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Monday, September 9, 2013

Five tips to reduce workers' compensation costs

Avoid unnecessary workers' compensation costs with a safe working environment
Working conditions affect insurance rates
By Catherine Harris
All small business owners know that one of their largest operating expenses is worker's compensation insurance. Premiums for this type of coverage can be very high, especially in industries that are considered dangerous or have high injury rates. 

Insurance rates, however, can be reduced if the small business implements safe working conditions for the employees that it can prove to the insurance company. Some of the easiest ways to do this include:
  • Ensure a drug-free workplace. Establish your company as a drug-free workplace. This will require you to have drug tests performed on all existing employees and all new hires. You will also have to explain to your employees that random drug tests will be conducted throughout the year. By documenting this type of action, you can request that your insurer adjust your rates.
  • Establish regular safety meetings. By conducting bi-weekly safety meetings you can establish with your insurer that you actively try to keep the workplace safe by keeping your employees informed.
  • Provide safety equipment. Make sure that it is company policy to issue safety equipment such as protective eye wear, hard hats, and ear plugs. It is also important that the company enforce the rules for the employees to use the equipment that is issued to them. Keeping a log book of the equipment when it is issued will provide sufficient proof to your insurer.
  • Require personal protection equipment (PPE). You will need to make sure that your employees adhere to safety standards such as wearing the right type of protective foot wear and clothing.
  • Create a safe workplace for your employees. Make sure that you have your workplace in a condition that will be conducive to the safety of the employees. Make sure that stock is not lying around or creating clutter. Have all machinery routinely checked and serviced so that accidents can be avoided. Install slip proof flooring or safety mats, properly label electrical areas, and make sure that everyone is always properly trained to use the equipment that they use as part of their job.
  • Pay attention to insurance categories. It is also important for the small business owner to make sure that the insurance company has their business classified under the right industry. In some cases, a business will pay higher rates because it is classified as a different type of business.
  • Don't allow under-21 workers to operate machinery. Business owners in the manufacturing industry can also reduce insurance costs by requiring workers who operate any type of machinery to be over the age of 21. Insurance companies find younger workers at particularly higher risk for injury due to inexperience. Additionally, federal child labor laws prohibit minors under the age of 18 from operating some heavy machinery,1 and some states have stricter laws in place prohibiting workers under the age of 20 or 21 from doing similar work. This does not mean that you cannot hire younger individuals for apprenticeship programs or to perform other duties, you just should wait to allow them to operate machinery until they pass this age.
Worker's compensation insurance exists to provide a safety net to all employees to provide coverage for their medical costs and basic needs in the event that they are injured on the job. Injured workers are compensated even when their work-related injuries were not the fault of the employer. It's best to keep this in mind, when - despite everyone's best efforts - an injury or accident occurs.

Ideally, worker's compensation protects both the employee and employer by encouraging and supporting a safe work environment and providing automatic support in the event of an injury. Maintaining adequate insurance coverage and making sure employees know how to access it is the hallmark of any established, well-run business. Insurance companies will adjust your rates when they see that your company is accident free for specific periods of time and documents the efforts by the business owner to keep the workplace safe.

About the author: Catherine Harris is pleased to offer these tips for reducing the risk of workplace injuries and lowering costs associated with worker's compensation insurance. She found information from the website http://www.augerlaw.com/north-carolina-workers-compensation-attorney.html to be very helpful when preparing this article.

1. U.S. Occupational Safety and Health Administration (OSHA). Safety and Health Bulletin SHIB 03-09-30. Protecting Young Workers: Prohibitions Against Young Workers Operating Forklifts. Accessed online: https://www.osha.gov/dts/shib/shib093003.html.

Photo credit:Elliot Brown; CC BY 2.0 

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