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The Hidden Costs of Workplace Accidents

Workplace Accidents
  • The Department of Labor’s Occupational Safety and Health Administration, which most of us know as OSHA, estimates that “employers pay almost $1 billion per week for direct workers’ compensation costs alone.” That “alone” should be setting off alarm bells right now, because it points to a simple, sobering fact: those direct costs, steep as they are, are only part of the equation. Workplace injuries have other, indirect, ways of draining your business’s resources. Safety consulting services from Safety International can help you understand those costs and better prepare you to protect your bottom line.

    Direct vs Indirect Costs

    In order to better understand indirect costs, it helps to understand what they are — especially relative to the direct cost of workplace accidents and injuries. Direct costs are those that are specifically incurred by the accident or injury. Most commonly, these are medical expenses and workman’s compensation costs. A third category of costs, legal fees, can fall under both direct and indirect expenses, as we’ll see below.

    Indirect Costs from Workplace Accidents

    As we’ve already seen from the OSHA example cited above, the direct costs of workplace incidents is already high. However, your tab can quickly run into hundreds of thousands of dollars’ worth of indirect costs. At first blush, that figure seems high. As you’re about to find out, it may actually be a conservative estimate.


    If an employee is going to be out for an extended period of time, your business will be faced with a hard choice: delegate their work, or train a replacement. Even if your workplace is such that you can quickly source temporary help, there’s still the matter of getting that person up to speed on your culture, procedures, and standards, and bucking up the morale of your other employees.

    Legal Issues

    You may have to deal with an accident investigation, an overhaul of policies and procedures, and the possibility of lawsuits (especially given that there’s a cottage industry of lawyers who specialize in workman’s comp and disability claims). The costs for those things start high and go much higher from there.

    Corrective Measures

    New training procedures, post-accident cleanup, repairs to existing equipment and property (or replacing / retrofitting to higher safety standards) and a host of other actions may need to be taken — and none of these will pay for itself.

    Lost Productivity

    Taken together, the costs above add up to another hidden cost. Bringing a new employee up to speed, accounting for poor morale, and even bringing your old employee back into the fold often translate to a period of lower productivity. That, in turn, takes a significant toll on your bottom line.

    Controlling Costs from Workplace Accidents

    The best way to limit the costs of workplace accidents is to have fewer accidents. Limiting exposure limits liability. There are a few Safety International safety management services you can take advantage of to help you do just that:

    Questions? Call us, or request a safety consultation today.

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