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Slide 5


    Title: Indirect Costs of Injuries and Illnesses
    Type: Text Slide

    • Examples
      • Wages not covered by workers compensation
      • Administrative time
      • Costs of training replacement employees
      • Lost productivity
      • Replacement costs of damaged material
    • Can be 1.1 to 4.5 times the direct costs

    Speaker Notes:

    In addition to the direct costs, your business also incurs a variety of indirect costs when a worker is injured or becomes ill. These may be hidden or less obvious than the direct costs, but in most cases they involve real out of pocket expenditures. Or, they consume your time and that of others that would normally be devoted to running the business. These indirect costs can include:

    • Any wages paid to injured workers for absences not covered by workers' compensation.
    • Time lost through work stoppages (to administer aid to the worker or correct safety deficiencies).
    • Administrative time spent by supervisors (filing reports and claims, assisting the worker's family, conducting investigations).
    • Costs of training replacement employees.
    • Lost productivity related to new employee learning curves and accommodation of injured employees.
    • Replacement costs of damaged material, machinery and property.

    A Stanford University study found the indirect costs can range from 1.1 times to 4.5 times the direct costs. This means that for every $1000 in direct cost from an injury there could be $1100 to $4500 in indirect cost.