Worker’s compensation is recognized by employers as an added cost to the company which seemingly does not have any effect on the overall business cycle. With the news that the worker’s compensation rates have been reduced, employers rejoice considering it as a relief of their already mounting expenses.
What most employers fail to realize is that worker’s compensation is a core business practice, which cannot be avoided. Therefore, instead of switching the finances and business attention to the exploration of new opportunities, it is wise to engage in methods which ensure long term saving of the amount.
There are some mistakes that employers make, which can be easily avoided to ensure long term savings for worker’s compensation. Following are the errors you would definitely want to avoid:
Confusing Lower Rates With A Reduction In Costs
Most employers are under the false impression that a reduction in the rate is sure to have a sound impact on their overall costs. The worker’s compensation reduction rate only has an impact on the financing of any injuries or accidents on the workplace, and is a credit line. The rates are not the only contributing factor of the insurance, therefore the effect on the overall cost is not significant.
Experience modification factor is a consideration which analyzes the number of losses experienced by an employer. A high number of individual losses can result in a high premium cost, notwithstanding the reduction in compensation rates.
Complete Focus On The Direct Costs Only
While most employers cite direct costs as the overall cost related to their worker’s compensation, they fail to recognize that a reduction in rate does not have any impact on the indirect costs related with the claim.
While direct costs only encompass around 20 to 30% of the overall compensation claim amount, the rest involves indirect costs like increased stress, training, unsatisfied customers, delayed production, property damage or equipment destruction etc. These costs should not be ignored by an employer rejoicing in the idea of a reduction in the compensation rates.
Becoming Complacent
A reduction in the compensation rates prompts most employers to relax and shift their focus to other business activities. But this failure to deal with outstanding compensation claims promptly, can lead to additional problems, with a rise in injury costs. The Experience Modification Factor can suffer a rise which can lead to high costs for the company. It is very important for the employers to have a very distinct idea of what key metrics affect the overall costs to the company and take suitable decisions according to it.
Assuming Reduced Rates On A Constant Scale
Employers wrongly assume that the compensation rates will be constantly low, while this is not the case. With reduced rates, most employers tend to shift their attention to other business matters, which affects the fall in costs of claims in relation to the reduced rates. As the Modification factor increases, along with the modifications in the legislative reforms, the rates are liable to fluctuate. Just assuming that the rates will be low for some time, is a serious error on the part of an employer.
Employers would do well to avoid such errors and thus ensure prompt settling of claims, thus not necessitating the victim employees to seek legal assistance from worker’s compensation attorneys in Orlando.
