Workers' Comp Costs One of the 'Greatest Challenges' to Business

June 13, 2002
California business leaders were warned at a Central City Association forum in California that implementation of workers' compensation reforms will not help them and they should implement injury prevention programs immediately or face exploding workers' compensation costs.

Aon Risk Services and DuPont sponsored the roundtable discussion on the financial impacts of California's workers' compensation legislation. Business representatives also heard from the California Chamber of Commerce and the Los Angeles Economic Development Corporation (LAEDC).

"Worker safety should be a primary focus of business owners as a way to prevent the pain and suffering associated with workplace injuries and their ultimate cost," said Rosanne Danner of DuPont Safety Resources. "Prevention is the only sure way to avoid workers' compensation costs. Until business owners drastically reduce the number of claims, workers' compensation costs will continue to have a dramatic effect on their bottom lines."

Carol Schatz, president and CEO of the Central City Association, called workers' compensation "one of the biggest financial challenges to Los Angeles business."

With the implementation of AB 749, business will face exponentially rising workers' compensation costs, said Bill Goldstein, vice president of Aon Risk Services. "Since 2000, benefits paid by employers have increased by 13.9 percent, mostly due to medical costs," Goldstein said. "On Jan. 1, base rates increased 10.2 percent. Under AB 749, there will be a mid-term increase effective July 1, 2002 of 10.1 percent, and, remarkably, the expected cost increase through 2006 will be a total of 16 percent over 2002. My over 30 years of experience causes me to be very concerned about the strain of workers' compensation on the employers."

Goldstein said employers can reduce their overall costs by monitoring all claims, providing safety training for employees and getting senior management involved and committed to safety.

Danner stressed that the best, and in many ways only, solution to high workers' compensation costs in California is to implement worker safety programs that emphasize injury prevention and ultimately reduce the number of claims filed.

Dominic DiMare of the California Chamber of Commerce told business leaders they still have time to change the workers' compensation rules. "The legislators have missed a golden opportunity to help the Golden State's economy by adopting an empty vessel in terms of reforming workers' compensation," DiMare said. "Every business in California that is feeling the effects of AB 749 needs to contact their state representatives to change this system before it drives more business away."

Jack Kyser, senior vice president and chief economist of the Los Angeles Economic Development Corporation (LAEDC), said the new Workers' compensation costs were driving businesses out of the state. "Small business constitutes 70 percent of the Los Angeles market. These businesses are especially vulnerable to the high costs associated with workers' compensation. California is viewed as a traditionally high-cost state. This situation just exerts further upward pressure."

About the Author

Sandy Smith

Sandy Smith is the former content director of EHS Today, and is currently the EHSQ content & community lead at Intelex Technologies Inc. She has written about occupational safety and health and environmental issues since 1990.

Sponsored Recommendations

Free Webinar: ISO 45001 – A Commitment to Occupational Health, Safety & Personal Wellness

May 30, 2024
Secure a safer and more productive workplace using proven Management Systems ISO 45001 and ISO 45003.

ISO 45003 – Psychological Health and Safety at Work

May 30, 2024
ISO 45003 offers a comprehensive framework to expand your existing occupational health and safety program, helping you mitigate psychosocial risks and promote overall employee...

DH Pace, national door and dock provider, reduces TRIR and claims with EHS solution

May 29, 2024
Find out how DH Pace moved from paper/email/excel to an EHS platform, changing their culture. They reduced TRIR from 4.8 to 1.46 and improved their ability to bid on and win contracts...

Case Study: Improve TRIR from 4+ to 1 with EHS Solution and Safety Training

May 29, 2024
Safety training and EHS solutions improve TRIR for Complete Mechanical Services, leading to increased business. Moving incidents, training, and other EHS procedures into the digital...

Voice your opinion!

To join the conversation, and become an exclusive member of EHS Today, create an account today!