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The Impact Of Workers' Comp Claims On Small Businesses: Mitigation Strategies

Recent reductions in the annual workers’ compensation assessment rate could lead to significant savings for small businesses in New York. As Governor Kathy Hochul announced in 2024, this change could reduce workers’ comp premiums by 22% for small businesses across the Empire State. That being said, workers’ comp claims can still have a significant impact on small businesses in New York, and business owners who face this issue might want to consider potential mitigation strategies. While some consequences of workers’ comp claims are obvious, others are more complex. These consequences also depend on the unique characteristics of each business, and it may be helpful to discuss these factors with workers’ compensation defense attorneys in New York. To continue this conversation, consider contacting Schwab & Gasparini. Reach our Syracuse office at (315) 422-1333, our Albany office at (518) 591-4664, our White Plains office at (914) 304-4353, or our Hudson Valley office at (914) 304-4353.

Workers’ Comp Claims Can Increase Premiums for Small Businesses

Perhaps the most obvious consequence of workers’ comp claims is increasing premiums. Small business owners should understand that their premiums are based on the amount of calculated risk associated with their operations. If the insurer believes that there is a high risk of future claims, then premiums will be higher. These risk calculations occur when a small business owner obtains their workers’ comp insurance for the first time, and premiums may vary depending on the nature of the business. For example, the construction industry is associated with a high number of annual injuries in New York. As a result, small businesses operating in the construction industry can expect to pay higher premiums – even if their workers never file workers’ comp claims.

After the first claim, a small business owner can expect to pay still higher premiums. Again, this comes down to risk assessment. If the insurer sees that a worker has suffered an injury, they may conclude that other workers are likely to suffer similar injuries in the future. Of course, this all depends on the nature of the small business and the individual claim. For example, the small business in question might deal with biohazardous materials on a daily basis. In this situation, a claim involving some kind of infection could cause the insurer to increase risk calculations and hike premiums. That being said, even a relatively “safe” business like a bakery could see massive premium increases after repeated workers’ comp claims.

Frequent Workers’ Comp Claims Can Damage Productivity

A workers’ comp claim also means that a worker is no longer able to contribute to the operation. This could be particularly problematic for small businesses, as many rely on small workforces. For example, a small business might have 10 employees. If one of these workers suffers a serious injury that puts them out of commission for six months, this represents a 10% drop in productivity during this time. In addition, some workers are much more productive than others. If a small business loses a key member of the workforce due to an accident, the consequences can be tremendous.

Even non-injured workers may lose productivity after an accident. These individuals may be shaken and traumatized after seeing their colleague suffer a serious injury. Some may need to take time off to deal with these psychological challenges. Even if the worker takes unpaid leave, this can still damage productivity to a considerable degree.
Mitigation Strategies for Reducing the Consequences of Workers’ Comp Claims

The most obvious mitigation strategy is to prevent accidents from happening in the first place. The Workers’ Compensation Board of New York shares several tips for improving workplace safety, and a few basic improvements could help small businesses protect their workers while avoiding unnecessary financial consequences. Clear, written safety policies can make a real difference. Small business owners should also continuously re-educate their workers about new safety hazards. Team leaders should organize safety meetings and keep careful records of these discussions for future reference.

If an injury does occur, small business owners should do everything possible to learn from their mistakes. Consider interviewing anyone who witnessed the accident to learn how it happened. Photographs, video surveillance, and other data could also be helpful. Sometimes, preventing similar accidents is as simple as installing a new handrail or improving ventilation.

Defending Against Invalid or Fraudulent Workers’ Comp Claims

Another potential mitigation strategy involves defending against fraudulent or invalid workers’ comp claims. For example, the injured worker might have been intoxicated at the time of the accident. Perhaps they were engaging in horseplay. Maybe the accident occurred outside of work hours, and the injured party was not engaging in work-related duties at the time. All of these situations may make workers’ comp claims invalid – and an experienced lawyer might be able to help companies avoid liability.

Workers’ Comp Insurance Premiums Can Be Extremely Expensive

The average small business devotes a considerable amount of its income to workers’ compensation insurance premiums every year. Small business owners need to save as much money as possible, and every additional expense matters. While premiums have been decreasing in recent years throughout New York, just a handful of minor accidents could make business operations unaffordable for small businesses. In serious cases, small businesses may need to shut down because their premiums become too high. This highlights the potential benefits of discussing mitigation strategies with a law firm like Schwab & Gasparini.

Learn More About Mitigation Strategies With Schwab & Gasparini

All small businesses can benefit from mitigation strategies to reduce workers’ comp claims in New York. While it might not be possible to avoid all of these claims, business leaders can at least keep them to a bare minimum. Mitigation strategies may also help reduce the impact of each claim. That said, the most effective strategies should target the unique characteristics of each business, and online research may not provide this type of targeted guidance. On the other hand, a consultation with a workers’ compensation defense attorney in New York could offer more personalized legal guidance for small business owners. Consider continuing this conversation by contacting Schwab & Gasparini. The phone number for our Syracuse Office is (315) 422-1333. Dial (518) 591-4664 to speak with a representative at our Albany office, (914) 304-4353 for our White Plains office, or (914) 304-4353 for our Hudson Valley Office.

Mon Sep 15 2025, 12:00am