Workers’ compensation is a type of insurance policy that covers the costs related to a workplace injury, illness, or death. Examples of such expenses include, among others, lost wages, medical costs, and funeral expenses. Because workplace accidents are common in America, the National Federation of Independent Business (NFIB) usually requires every business with more than five employees and construction businesses with one or more employees to have workers’ compensation coverage. (The limit on the number of employees will vary from state to state)
Notably, the construction industry typically records a high number of work-related accidents every year. More specifically, about 150,000 injuries happen at construction sites annually due to falling objects and equipment/machinery accidents, as reported by the U.S. Bureau of Labor Statistics (BLS).
Keeping this in mind, here is a detailed look at four benefits of workers’ compensation for employers.
1. Lowers the Employee Turnover
On average, the cost of employee turnover per worker is about one-third an employee’s annual salary, with substantial expenses incurred on recruitment, training, lost productivity, and hiring temporary workers, as per a survey conducted by the Society of Human Resource Management. Thus, an average company in the U.S. spends about $4,000 on hiring a new employee. This implies a high employee turnover would cause your business to record a significant financial loss. The good news is that workers’ compensation can improve employee job satisfaction, lower the resignation rate, and, ultimately, lower employee turnover.
2. Maintains a Good Reputation for Your Company
Every year, tens of thousands of accidents happen at the workplace, resulting in injuries, illnesses, and in the worst cases, fatalities. The most common work-related injuries are sprains, tears, and strains, as reported by the National Safety Council (NSC). Such injuries can result in lawsuits, which often tend to be expensive. Moreover, lawsuits against your business can taint your business reputation, giving your competitors an edge. For example, your business may be unable to attract top talent, making it virtually impossible for your business to compete in the marketplace. To avoid such problems, it is essential to carry workers’ compensation.
3. Improves Employee Productivity
According to the National Center for Biotechnology Information (NCBI), worker’s compensation can significantly enhance your employees’ productivity in several ways. These include, among others:
• Reducing absenteeism due to lack of medical care
• Motivating employees
• Promoting a safer working environment
In general, workers’ comp coverage assures the employees they are being taken care of, thus allowing them to focus on their work.
4. Lowers Your Business Costs
If you do not have workers’ compensation coverage, you’ll likely end up paying for the costs related to workplace injuries/illnesses out of pocket. Additionally, the authorities may punish you with hefty penalties and interest for failure to comply with the 1908 U.S. Workers’ Compensation Act.
The average workers’ compensation claim amounts to tens of thousands of dollars. More specifically, the average compensation for a workers’ compensation claim in the U.S. is about $40,000, as reported by the National Safety Council. Even if your business has huge cash reserves, it would be unwise to settle such claims out of pocket as they can quickly deplete your savings, leaving your business with no money to run its operations. Fortunately, workers’ compensation can help you avoid such a situation.
Thus, having the right amount of workers’ comp in place will protect your business operations from an expensive lawsuit and give your employees the assurance and security they need for greater productivity.
Do you have any questions about workers’ comp insurance? Contact the experts at Pittman Insurance Group,LLC. We are eager to assist with all your coverage questions and needs.