Understanding the Hidden Costs of Workplace Accidents
School
University of Nairobi**We aren't endorsed by this school
Course
DOM 402
Subject
Management
Date
Dec 12, 2024
Pages
10
Uploaded by ColonelPonyPerson1205
ENGR 6025-B Mini ProjectName:Institution:Due Date: 11/12/2024
Question 1These direct costs of accidents—the worker’s compensation premiums, the medical insurance—are only a drop in the bucket because they constitute only a small fraction of the total costs of workplace accidents. In addition, there are a number of other significant liabilities that are often hidden or ignored. Here are some examples and a discussion of these hidden costs:Lost productivity:An injured worker may need time away from work to recover, or go to medical appointments or rehabilitation. Such absence decreases productivity because the workload must be redistributed or disrupted to other employees or must be postponed until a replacement is hired. Moreover, other workers may worry the incident reduces their chance of getting injured and will demonstrate a decline in focus and productivity.Training and replacement costs:An employee can become permanently disabled or unable to return to work because of severe accidents. The organization should recruit, hire and train a replacement employee in such cases. Recruitment can include advertising, consideration of resumes, interviewing and selection of suitable candidate. It can be time consuming and costly training the new employee to a level of competence equal to that of the injured worker.Damage to equipment and property:Accident could damage or destroy machinery, tools or other workplace equipment. These items can be repaired or replaced and it can be very expensive. In addition, other accidents, for example, accidents in which property is damaged, for instance structural damage to buildings or automobiles, may entail substantial investments, the cost of which falls in the range of an organization's budget.Investigation and administrative costs: Investigation and administrative costs: Once there is an accident, such an accident needs to be investigated and documented thoroughly. There are
certain things it must do regarding incident reporting, dealing with an internal investigation to understand what happened, and preventing a reoccurrence, as well as with external agencies, likethe regulating agency in the case of an occupation safety regulator. These activities would consume time and resources for organizations depending on how they would be done with existing staff or assigning staff or hiring external consultants.Legal expenses: Legal expenses: Legal actions and settlements are result for workplace accidents due to negligence or non-obedience to safety regulations. Legal proceedings can be costly and organizations often will need to hire lawyers. All this feeds into the financial burden and contributes such court fees, compensation payouts, potential fines and penalties.Impact on employee morale and reputation: Impact on employee morale and reputation: Accidents at work can be very costly in terms of morale in the workplace. Seeing or getting involved in an accident can be feared, may provoke anxiety and diminish the motivation of the workers. It often leads to less productivity, and greater turnover as employees may suddenly seeka safer work environment with different people. Furthermore, accidents can tarnish a company's image with its employees and external clients, as well as with potential recruits and the rest of the public. However, a tarnished reputation can severely damage a company’s ability to attract and retain talent and leads to lost business opportunities.Intangible costs: Intangible costs:Accident costs that are hard to quantify but have a big effect.The emotional and psychological burden on the injured worker can be very substantial, with implications to their global health and life. For its part, the injured worker’s colleagues and family members may also suffer emotional distress. An accident also has the potential to producenegative publicity that damages public perception of the company and therefore the company’s brand and diminishes customers’ awareness and trust in the company.
Question 2Fatality worker's compensation is one of the most important elements of protecting workers and paying for the death caused by work related accidents or occupational illnesses. The process of determining the monetary figure for worker's compensation for fatalities is multifaceted and involves several key factors. comprehensive perspective on how this monetary figure is obtained:1. Legal Framework: Legal Framework: State and government agency legislation forms the bedrock of worker's compensation. However, this legislation is not uniform throughout the worldand as a rule differs from country to country and, sometimes, from state to state, which prescribes to employers to pay that compensation to such dependents or to beneficiaries of a deceased worker. These are laws of minimum and maximum limits of compensation and circumstances in which compensation can be claimed.2. Coverage Assessment: First it must also be shown that the death occurred in course of employment or was a result of occupational hazards or illness to determine eligibility for worker's compensation. This is made of going through the cause of the fatality in details especially by means of testimonies, eyewitness accounts, medical reports and expert analysis.3. Dependents and Beneficiaries: That total may vary based on number of dependents or beneficiaries of the deceased worker. Compensation is generally claimable by spouses and children, and dependent parents. According to predefined legal guidelines, these beneficiaries may receive the amount in distributed quantity.
4. Average Weekly Wage: For most, the amount of compensation is tied to what the deceased worker earned on average each week. In other words, the wage is based off the earnings of the worker over a certain time frame, typically the last 52 weeks, or the highest 26 weeks.5. Length of Compensation: How worker's compensation for fatalities is paid out varies from jurisdiction to jurisdiction and from case to case. It may be presented as a one-time payment or as regular payments, e.g. monthly, bimonthly or annuity.6. Additional Benefits: Other than monetary compensation to the worker, the system of worker compensation can also include provisions for payment of funeral expenses, counseling services for the workers' beneficiaries, and medical benefits to the worker's injuries or sickness attributable to the incidence of the death.7. Assessing Loss and Suffering: Assessing Loss and Suffering: In addition, the compensation process includes the loss and suffering of the dependents because the worker died. It’s a subjective evaluation in that you have to understand the biased emotional, biased financial, biased psychological impact on those that benefit.8. Legal Representation: Beneficiaries often look to a lawyer to get him fair and just compensation. Depending on the circumstances, legal experts working in the field of worker's compensation can go to bat for dependents to get the best settlement for them.9. Insurance Coverage: Most employers have worker’s compensation insurance that would coverany of these incidents. Insurance company may simply investigate and evaluate it to verify the claim and to what extent it is reimbursed.
10. Appeals and Disputes: Appeals and Disputes: In the event compensation is disputed there may be an appeals process allowing for a review and re consideration of the decision. This guarantees that on the off chance that there are any inconsistencies or slipups in the initial appraisal they are resolved.Framework a.Eligibility for CompensationCompensation is available to the dependents of the deceased worker. Dependents are typically defined by law and may include:Spouse and Children: majority of the states define spouses and children of a deceased worker as being in the dependent category.Other Relatives: If the parents, siblings or other relatives can prove that they are financially dependent then some states offer this assistance (Workers’ Compensation Death Benefits by State [INTERACTIVE MAP]. 2024).b.Calculation of BenefitsThe calculation of workers' compensation death benefits usually involves several factors:Average Weekly Wage (AWW):Average weekly wages of the deceased worker play crucial role in calculation of amount of compensation. This wage is normally determined with reference to wages earned by the worker in a certain period before the death.
The published weekly wage that was deemed suitable for workers’ compensation benefits was the most current figure of about $548.34 to determine the maximum calculation values.Usually, compensation gives certain percentage of AWW to the dependents. For instance, most ofthe state’s dependents are paid almost two-thirds of the deceased worker AWW but with maximum limits.Maximum and Minimum Benefit Limits:The maximum and minimum benefits for each state are also given, and they are the allowed death benefits as calculated from insurance policies. For instance, that maximum burial allowance tends to range greatly, depending on state laws.Burial allowance offered is, therefore, between a few thousand dollars and much higher, with some states limiting such payments.Data on the current worker’s compensation benefits taken for fatalities should be used in making these calculations. According to BLS data in 2022,the afore mentioned fatal occupational injuries in the United States were 5486, a 5.7%increase from the previous year (https://www.bls.gov/news.release/cfoi.nr0.htm)Compensation rates and possible amounts may vary greatly in different states of the USA, the maximum benefit limits, and burial allowances vary. For instance, maximum weekly benefits canbe as diverse in terms of amount concerning increase caused by inflation and particular state legislation.
Question 3a)2 counts of concussionOSHA Safety Pays calculation for the provided organization reveal that two cases of concussion incurred an economic loss of $229,198. To offset these costs when operating at only 5% profit margin, the company has to make an additional in sales of $ 4,583,960.This amount is important as it demonstrates just how costly a few injuries can be for a business. In addition, to original costs that can be associated with an injured, for example, treating bills or costs incurred as a result of property damage (direct losses), they are also characterized by secondary costs that may include lost time, costs incurred to retrain the injured employee or a lower morale level (indirect losses). These indirect costs are normally higher than the direct cost and exert much pressure on the overall cost of the company particularly those operating on a very low profit margin.Large costs of injuries are a good ground for establishing tight rules and regulation concerning workplace safety. To avoid such occurrence maybe it is prudent to invest in safety which will help save costs in the long run while at the same time safeguarding the employees as well as the profits. Measures that include education, upkeep of equipment, establishment of security measures go a long way in making the environment safer thereby avoiding these expensive disasters to both the company and employees.b)1 count of amputationOne cost estimate from the OSHA Safety Pays tool estimates that a company’s direct and indirectcosts associated with one amputation incident is $201,606. At a profit margin of 5%, the company would have to create or sales would have to be more than $4,032,119.
The amount underscores the tremendous financial drain workplace injuries impose. Direct costs, including medical treatment, are just a small part of the expenditure, while indirect costs of lost production, of retraining new hires and the lowering the morale are the most significant. Together these costs make it difficult for companies to stay profitable.These costs are high, and the high sales required to offset these costs speak to the importance of safety investment. If strong safety protocols can be drafted, accidents can be prevented, and millions of dollars can be saved with a profit margin intact. Along with this, proactive investmentin training, maintenance, and safety policies does not only avert incidents but also saves the workforce and also protects company’s financial stability.c)1 count of electric shockOSHA Safety Pays results indicate that a single case of electric shock costs the company $332,257 in total direct and indirect expenditures. This cost amounts to an additional $6,645,139 in sales from the company required, at a 5 percent profit margin, to offset.The implication is that workplace injuries can wreak havoc on an organization’s finances. Indirect costs like downtime, hiring replacements and loss of productivity are also a large burden, especially when your company has a smaller profit margin, says Morris.The high costs of these underscore the need to have very strong safety measures. Companies can prevent such risks by channeling their investments in prevention, protecting the workforce and remaining profitable. Electrical hazard training and equipment maintenance help reduce the likelihood of accidents and serve the company’s financial health as well as the employees.
REFERENCESHow Much Does Workers’ Comp Insurance Cost? (2024). The Hartford. https://www.thehartford.com/workers-compensation/how-much-does-workers-compensation-costNational Average Weekly Wages (NAWW), Minimum and Maximum Compensation Rates, and Annual October Increases (Section 10(f)). (2024). DOL. https://www.dol.gov/agencies/owcp/dlhwc/NAWWinfoNARFA. (2023). Direct and Indirect Costs of Workplace Injury. NARFA. https://www.narfa.com/the-direct-and-indirect-costs-of-workplace-injury/optadmin. (2020). The Real Cost of a Workplace Injury - Amerisafe. Amerisafe. https://amerisafegroup.com/the-real-cost-of-a-workplace-injury/The Direct and Indirect Costs of a Workplace Accident - SafetyIQ. (2024). SafetyIQ - Predictability at work. https://safetyiq.com/insight/direct-and-indirect-costs-workplace-accident/Workers’ Compensation Death Benefits by State [INTERACTIVE MAP]. (2024). Gerber & Holder. https://www.gerberholderlaw.com/employee-death-benefits-by-state/https://www.bls.gov/news.release/cfoi.nr0.htm