As small businesses in California continue to seek a healthy balance between operating costs and profitability we must constantly seek all methods and alternatives for controlling operational expenses. One area of concern for small business employers in California is workers’ compensation. All California companies are not only struggling with the increased cost of workers’ compensation premiums, but are also experiencing an elevated level of worker’s compensation claims.
According a 2014 study by the Oregon Department of Business and Consumer Services, “California employers pay the highest workers’ compensation costs in the nation — by a wide margin.” In fact the study states, “California has consistently ranked among the most expensive states in this workers’ compensation rate study for more than a decade. California has been tagged with the No. 1 spot since 2004. The study revealed that California employers pay 188 percent more in workers’ compensation costs than the national median and 33 percent more than the second most expensive state (Connecticut).”
The increased cost of workers compensation premiums have led to California businesses having, on average, a 19% higher operating costs per job than businesses in the rest of the country. This fact was revealed during a 2014 study released by the California Foundation for Commerce and Education (CFCE). In addition, California continues to see an increase in workers’ compensation claims. In attempting to understand the cause, a 2015 report by Workers’ Compensation Insurance Rating Bureau of California states, “The high cost of medical benefits in California relative to other states is not driven by treatment costs early in the life of a claim, but rather by the length of time a claim remains open and medical benefits are paid.”
What these facts reveal to business owners is that companies must take a hard look at their environments, make an assessment and work to mitigate and where possible eliminate environmental elements which increase or create health and safety issues. The importance of eliminating claims, managing the claims and getting injured workers back to work as soon as possible will have a dramatic positive impact on business expenses.
When an employee gets injured and goes out on workers’ compensation, the business impacts may include:
- Reduced company or departmental productivity
- Employee replacement cost
- Negative impacts on team operations
- Potential Increased premiums
In this case the old saying, “An ounce of prevention is worth a pound of cure” is especially applicable. Managing the environment on the front end can prevent potentially devastating financial and productivity consequences.
Three steps to reducing workers compensation claims
- Consult with human resources or risk management professional. Human Resources professionals are well versed in assessing the environment, recommending valuable workers’ compensation tips and preventative steps to reduce or eliminate workers’ compensation costs. In addition, managing workers’ compensation is directly related to employee health and safety. Claims can often be a complex and time consuming process. Lack of a plan or protocol, mismanagement of claims and inexperience in understanding Human Resource impacts many times extend the process and increase the financial impact.
- Immediately create and implement a health and safety plan. Treat employee safety as a critical project and manage the process as you would any other project critical to your business success. Follow through with objectives, timelines and milestones. Assess where you are, where you are going and most importantly how you will attain results. In cases where there are injuries and a claim has been file, a well written and publicized plan can be a huge factor in mitigating any claim damages.
- Get Buy-In. It is not enough simply to have a plan. Management and all employees must clearly understand and adhere to it. Employee safety needs to be part of a company’s mission and is everyone’s job. It needs to be clearly stated and understood. The policy and process should be included in your Employee Handbook (Your company does have one, right? This is a must have for all companies with employees), it should be posted prominently on company bulletin boards and most importantly, by policy enforced with rewards and consequences.
Understanding the importance and complexity of workers compensation in San Diego, and California in general, may ultimately be a determining factor in your company’s success. Hopefully these tips will assist you in better understanding and managing the process and results. If your company does not have Human Resources expertise on staff, outsourcing that task is often the best and most cost effective solution. Companies like Back Office Support Solutions can assist your organization with creating a roadmap to successfully reduce workers compensation claims.
Contact us today for a free, no-obligation consultation on all your human resources, accounting & bookkeeping, tax prep, and back office needs. We provide highly skilled HR professionals who focus on providing the right products and services to help you grow and succeed. Back Office Support Solutions (BOSS) is a leading Human Resource Outsourcing company. “Let us do the work… so you don’t have to.”
Call BOSS at 619-363-3009 or visit us at: backofficesupportsolutions.com
This article was written by: Ricardo H. Correia, Human Resource Manager for Back Office Support Solutions.