October 12, 2016 | Tony Geng |

The Hidden Costs of Lost-Time Injuries in the Workplace

Did you know that the average cost to a company for a lost-time workplace injury is $7,500.

If you think that’s an overestimation, consider this: The cost doesn’t stop with a worker’s compensation claim or replacement of a broken piece of equipment. It branches out to include many other costs, as well.

Lost time injury

A comprehensive health and safety program can lower the risk of injury and the direct and indirect costs.

For example, companies that participated in OSHA’s Voluntary Protection Program saved a combined amount of approximately $130,000,000 in a single year.

Although your industry might have fewer safety risks and not as many lost-time injury occurrences as others, a focus on prevention is always worth the effort.

It can save lives, and it can also help reduce the damaging effect on the company’s budget.


The Cost of Lost-Time Injuries has Layers like an Onion:

Paying out an indemnity claim after a workplace accident can hit a company hard.

The costs might run well into the thousands depending on the nature of the incident.

But the direct costs of a lost-time injury are only just the beginning. Indirect costs can total much more.

Employers pay out an estimated $1 billion every week just in worker’s compensation claims according the Business Case for Safety and Health.

Then start piling on other common direct costs, such as legal services and medical expenses and the cost skyrockets.


How Indirect Costs Add Up:

In our exploration of the True Cost of a Hand Injury indirect costs often exceed direct costs. The American Society of Safety Engineers (ASSE) estimates that indirect- to direct-cost ratios anywhere between 1:1 to 20:1.

Indirect costs can include:

  • Damaged machinery or tools
  • Worksite shutdown costs for investigation purposes
  • OSHA fines
  • Recruiting and training new hires
  • Increased administrative costs related to the injury
  • Reduced productivity due to lower employee morale
  • Negative media attention
  • Reasonable accommodation costs
  • Legal fees


These Costs Don’t Take the Emotional Toll of an Accident Into Account:

Even a drop in worker morale, which can easily happen after an accident or injury, especially if it’s a serious one, can return severe financial effects on the company.

Layers and layers of indirect costs can accompany even the slightest work-related injury. When it’s a lost-time injury, the costs are usually much greater.

safety director

“Everyone from the safety director to the employees is responsible for safety.”


Safety Offers a Healthy Return on Investment

It’s true that the initial cost and time involved with developing and implementing a health and safety program could turn off some employers.

There might not be enough hours in a day or dollars in the budget for such an undertaking, especially when there’s already a safety plan in effect. But if the cost of lost-time injuries are racking up, the plan isn’t saving money; it’s a liability.

According to OSHA’s “$afety Pays” initiative, a comprehensive health and safety program in the workplace can return as much as $6 for every $1 invested.

How It’s Possible:

Worker’s compensation costs decrease when there’s a solid plan. Morale can also benefit from a good safety program, and medical costs will almost certainly go down.

But proving the financial benefit of workplace safety still might take some effort.

It’s easy to explain the importance of safety, but the financial burden of improvement might outweigh the healthy worker benefit. Unfortunately, that only lasts until there are lost-time injuries.

Eliminating a workplace hazard might seem too costly when workers can be trained in better safety habits.

But when a worker is injured and the injury was preventable, all of the direct and indirect costs could add up to much more than a better safety program. And if the hazard and injury result in an OSHA citation and fine, better safety on the front end would seem like a minor investment by comparison.


Improved Safety Can Fit Any Company Budget

Maybe you think that a new safety program sounds great, if only you could afford it. If so, you should know that there are numerous tools that help you design a program and maintain it in-house — your insurance company may even have a program that can help.

Areas of focus should include:

  • A clear company health and safety mission statement
  • Personal safety responsibility
  • Creation of the company safety department or group
  • Safe and proper workplace procedures
  • Safety training methods and schedules
  • Regular workplace inspections
  • Hazard, accident and injury reporting procedures
  • New-hire safety orientation

You’ll probably think of additional points to cover, such as lockout/tagout procedures and the administration of first aid in case of injury. The important thing isn’t creating the perfect safety program out of the gate. Workplace health and safety should be an ongoing effort. So the program you design will naturally evolve and improve year to year.

Lost-time injuries affect so much more than the workers who file a report or claim. The ripple effect can send aftershocks in the form of indirect costs that hurt the company’s profitability now and for years to come. A solid health and safety program is the answer.


Workplace Health and Safety is an Ongoing Effort.

Even a small injury, such as a minor cut, can stop a production line, create a slipping hazard and even damage customer relationships if a deadline isn’t met. In that case, investing in safer, cut-resistant work glove would be worth it. And so would the time and effort devoted to creating a health and safety program that protects the workers as well as the company day in and day out.


Want to learn more?

Discover how creating a safety culture can reduce workplace injuries.


About Tony Geng
President of Superior Glove