Cut Your Workers Compensation Costs

Your workers? comp premiums are probably your single largest expense after direct payroll. But many savvy small business owners are writing smaller checks for their workers? comp premiums. They?ve adopted moneysaving strategies to actively manage their workers? comp insurance ? the state-mandated program that pays medical and other expenses for workplace injuries and provides employers liability coverage for lawsuits filed for job-related accidents. Here?s how you can reduce your workers? comp premiums, lower your exposure to accidents and injuries and keep your workers safe:

1. Classify your employees correctly.
Job classifications are determined by independent rating bureaus or by state-run classification systems. An employees? job is assigned a particular rating and matching premium based on the job?s estimated level of risk. Since insurance companies typically assign a business a single classification, you could be paying more than you should. For example, if you run a roofing company with three roofers and two office workers, and all your employees are classified as roofers, you are being overcharged. Contact your insurance company and request that each employee be reclassified according to the specific tasks each performs. Reclassifying your employees could mean a big difference in your premium rates.

2. Establish a safety program.
Contact your local OSHA office for safety guidelines, and discuss them with employees. Give workers a list of do?s and don?ts about safety practices.

3. Create an employee safety committee.
Appoint one or two employees to work with you to audit your business. Check to ensure equipment is in good condition and work areas are clean and safe and meet OSHA requirements. At Jack M. Otto Electric Company in Memphis, Tenn., co-owner Cindy Otto and one employee work as a safety committee to ensure the company?s 65 employees maintain their equipment in good condition and keep work areas free of debris and spills. The duo conducts safety inspections of each employee?s work van, checking for cracked windshields and worn-out brakes.

4. Give monetary rewards.
When you save money on your workers? comp premiums, share it with your employees. Give a cash bonus during months no injuries are reported. Or start a safety bingo or other game: During months that no injuries are reported, put every employee?s name into the hat for a $100 or more drawing. The game will not only lower your reported injuries but also create a group consciousness about work safety.

5. Handle claims promptly.
Employees often feel abandoned, fearful and angry when they?re left on their own to see the doctor, pay out-of-pocket expenses and wonder what their rights are. Instead of asking you, they could contact a lawyer and start the claims process. Prevent that chain of events by taking immediate action when an employee is hurt on the job. Personally escort the injured worker to the doctor. Explain what type of work the employee does, and find out what accommodations you can make to return the employee to work, even if it means filing papers or answering the phone. Consider personally paying your employee?s out-of-pocket medical expenses and letting the insurance company reimburse you.

6. Offer alternative work options.
If an employee has injured his back lifting boxes, have him sort mail or answer the phone. If an employee is not bedridden but must stay home, let her work on projects using a home computer, phone and e-mail.

7. Be supportive.
Take a positive and sincere interest in your employee?s recovery. Call regularly. Show workers that they are needed and respected, and they?ll want to come back to work.

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Source: http://themodernaccountant.com/2012/09/27/cut-your-workers-compensation-costs/

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