OSEA Safety Blog

The True Cost of Workplace Injury

Monday, December 3, 2018 Ariana Naumvoski

The True Cost of Workplace Injury for Employers

As far as safety goes, many companies choose to put safety on the back burner because it can be costly. But what these companies don’t realize is that when it comes to safety, you have to spend money to save money; meaning, you have to spend money on PPE, training, safety programs, etc. in order to save money on potential injury costs. If your company has ever had an employee get injured on the job before, you’ll know how expensive it can be. There are medical bills, insurance costs, worker’s compensation costs, and more that you have to cover for that employee’s injury. But those costs are just the beginning of a long and expensive bill to come.

With that being said, there are actually two types of costs that add to the true cost of a workplace injury; direct costs and indirect costs. Many companies forget to think about the indirect costs associated with an injury. But it’s just as important if not more because indirect costs can be as much as 20 times the cost of direct costs. You’ll see this number fluctuate depending on the injury and its severity and the factors involved.

Your direct costs are your upfront costs for the accident. You’ll hear many people refer to these as “the tip of the ice berg.” This just goes to show that there is more to the true cost of a workplace injury than just the few that we will cover in this section. These direct costs are going to encompass the following costs:

  • Medical
  • Indemnity
  • Worker’s compensation
  • Increased insurance

Now your indirect costs which many companies don’t realize are going to be the bulk of your “ice berg.” You may not pay these costs upfront, but they will add up and hit your bottom line hard. These costs will include a majority, if not all, of the following:

  • Damaged machinery or tools
  • Property damage
  • Decreased productivity
  • Replacing the injured employee
  • Drop in employee/company morale
  • Negative media attention
  • Damaged reputation
  • Decreased sales
  • Administrative costs
  • Employee training
  • Legal
  • OSHA fines
  • Overtime pay

So why are these costs so important? Well for starters, because you as an employer will be footing the bill. But time is an equally important cost. The time that you’re going to “spend” on this injury is going to be great. It will take many hours to investigate the injury, train a replacement for the injured employee, and even go to court if that’s the direction the injured employee takes.

Let’s take a look at an example. According to these statistics from Liberty Mutual, a simple slip or trip ended up costing companies a total of $2.3 billion dollars in 2015. Let’s say your employee had a resulting back injury from a slip; the average direct cost for a back injury strain/sprain is roughly $10,000. The indirect costs for that injury can go anywhere from $30,000 to $100,000. That’s an average of $45,000 just for one injury! Now imagine if that was a fatal injury. It would definitely cost you a lot more than $45,000.

It should be obvious from the high costs of a workplace injury and the time invested, putting safety first will give you a great return on investment. Yes, we need to look at safety as the right thing to do but it’s also a good business move. Spending a small amount on safety will save you an even greater amount of time and money from a workplace injury.








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