when these may be conducted. On the other hand, true physical capability testing is not a medical evaluation and employers may have more freedom to use this as a similar tool to assess someone’s ability to do certain tasks before they become an employee. 
  10. Institute a drug testing program. Drug testing can discourage users from applying and may limit employees’ use over the course of employment. In addition, some carriers may provide a premium credit based on an employer’s program. Employers using a drug-testing program need to ensure they are complying with federal, state, and local laws. 
  11. Evaluate employees during an introductory period. Contrary to popular belief, at-will employees do not have any fewer rights on day 91 than they do on day 89, so termination before 90 days does not place the employer in an exempt category from lawsuits. However, having a short introductory period, along with regular follow-up, can set the expectations early for the position and let both the employee and employer adequately assess whether this is the right fit.
  12. Provide orientation. Orientation helps assimilate an employee into the organization’s culture, including the safety culture. By placing an emphasis on safety early on, it becomes clear safety is a priority. Orientation is also a good time to provide introductory safety training (which should complement periodic reinforcement training). 
  13. Enforce a safety culture. Embracing such a culture can greatly reduce the incident rate and severity of accidents in the workplace, while increasing employee morale and productivity. Creating an effective safety culture should be an essential part of any organization’s loss control efforts.   
  14. Implement a wellness program. Unhealthy workers can drive up all costs to an employer, including workers’ compensation costs. Instituting a wellness program may result in a significant return on investment. It is estimated for every dollar invested in wellness, an organization may see $3 to $6 in savings.

These strategies can serve as a starting point for an organization to assess its own practices. For more information, contact Associated Financial Group.

Rebecca Kellner is an HR consultant at Associated Financial Group.

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