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Navigating Workers Compensation

By: Verlinda J. Henshaw, OTD, MS, OTR/L

Workers’ Compensation presents a significant challenge to small businesses. Often businesses feel that they are held hostage by the medical community, the employee and attorneys when dealing with a workman’s compensation claim.

Workplace Injuries And Illness Are Costly
Workplace injuries and illness are costly both directly and indirectly to the employers. “The cost for all U.S. workers out of work due to Musculoskeletal Disorders or MSD’s is estimated at $13-20 billion annually with indirect costs between $26-110 billion annually.” (Gange, R. 2011)

“A company experiencing an employee injury with direct costs of $5,000 is expected to carry indirect costs of approximately $20,000 bringing the total cost to $25,000. Based on a profit margin of 10%, it would take the same company $250,000 of revenue creation (and collection) to offset the expense.” (Gange, R. 2011) 

Direct Cost Vs. Indirect Cost
Direct costs may include medical costs, workman’s compensation premiums, and case management. Indirect costs include: Productivity reduction, loss of employee morale, overtime pay, administrative costs, potential fines from regulatory agencies, etc. 

Opportunities Available For Small Businesses 
In today’s market it is imperative for small business to utilize every opportunity to actively participate in navigating a claim to reduce the financial impact.  What opportunities are available to small businesses? There are both pro-active and reactive services that are vital to reducing the overall workman’s comp cost. 


  • Pre-Employment Testing:  Both medical and physical demand testing ensure that employers are hiring employees that are physically able to meet the demands of the job.  These tests also allow for establishing baseline physical data on the employee that can be used as comparison in the event of an injury.
  • Physical Job Demand Analysis:  Having current physical job demand analysis that accurately and objectively measure the demands and establish essential functions of the job is the key to a both the proactive and reactive program.  This information is required to develop an EEOC compliant Pre-employment Post-offer test. It is also used by the medical community in the event of an injury to determine return to work ability and establish light or transitional duty possibilities.
  • Drug and Alcohol Testing:  Ensuring a drug-free workplace through pre-employment, random and post-accident testing can reduce the number of work related accidents and a drug-free work environment.
  • Ergonomic Risk Assessments:  Reviewing injury logs and an ergonomic assessment can lead to identification of potential musculoskeletal and safety hazards.  An assessment of potential areas will result in a correction plan to reduce risk.
  • Education:  Employee education on proper lifting, body mechanics, and micro-break stretching program are an important component to an injury prevention program.
  • Employee Wellness Program:  An employee wellness program offers employees the opportunity to participate in an organization led healthy initiative.  Healthy workers are at less risk for work related injury and illness. This program can also help reduce the cost of employer provided health insurance.  A wellness program should focus on smoking cessation, weight management, and attention to biometrics and health risks.


  • Emergency Medical Care:  Develop a relationship with a quality occupational medicine facility that can be used during business hours to reduce the number of costly emergency room visits.
  • Injury Navigation:  An injury navigator works for the company to communicate and coordinate between medical provider, employee, insurance company and employer. They assist in developing and monitoring return to work for light or transitional duty.
  • Fit for Duty Testing:  Testing the ability to complete the essential functions of the job for an employee who has been off work for either work or non-work related injury or illness is key to ensure the employee is safe to return.
  • Light Duty/Transitional Duty Program:  Many employers are leery about bringing an injured employee back to work, however this is a key component to reducing lost time days and lowering the overall cost of a claim.  It is important to bring back those employees with restrictions on modified duty as soon as possible.  Research shows that the longer an employee is completely off work due to a work-related injury the less likely they will return.

Keys to Reducing Cost
These services of a work injury program are key to reducing both the direct and indirect costs of work related injuries and illness.  The cost to provide these services is typically less than 1% of the overall total cost of an injury and is oftenreturned to the business through the savings that a company realizes from both premium discount for being proactive and the reduction of lost time days.

Gagne, R. (2011). What Does a Workplace Injury Cost? Direct Versus Indirect Costs and Their Affect to the Bottom Line. Fit2WRK Clinical Education Series, 1(16), 1-2. Retrieved from