Calculating the Cost of Workplace Injuries

It’s no secret that workplace accidents can cost your company dearly. There’s not only the loss of an employee who has to take time off work for treatment and recovery but also the hiring and training costs for a replacement, the risk of citations and fines by OSHA, and the likelihood of increased workers’ comp costs.

The National Safety Council estimates that the average workplace injury ends up costing more than $40,000 in treatment and lost time. But just how much can an industrial injury cut into your profits? There’s a website for that!

Workplace Injury Cost Calculators

OSHA’s Lost Profit Calculator

OSHA’s Safety Pays Program offers a calculator to figure out how much various injuries can cost you in terms of lost profit. It has a fairly comprehensive list of the most common injuries in workplaces and includes other fields of data you need to enter to arrive at a cost.

While OSHA cautions that the calculator is not exact, it provides a glimpse of just how damaging an injury can be to your company’s finances. According to OSHA, the tool “is intended to help raise employers’ awareness of the impact of occupational injuries and illnesses on profitability” and is not a standard or regulation.

The tool offers employers a worksheet where they choose the type of injury from a list and then enter information, including workers’ comp costs, profit margin, and number of injuries. The worksheet then provides estimates of direct and indirect costs, as well as the amount of sales required to cover these costs.

While this tool is only meant as a rough estimate, it can be a great visual to remind business owners, foremen, and employees of how unsafe practices impact the company’s bottom line. While it may not be the most important reason to work safely, the calculations may offer an extra incentive for everyone to reinforce proper safety habits.

Workplace Injury Total Cost Calculator

In addition, Safety Management Group, a workplace safety consulting company, has an injury cost calculator that you can use to find the total costs to you of an injury. You can plug in the direct costs of a claim, and it will calculate the indirect costs for you.

Indirect costs include administrative time dealing with the injury and medical care, increases in insurance costs, replacing the hours lost by the injured employee with hiring another employee, loss of reputation and confidence in employees and clients, unwanted media attention, and more.

You can find that calculator here.

Workplace Safety as a profit center

These two tools should help you think of safety as a profit center rather than an expense. The following are just a few potential profit areas:

Insurance premiums – If you keep workers’ comp and other insurance claims under control, thus lowering your X-mod, your insurer will perceive your company as a lower risk. Consequently, you may be eligible for reduced premium rates.

Regulatory compliance – Failure to adhere to OSHA-mandated safety requirements can result in substantial penalties. Having an effective safety program in place can help you avoid fines or reduce the severity of fines should a violation occur.

Higher-caliber employees – A well-trained workforce with proper safety training is an invaluable resource for any company. Not only will employees be more productive, but they will also be able to help identify unsafe conditions or operating practices as well as situations where jobs might be done more safely and effectively.

Company safety culture – Promoting a safe work environment improves employee morale. If employees believe the company cares about their well-being, they are likely to care about the well-being of the company. The result can be greater productivity and employee loyalty.