Many of our clients are interested in lowering their Workers’ Compensation premium and there are many effective tactics that do just that. One is the use of safety incentive programs. A safety incentive program sets safety goals for employees to meet and when they do, they are rewarded with the incentive. Incentives vary and can be in the form of bonuses, or gift cards, sometimes even pizza parties. These types of programs have proven to be effective in lowering incidence of injury; however, they may only be reducing the injuries reported.
According to a study done by the Government Accountability Office (GAO) simply implementing safety incentives may not be the best way to reduce workers’ compensation claims. Sometimes claims are only reduced because employees are discouraged to report their injuries or potentially risky work conditions to receive the reward for not being injured.
The GOA has found that rate-based incentives, like rewarding employees with bonuses or gift cards for going a period of time without being injured, is a particularly hazardous practice because employees may not report their injuries just to receive the bonus. While your company will save on the cost of a Workers’ Compensation claim for now, in the future that injury could cost your business an unprecedented amount and may lead to workers being permanently injured and unable to ever return to work.
On the other hand, the GOA said behavior-based programs that provide rewards for demonstrating safe behaviors, but are not tied to low injury and illness rates, are more effective incentive for employees to report injuries and risky situations. For example, an employer may reward workers with gift cards or bonuses for identifying hazardous conditions and suggesting safety improvements. These systems may also include demerit systems that discipline workers for failing to follow safety procedures.
Often employers don’t know about under reporting and assume that their incentive program is working. A review of your safety incentive program could prove very beneficial in understanding the true injury rate of your company.
The Flanders Group believes that employee safety comes first. If you have any questions about your safety incentive programs, or would like help reviewing their effectiveness, contact us today. We’d be happy to answer any and all of your Workers’ Compensation questions. And, for more useful information about workers’ compensation premiums follow us on Twitter, “Like” us on Facebook, or subscribe to this blog. We’re always adding new information to help you understand and lower your Workers’ Compensation premiums.