Workers' Compensation, PPE, and the Bottom Line

When you say “workers’ compensation,” most employers will groan and hold their heads in their hands. Nobody likes to hear that an employee was injured on the job.

An employee who experiences a work illness or injury can receive workers’ compensation benefits, regardless of who was responsible for the incident. Essentially, this means unsafe working conditions and improper personal protection equipment (PPE) worn will cause profits to suffer.

Unsafe conditions and potential dangers are everywhere in metal fabrication. Flying metal projectiles, metal burrs, and sharp objects are all concerns. Before we dive deeper into worker’s compensation, be sure to check out our metal fabrication resources page highlighting this industry’s hazards.

Worker Compensation Since Antiquity

Around 2050 B.C. in ancient Sumeria, Nippur Tablet No. 3191 defined the law of the city-state of Ur. The law provided monetary compensation for specific injury to workers' body parts, including fractures.

The Great Ziggurat of Ur

Worker compensation is relevant today, just as much as it was 4,068 years ago. Even though our technology advances at a rapid pace, workers still need protection while at work. Today’s workplace hazards are just as dangerous, if not more so, and can easily cause severe injuries. One thing is certain; worker compensation is a complex issue.

Without further ado, here are some things you need to consider when it comes to this topic.

Premiums

There is no federal oversight of workers’ compensation, so each state is entirely on its own when it comes to providing rules and guidelines. Even the types of businesses that are required to purchase coverage varies from state to state. In some places, any business with even one employee must participate. In others, the number of employees fluctuates and varies based on industry.

Regardless, most businesses must carry coverage, and that coverage isn’t a negligible amount of money. The amount itself will also vary widely. There are three primary factors in the cost of buying coverage:

• The state or states in which your company does business
• The size of your payroll
• The type of work your employees do and the risks associated with those jobs

Jobs come with particular codes, each of which has a particular risk level associated with it. For example, 3076 (sheet metal products manufacturing) will require a higher premium than 8006 (retail apparel dealer).

Sheet Metal

Experience Modifiers

This is essentially still about premium payments, but it can have a huge impact on what you are paying, entirely independent of the above three factors. Experience modifiers, also known as the experience modification rating, are based on your own company’s previous record of losses. In other words, it’s a rating given to you based on how much money your workers’ compensation coverage paid out during a given time period, with the assumption that past safety is a good indicator of future safety.

A good rating will lower your premium payments, while a bad rating will raise them. The only way to improve your experience rating is to take as many precautions as possible to maintain a safe and healthy workplace, and to continue to do so consistently over years. If your rating is consistently problematic due to workplace injuries, it’s worth having your business assessed professionally.

MCR Safety’s 360 protection program helps companies outfit their workers with the most appropriate safety gear needed. The Occupational Safety and Health Administration (OSHA) requires that all employers protect their employees from workplace hazards. However, not all protection is equal. Just because a worker is wearing PPE does not mean it’s the correct gear for the application performed.

Coverage, Investigations, and Legal Fees

Workers’ compensation insurance offers four major categories of coverage:

• Medical treatment: Medical care may include surgeries, hospital stays, doctor visits, treatment, and medications.
• Wage replacement: Typically, employees can receive two-thirds of their wages. In addition, they won’t have to pay state or federal income taxes on that amount.
• Vocational rehabilitation: Therapeutic care helps employees make a full recovery.
• Death benefits: Family dependents can receive benefits.

If you have reason to believe that a workers’ compensation claim is either fraudulent or unwarranted, you might consider attempting to deny the claim. Reasons for denying all or part of a claim include:

• The employee wasn’t really injured or sick.
• The employee was injured or sick, but the injury or illness did not actually take place at or result from work.
• The employee was mildly injured, but didn’t truly require medical attention.
• The employee was injured or ill and needed treatment, but didn’t really require time away from work.

If you want to fight a claim, you may need to pay for an investigator or lawyer to assist you with your claim denial. (It is worth thinking about whether this is greater than the cost of the potential experience modifier.)

HR and Processing Costs

Human resources employees are generally responsible for ensuring that workers’ compensation claims are handled quickly, effectively, and correctly. They ensure company actions comply with federal and state labor laws, as well as with any collective bargaining agreements or contracts that might be in place.

With each new claim, it increases the labor hours HR spends on workers’ compensation, rather than on other tasks. If the business is very small, the owner might take on all these responsibilities, which can ultimately distract the primary business operations.

PR and Morale

Workplace injuries and illnesses often become news stories, but are more common if workers’ compensation claims are not handled quickly and compassionately. Fighting claims or handling claims ineptly can hurt worker productivity through lowered morale.

Poor morale eventually makes its way to front line workers engaged with the company’s very own core customer base. Existing and potential customers may prefer to stay away from a business with a history of safety issues and poor responses from administration and leadership. This in turn starts to affect sales revenue, which ultimately affects the bottom line.

An Important Question to Consider

Is the bottom line effect of saving money by equipping workers with lower quality or incorrect PPE worth all the indirect costs? Most times, the answer to this question is “No.” The dollars saved by lowering PPE standards or outfitting workers with incorrect PPE is not worth the backend headache, the increased expenses, or the time lost. OSHA’s profitability calculator is an excellent tool to use when contemplating this question.

How much did you truly save from buying lower priced PPE?

Things You Can Control and the Things You Can't

Tom Brady posted on Facebook back in 2017:

"I really don't like leaving much up to fate—certainly with regard to my football career. If, like me, you're serious about your peak performance, you need to work hard at the things that are within your control: your work ethic, how you treat your body, and your attitude. Wisdom, someone said, is about knowing the difference between the things you can control and the things you can't."

There is one thing every single company absolutely controls and that is equipping workers with appropriate PPE for the hazards faced. At a minimum, every company should make sure PPE meets the basic level of protection.

Beyond the minimum though, the little things start to add up. Do I pay a little more for cut-resistance? Do I purchase the gloves double stitched with DuPont Kevlar? Do I go with a Class 2 safety vest instead of a general-purpose vest? Do I spend money on an eyewear style employees will not take off?

The Best Prevention for Rising Costs Is Preventing Injuries in the First Place

As the saying goes, “An ounce of prevention is worth a pound of cure.” Sometimes, the best thing you can do for your business is to get an objective third party to look at your health and safety from the ground up. Our 360° Protection Program will not only help you analyze the specific risks in your workplace, but it will also help you find the ideal safety solutions that fit your needs and budget.

Lack of safety knowledge is often one of the most dangerous hazards. Click the image and request our trained 360 specialists to visit your machine shop.

For over 40 years, MCR Safety has proven to be a leader in gloves, glasses, and garments. Whether it’s on a shop floor, an oil rig, or a construction site, we are there providing solutions to workplace hazards.

We Protect People!

Learn more about MCR Safety by checking out our most recent video. For more information, browse our website, request a catalog, find a distributor, or give us a call at 800-955-6887.