MEASURING THE HIDDEN COSTS OF INJURY
It's easy to assume that the cost of an injury is merely the
worker's compensation premiums you pay. Every organization paying
compensation insurance premiums recognizes such expense as part
of the cost of injury. In some cases, medical expenses also can
be covered by insurance. These costs are definite and known.
But injuries can result in hidden costs you may not have taken
into account. These costs can include the following:
- Uninsured medical costs covered
- Lost efficiency due to interrupted schedule
- Failure to fulfill customer commitments
- Reduced competitiveness
- Additional overhead costs while work is disrupted
- Cost of overtime
- Cost of temporary employees
- Cost of training new or temporary employees
- Cost of wages paid to supervisors for time spent on
- Time lost from work by injured employees
- Lost time by workers other than those injured but who
were directly or indirectly involved in injuries
- Lowered employee morale
- Employees' loss of earning power
- Economic loss to injured employees' families
- Cost of additional wages caused by decreased output by
injured workers after returning to work
Other hidden costs
Looking beyond the cost of the actual injury, other costs must be
considered such as the cost of failing to meet standards governed by
law. Some of these costs can be quite expensive.
The Occupational Safety and Health Act of 1970 requires the
government to cite companies for unsafe work practice violations and
to propose financial penalties. These penalties range from $7,000 for
violations that probably would not cause death or serious physical
harm to $70,000 for violations committed intentionally.
In addition to such citations and penalties, the U.S. Department
of Justice can bring a criminal action against an employer who
willfully violates a standard that results in the death of an
employee. A criminal conviction can result in a fine of up to
$250,000 for an individual or $500,000 for a corporation.
Excerpted from the new book, "Beyond Worker's Comp-A Human
Resources Guide to Building Safety Into Your Organization,"
published by NSC Press. For information about ordering the book,
call (630) 775-2075.