Leaders need to pay attention to these workplace health and safety trends - Part 1

Last month we looked at the regulatory actions in 2023 that will impact employers in 2024 and beyond. While compliance with federal or state laws and regulations is critical, smart organizations build resilience to protect themselves against a wide range of disruptions, including a polarized and stressed workforce, workplace violence, cyber assaults, environmental events, and more. Even in a time of controlled spending, strengthening health and safety management is an effective way to bolster the bottom line.

Although there are several other issues affecting work comp, here are eight workplace health and safety trends, some ongoing, others emerging, that employers will grapple with in 2024:

1. Headwinds affecting long-stable market: injury rates, medical and wage inflation, reserves

   While the strong performance of the workers comp line is expected to continue in 2024, some headwinds suggest the market cycle may be changing. Employers who proactively work to strengthen their health and safety programs will be in the best position to manage a hardening market.

   Injury rates

   The downward trend in accident frequency over the past 20 years is a major factor in the declining workers compensation insurance rates. Yet, data released by the Bureau of Labor Statistics (BLS) in November and December 2023 reveals adverse frequency trends. While injury rates were flat, when illnesses were factored in there was a 4.5 percent increase in 2022. Even more troubling, there was a 5.7 percent increase in fatal work injuries. During a recent webinar, Mark Walls, vice president of specialty insurer Safety National, noted data from large employers and public entities show overall accident frequency rates also increasing in 2023.

   There are many studies including a recent one by The Workers' Compensation Research Institute (WCRI) that show the risk of accidents is substantially higher at the start of employment and that the average job tenure before an injury for younger workers is shorter than for older workers. Understaffing, the high number of new employees, and relaxed hiring practices have contributed to rising injury rates.

   Wage and medical inflation

   It's easy to understand how rising wages can lead to higher rates. Rising wages in the tight labor market have accounted for increases in the average indemnity payment for injured workers since payroll is used to calculate work compensation premiums. Medical inflation is more complex. NCCI notes that state fee schedules function well as a control mechanism, but Mr. Walls points out that most fee schedules are tied to Medicare reimbursement rates and most do not have automatic adjustment provisions, so the impact of inflation is delayed. However, providers are pushing for revisions, and in Illinois, which has an automatic inflation adjustment built into its medical fee schedule, most workers compensation medical services rose 8.3 percent on Jan. 1. Medical services, which are not covered by fee scheduled, such as transportation, attendant care, and durable equipment, has seen significant rises in costs. Physician dispensing, specialty medications, health care consolidations, mega claims, and the shortage of medical professionals are also contributing to rising costs.

   Reserves

   The long period of strong workers compensation profitability coincides with an extended period of highly favorable loss reserve experience. However, inflation is much higher than anticipated on claims before 2019, medical costs are rising, the impact of long-COVID claims is unknown, and severely injured workers are living longer. Combined, these pressures could require increased tail reserves.

   Takeaway: Work comp is one of the most controllable costs in an employer's risk profile. It's time to take stock and reverse any shortcuts or relaxed standards that were adopted because of the labor shortage and low comp rates. Pre-employment physicals, robust safety training programs, continuous safety audits and enforcement, monitoring hours and employee burnout, and investing in automation and technology are critical to maintaining a safe workplace.

2. Workplace violence

   This has been an issue to watch for several years, but it isn't getting better. In 2022, fatalities due to workplace violence, which is currently the third-leading cause of fatal occupational injuries, rose 11.6 percent and there were 124,040 non-fatal injuries related to violence in 2021-22 resulting in days away from work or restricted duty. While regulations and programs were initially focused on the healthcare industry, the frequency of workplace violence has been increasing in any profession that interacts with the public, including teachers, police officers, transportation workers, delivery drivers, retail employees, and restaurant workers.

   According to a 2023 survey, nearly 2 out of 3 frontline workers don't feel safe on the job, threatened by erratic or aggressive behavior from customers, clients, or guests, theft, or fear of an active shooter. Moreover, younger workers, particularly Gen Z, feel less safe than older workers. Most concerning, there is a significant divide between employers' perceptions of job safety and the experiences and concerns of their workers. Only a third say they've received training from their employer on how to respond to an active shooter situation.

   While workers' compensation is generally the exclusive remedy available to an employee injured by workplace violence, there are two civil cases in Virginia related to workplace shootings that were allowed to proceed and may spark lawsuits in other jurisdictions. The employees maintain the employer knew or should have known about the potential for workplace violence but failed to take steps to prevent it. A jury will now decide if the burden to overcome exclusive remedy was met.

   Takeaway: Employees are taking action to prioritize their safety - quitting, changing careers, walking off the job, and retiring early. According to the 2023 Healthcare Workplace Safety Trend Report, 100,000 registered nurses have left the profession in the past two years and another 610,000 plan to leave by 2027and 63 percent of the respondents worry they'll be injured by patients. Employees want to be able to express and have their safety concerns addressed without fear of retaliation. This should be a wake-up call for employers. Failure to address the issue affects hiring and retention and can result in litigation and injuries. Employers need to consider increased security measures, enhanced use of technology to help prevent and better respond to threats, and robust workplace training in recognizing threats and de-escalation.

3. Mental health, suicide, and employee wellbeing

   COVID-19 made mental health a top focus of organizations and that will continue in the coming year as rising rates of employee burnout and the looming presidential election are expected to raise stress among a polarized workforce. Moreover, mental health conditions can contribute to suicide risk, which is a growing concern in the workplace. According to a CDC report, the suicide rate among working-age people is up 33 percent in the past two decades. Nearly 38,000 working-age people died from suicide in 2021 and rates were elevated in nine of 20 major industry groups.

   In workers comp, compensability of mental health claims is complex and varies by state. However, it is cropping up in more claims, as employees maintain they suffered stress-related illnesses as a direct result of burnout at work, harassment, or an injury and more states enact laws related to mental injuries. Compensability aside, mental health factors impact comp as strong predictors of delayed recovery and other adverse outcomes.

   Beyond benefits, employers need to look at the work environment, which can be a positive or negative factor affecting mental health and assess employee satisfaction with the offerings, accessibility, and outcomes. Employers have a critical role in fostering a psychologically safe workplace and managing workplace stress by adjusting work hours, stopping bullying and harassment, confronting poor managerial support, providing stress management programs, and engaging in empathetic communication.

   Companies have made meaningful strides in being more open about mental health in the workplace and offer more benefits that include virtual and in-person mental health care and online resources such as apps, articles, and webinars. Utilization, awareness, and access are barriers that employers must address. There also should be a plan to assess the effectiveness of these offerings to be sure it is money well spent.

   Takeaway: Improving mental health access and strengthening services, including suicide prevention, will be top priorities in 2024. Employers should plan to work with their health plan and other vendors to expand their care provider networks, strengthen outreach, as well as offer new or different benefits based on employee needs. Employers should also focus on core organizational practices such as scheduling, manager relations, communication, and fostering a culture that prioritizes well-being.

4. Technology

   At a rapid pace, technological advances continue to reshape production practices, workplace environments, and how employees work. Wearable devices provide real-time data on employee health and safety, IoT sensors play a role in monitoring environmental conditions, AI-powered predictive analytics help identify potential hazards before they occur, and safety training has become more interactive and tailored to individual needs with virtual reality (VR) and augmented reality (AR). Data management systems help identify trends, predict risks, and continuously improve safety protocols. This rapid evolution has led to a seemingly endless number of products and solutions and assessing the technologies and potential results can be daunting. Last year, NCCI did a two-part series that is a helpful guide for employers.

   Although technology has always raised questions about data privacy, ethical use, and worker acceptance, there was heightened concern in 2023 centered around Generative AI. This has led to a dynamic regulatory environment with standards evolving and heightened awareness among employees, customers, and other stakeholders.

   Takeaway: While business needs will vary depending on sector, size, and structure, investment in technology is an essential part of comprehensive and proactive risk management. Balancing technological advancement with ethical considerations and user acceptance is key to managing technology responsibly and building trust. In addition to assessing the operational, security,privacy, and financial impacts of the investment, employers must also include the social and ethical impact. Developing a set of ethical criteria to evaluate technology, educating employees about the ethical considerations and responsible use of technology, and addressing concerns about the collection and use of personal data are essential to foster trust.