Return-to-Work

Economics of Workplace Injuries Makes Early Return-to-Work Essential

Is your company prepared to work harder than ever, sell more than you thought possible, and slash costs even tighter than before just to cover the costs of workplace injuries and illnesses? If that sounds like too much of a burden (or if you would prefer such hard work to be reflected on the bottom line), consider the economics of workplace injuries:

Researchers estimate that the direct costs alone of occupational injuries and illnesses exceed $60 billion annually. Direct costs include workers' compensation indemnity payments, medical expenses and direct administrative costs. Nationwide, lost-time injuries cost employers an average of $10,488 per incident in direct costs, according to the National Safety Council (NSC). Lost-time injuries to multiple body parts or to the head and central nervous system average more than $20,000 in direct costs per workers' compensation claim. The average back injury costs employers more than $10,000 in direct costs, according to NSC statistics.

Unfortunately, such direct costs are just "the tip of the iceberg." Indirect cost multipliers for work-related injuries range from 3 to 10 times as much as direct costs. Indirect costs include costs of employees who assist injured workers, equipment repairs, lost production, administrative time, overtime costs, training costs and much more.

The impact on a company's revenue and profits from even moderate injuries can be severe. For example, according to OSHA, the typical burn injury results in $3,846 in direct costs and $6,154 in indirect costs - a total cost of around $10,000. Assuming a net profit margin of 2.5 percent, a company would have to generate an additional $246,161 in sales to cover the direct costs and $400,001 in sales to cover the indirect costs.

An effective return-to-work program that includes transitional duty is critical to controlling injury costs. Waiting until someone is 100 percent rarely works. Research shows that one-half of all workers who miss at least five months never return to the workplace, even if their injuries are not permanently disabling.