Direct vs Indirect Costs of Work-Related Injuries

According to the Occupational Safety and Health Administration (OSHA), there are approximately 4.1 million "serious" work-related injuries each year. While OSHA done a phenomenal job at lowering the rates of work-related injuries ever since the OSHA Act was signed into law nearly half a century ago, more work needs to be done. Injuries sustained by workers while on the job typically create direct and indirect costs for the employer. Understanding the nuances between these costs will allow employers to make smarter safety decisions.

Work-related injuries can take a toll on an employer's finances in multiple ways. Some people assume that worker's compensation is the only cost associated with a work-related injury, but this isn't true. Granted, worker's compensation is certainly one of the costs, there are several others worth noting. Let's take a look at some of the direct and indirect costs associated with work-related injuries.

Direct Costs of Work-Related Injuries:

• Worker's compensation
• Doctor's visits
• Hospital care/treatment
• Rehabilitation
• Physical therapy
• Medicine

Indirect Costs of Work-Related Injuries:

• Reduced productivity
• Lower morale among employees
• Administrative costs
• Legal expenses (particularly costly when the company is being sued
• Hiring costs for finding replacement employee
• Overtime pay for workers covering the injured worker's shift
• Shipment and/or production delay
• Monetary fines issued by OSHA
• Broken tools and equipment
• Ties with clients broken or damaged
• Total cost of worker's compensation goes up
• Investigation of the incident that caused the injury

It's estimated that an average work-related back injury will cost around $10,000 in direct costs. While this is certainly a steep price, the real financial burden comes in the form of indirect costs, which can easily total over $100,000. So regardless of what industry/niche your business operates in, you should pay close attention to worker safety. Assuming these figures are correct, indirect costs of work-related injury are approximately ten times higher than direct costs.

You can protect yourself from steep direct and indirect costs, however, by promoting a safe working environment. This means training employees on how to use their respective machinery and equipment, watching for signs of fatigue, and following all rules and regulations set forth by OSHA. You can also check back with us here at the Safety Equipment blog for more safety tips.