What Are Some Indirect Costs of Workplace Injuries?

• What are the direct costs of workplace injuries?
• What are the indirect costs of workplace injuries for the employee?
• What are the indirect costs of workplace injuries for the business?
• How can you calculate your indirect and direct injury costs?
• What is the best way to cut workplace injury costs?

When an employee is injured, the direct costs of the injury tend to be the most pressing initially. These costs include those related to insurance, and they are often a glaring overhead expense that costs American companies millions annually. 

What you often don’t hear about, however, are the indirect costs of workplace injuries. These are often just as catastrophic to business overhead, and many times, they extend well beyond the original event of the injury. 

If you are curious about how much you are spending to cover these hidden expenses, click here to calculate your indirect workplace injury costs using our free calculator.

What are the indirect costs of workplace injuries and how do they differ from direct ones? What can employers do to cut these costs, both for the business and for the injured employee?

The direct costs of a workplace injury include damages that are covered by workers’ compensation insurance or by healthcare benefits that cover medical treatments.

Some of these insurance-related costs include the following: 

• The premiums employers pay to health insurance carriers or their workers’ compensation insurance premium. Unfortunately, these costs often increase after even one OSHA recordable incident. 
• The workplace-related insurance covers the replacement of faulty equipment or fire and property insurance. Note that these policies often have deductibles that the employer must cover before the policy kicks in.
• Medical costs such as the hospital, doctor, and ancillary fees, medications, and physical therapy
• Indemnity payments such as death, disability, or dependent benefits. Like any insurance policy, these policies carry a deductible that the employee must cover before the policy pays out.
• Hiring or training employees to cover for an injured worker while they are out sick or injured. 
• Legal fees related to compliance failure, and potentially a court case or OSHA fine, investigations, and of course, settlements or payouts to the injured employee or an innocent bystander. 
• Administrative costs to handle these complexities within the business. This is typically about 10% of the overall direct costs of workplace injury.

 Some of the biggest direct costs for a self-insured employer include the cost of the claim itself, which is about 80% of the expense. The direct costs, however, are literally the tip of the worker injury iceberg. 

For every $1 spent on direct workplace injury costs, companies will spend another $4 in indirect costs. What are the indirect costs employers face every time an employee is injured?

The indirect costs of even one workplace injury can drag on for months. These costs are often difficult to track, and they can create a ripple effect across a business that far exceeds any immediate impact of the injury. 

Some of the indirect costs for the injured worker include the reduction in both their income and in their quality of life.

When an employee is injured and cannot return to work for a time, this directly affects their hourly wage or salary. While the employee may have paid time off, if this runs out, disability payments or other types of supplemental worker insurance may kick in. The problem is that this compensation is rarely paid at the same rate that a regular salary would be. 

Additionally, workplace injuries can be highly debilitating and could affect the employee’s ability to function normally. For example, orthopedic injuries could change the employee’s mobility which could, in turn, affect their ability to drive a child to school or handle other normal areas of life, in addition to being unable to return to work. This could in turn also affect the emotional and social aspects of the person’s life, and while this is hard to measure it could be substantial.

For employers, the indirect effects of a workplace injury could negatively affect overall team production and worker morale. Employees want to know they can trust their employer to create a safe and healthy business environment for them to work in. 

 Even one workplace injury could also have a negative effect on the public perception of your business. For example, if a customer is affected by a workplace injury incident, the public’s perception of the safety of entering your business could decline. Or, if an employee is injured and feels that the work environment promotes a less-than-safe space, the PR fallout from this kind of incident could be profound and long-lasting.

 From the effect on internal and external perception alone, the indirect costs of a workplace injury for employers could include:

• Absenteeism or call-offs from non-injured workers
• Difficulty recruiting new talent to a “tarnished” workplace
• Increased workload for supervisors and employees to train on worker safety
• Loss of business or loss of goodwill
• Production slowdowns or work stoppages

Additionally, on the employer side, there are factors such as damages to equipment, the need to secure emergency supplies or rent replacement tools, and any cleanup costs depending on the extent of the damage that occurred during the injury.

On-the-job injury is clearly a massive problem for American employers that has long-lasting effects. Is there a way to mitigate the risk of these incidents while reducing some of the indirect and direct costs when they occur?

In simple terms, cutting your workplace injury costs begins with reducing the chance of injury in the first place. Additionally, offering treatment on the scene can prevent the effects of any incident from escalating.

Overexertion in the form of muscle strains, sprains, and other types of orthopedic injuries is the biggest cause of workplace injury incidents in the U.S. today. You can limit the impact of these types of injuries thanks to the OrthoLive Remote Injury Care program. 

OrthoLive provides telemedicine access to licensed clinicians who can triage and treat most of your job site injuries over the phone or on another digital device. This service provides immediate triage and treatment for job site incidents that, in many cases, prevent the need to travel to the ER and create an OSHA recordable incident for a minor orthopedic injury. 

Save up to 80% of the direct and indirect costs of workplace injury, and get ready to improve how your company handles workplace injury incidents.