Anyone with employees needs workers’ compensation insurance. Yep, everyone. Workers’ compensation provides wage replacement and medical benefits to employees injured in the course of employment. Just like any other insurance, you hope you’ll never need to cash in on it. But if you do end up needing it, it’ll save your butt a million ways. That said, the costs associated with workers’ compensation claims can be a significant burden on a business, so it’s best to take proactive measures to create a safe work environment and manage potential liabilities effectively.
5 Steps to Safeguard Against Workers’ Compensation Risk
Step One: Be Proactive
Employers that ensure worker safety and implement best practices before they need them are in the best position to protect employees, keep claims manageable, and maybe even keep premiums down. That’s a good reason to pursue prevention like you would pursue a crisis. If you do, you might end up preventing said crisis all together.
Proactive measures include making regular safety meetings, ongoing education, and performance metrics standard procedure. Encourage open communication about safety concerns. Identify potential safety hazards in your workplace and provide written safety policies and procedures to address them. Regularly update them to reflect changes in regulations or emerging risks.
Keep your workplace clean and organized to reduce slip and trip hazards. Ensure that safety equipment, such as fire extinguishers, first aid kits, and eyewash stations, are easily accessible and regularly inspected.
You know that weird thing that happens when you are so close to a situation that you lose objectivity about it? That’s a good reason to have a third party conduct regular safety audits and inspections whenever it makes sense for your business.
Step Two: Create Airtight Internal Processes to Handle Claims
After you’ve taken measures to prevent workplace accidents, it’s still good business to prepare for the worst. Create a process for employees to report safety concerns, near misses, and accidents promptly. Investigate incidents thoroughly to identify root causes and implement corrective actions to prevent similar incidents in the future.
Implement a plan for how you’ll handle a claim if one does still come up after you’ve put all your preventive measures in place. Make sure reserves are accurate. Have a standard operating procedure. Decide who will talk to the adjuster and within what time frame. Taking the time to lay out your processes while your brain isn’t in crisis mode results in sounder decisions. The added benefit is that it will reassure your adjuster that you’re engaged and motivated to reach a speedy resolution.
Have a “Return-to-Work” Program established to help injured employees transition back into the workforce as soon as they are medically able. This can reduce the duration of workers’ compensation claims and associated costs. These measures demonstrate a level of professionalism and reassure insurance companies and employees alike.
Step Four: Invest in Accurate Worker Classification
This may not seem related, but an independent contractor filing a workers’ comp claim can easily land a well-intentioned company on the DOL’s radar. This happens with surprising frequency despite the logical assumption that an independent contractor should understand the implications of a business-to-business relationship. One key aspect of a true B2B relationship is that a worker’s business activity exists independent of the employer. Preventing misclassification and communicating clearly with workers is a worthwhile preventative investment.
Step Five: Engage The Right Partners
Review and evaluate your insurance coverage to ensure it adequately meets your business needs. Consider working with an insurance expert to identify potential cost-saving opportunities. Seek professional guidance from partners (such as an Employer of Record, like PayReel) that is in position to help you manage the risks associated with having employees. They can provide valuable advice on risk mitigation strategies and legal compliance.
The Bottom Line
If you don’t have the budget to implement every possible safety measure for a project, you don’t have the budget for the project. Protecting your business against workers’ compensation risks is not only a legal requirement but also a smart business practice. By creating a safe work environment, implementing comprehensive safety measures, and actively managing workers’ compensation claims, you can reduce the financial and reputational risks associated with workplace injuries. Remember that investing in safety is an investment in the long-term success and sustainability of your business. The best workers’ comp claim is the one that never happens.