How many business owners and business managers really buy into the fact that when you protect your workers you are improving your business? The key factors focused on by most employers are increasing revenue and reducing the operational costs. Of course, this makes sense, however, the operational costs can be affected by increased and frequent worker turn-over, rising workers’ compensation premiums, absence of workers due to injuries, training of new workers, and fines imposed by regulatory agencies for an employer’s failure to protect workers. The purpose of this article is to provide information to help business owners assess how they can take proactive steps to improve their business by protecting their workers.
Cost of Worker Turn-over
It only makes sense that increasing retention of workers reduces the costs associated with recruiting and training. Less turn-over equals more savings so employers need to take steps to retain good workers. One way to show workers that the employer cares is through development, implementation, and enforcement of its safety program.
The Bureau of Labor Statistics (BLS) gathers data on employee tenure. The statistics published in 2016 indicate that the median number of years that wage and salary workers had been with their current employer was 4.2 years. Older workers tend to have higher tenure than younger workers. For example, BLS shows that the tenure of workers ages 55 to 64 was 10.1 years and ages 25 to 34 years was 2.8 years.
According to BLS’ statistics for tenure by occupation, workers in management, professional, and related occupations had the highest median tenure of 5.1 years. Workers in service occupations who are generally younger than persons employed in management, professional, and related occupations, had the lowest median tenure of 2.9 years. Food service workers had the lowest median tenure at 1.9 years. The cost of recruiting and training new workers adds to operational costs so employers need to provide the type of work culture that will help attract the right type of workers and retain the best workers.
Rising Workers’ Compensation Premiums; Worker Absence
Many employers may view safety as a financial burden, but there’s more financial liability without a safety program. When on-the-job injuries occur, the employer is required by law to provide medical care for that injury, and in many cases, monetary payments to compensate for resulting temporary or permanent disabilities.
Workers’ compensation laws date back to 1902 when the state of Maryland passed its state law. By 1949, all states had enacted some type of workers’ compensation regime. Each state has different Workers’ Compensation Laws. In most states, workers’ compensation is provided by private insurance companies. At least twelve (12) states operate a state fund and a handful have state-owned programs. Business owners need to ensure that they understand and comply with state workers’ compensation laws.
So once the requirements are determined and the appropriate insurance carrier or state fund are in place, how can employers control the cost of workers’ compensation premiums? Of course, the first defense is a good safety program so there aren’t any injuries. But people will be people and accidents do happen.
Understand how the rate is calculated. The first time an employer purchases workers’ compensation insurance, the rate will depend on the payroll and industry. After a few years, premiums will be based on the actual experience of the company. An Experience Modification Rating (Experience Mod) will be assigned. This rating needs to be monitored regularly as it is a major key to reducing Workers’ Compensation costs.
It makes sense to consider the Experience Mod as an indicator of a company’s commitment to safety and management of the safety program. Some states that have state OSHA plans use the Experience Mod to determine if an employer is required to have a Safety Committee. North Carolina is an example and companies that have an Experience Mod of 1.5 must have a Safety Committee.
Another important component of workers’ compensation premiums is referred to as Reserves. It’s basically a calculated guess, based on historical data, of what will be spent on a claim. Claims that have not been closed in a policy year will be assigned a dollar amount as a reserve. So in order to reduce reserves, the employer should communicate with the injured employee along with the adjuster and the physician. Getting an injured worker back on the job in a transitional, modified or light-duty role is important to reduce the reserves from one year to the next.
Minimizing workers’ compensation costs can help reduce operational costs. Employers can take advantage of free assessments and consultations offered by federal and state agencies and even workers’ compensation carriers to create a safer workplace.
Training of New Workers
The General Duty Clause Section 5(a)(1) of the Occupational Safety and Health Act states “that each employer shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” So whether workers are full time, independent contractors, contractor’s employees, temporary agency workers, or part time workers, an employer must ensure that site-specific health and safety training is performed immediately upon hire, whenever new hazards are introduced into the workplace, and annually.
Throughout OSHA’s standards the words “training” and “instruction” appear along with the words “adequate” and “effective” to describe the extent of the training. Some standards require that the training be “in a manner” or “in a language” that is understandable to employees. A Memorandum was published in April 2010 to OSHA’s Regional Administrators that “regardless of the precise regulatory language, the terms “train” and “instruct,” as well as other synonyms, mean to present information in a manner that employees receiving it are capable of understanding.”
If an employer has non-English speaking employees, then those employees should receive the training in the language they understand for their safety. Solutions include providing a translator and can even include providing instruction in learning English to non-English speaking employees.
Employees who are hearing impaired should also be provided a way to understand the safety training. If the training is not available to them in a written form that they can follow, then a translator should be present during the training.
OSHA also instructs that the training should be presented on a vocabulary level that is understandable by all employees. Therefore, if workers with a limited vocabulary are employed, then the vocabulary used in the training must be on that limited level. Employees who are not literate, can’t be expected to read work instructions, signs, and other safety materials.
A number of the OSHA Standards include language directing the employer to ensure that employees comprehend the safety training provided by the employer. For instance, Lockout/Tagout requires the employer to verify that the employees have “acquired” the knowledge and skills on which they have been trained. Annually, employees responsible for Lockout/Tagout must demonstrate that they can follow lockout procedures. Those procedures must be in writing but as stated above, the employee responsible for carrying out the procedures must be trained in a manner understood by them.
Respiratory Protection standards require that retraining must be provided when “inadequacies in the employee’s knowledge or use of the respirator indicate that the employee has not retained the requisite understanding or skill”. This could include instruction on how to wear the respirator, care for the respirator, maintain the respirator, dispose of the respirator, etc.
Review language, vocabulary, hearing, and literacy of your employees to ensure that all health and safety training is provided so all employees understand it. The liability of the employer is to provide a safe and healthy workplace plus train employees on all aspects of safety that affect each employee.
Fines or Penalties for Non-compliance
Complying with the standards set by the Occupational Safety and Health Administration (OSHA), helps minimize and eliminate hazards in the workplace. If OSHA didn’t exist, how many workers would be injured and even die on the job if there was no oversight by such an agency? In the last fiscal year of 2016, the BLS reported a 7% increase in work-related fatalities from the prior year. BLS reports that “This is the third consecutive increase in annual workplace fatalities and the first time that more than 5000 fatalities have been recorded by the Census of Fatal Occupational Injuries (CFOI) since 2008. The fatal injury rate increased to 3.6 per 100,000 full-time equivalent (FTE) workers from 3.4 in 2015, the highest rate since 2010.”
As is common each year, injuries revolving around transportation incidents are the most common cause of work-related fatalities. There were 2,083 in this last fiscal year. In the beverage industry some examples of this would be workers who operate company vehicles/trucks and powered industrial trucks.
The second most common fatal event in 2016 was violence and other injuries by persons or animals. Assaults and violent acts are the category shown in the BLS statistics and in 2016 there were 866 cases. This was an 18% increase from the prior fiscal year. BLS also reports that workplace homicides increased by 83 cases to 500 and workplace suicides increased by 62 to 291. BLS reports that this is the highest homicide figure since 2010 and the most suicides since CFOI began reporting data in 1992.
Fatal work injuries from falls, slips, or trips have also continued upward and increased by 6% in 2016 and 25% overall since 2011. Wet surfaces can be common occurrences in the beverage industry so employers must keep walking and working surfaces clean and clear.
Other data provided by BLS concerns overdoses from the non-medical use of drugs or alcohol while on the job. These incidences increased from 165 in 2015 to 217 in 2016. BLS reports that these types of fatalities have increased by at least 25% annually since 2012.
BLS also reports information regarding the types of occupations where fatal injuries occur. In 2016 fatal injuries among transportation and material moving occupations increased by 7% which is the highest count since 2007 and accounts for more than one-quarter of all work-related fatalities. They report that the occupations that increased greater than 10 percent in the number of fatal work injuries in 2016 includes food preparation and service-related occupations; installation, maintenance and repair occupations; building and grounds cleaning and maintenance occupations; and sales and related occupations.
There are statistics available through OSHA’s website showing the inspections of establishments. The North American Industrial Classification System (NAICS) codes are used to show statistics by specific industries. This link can be used by employers to determine their NAICS code: https://www.naics.com/search/. In calendar year 2017, there were 188 inspections by OSHA in NAICS codes 312120 (breweries), 312130 (wineries), and 312140 (distilleries). This is public information so employers who want to review the inspections can go to https://www.osha.gov/oshstats/index.html and search by NAICS codes, names of establishments, and date ranges. The data will show the dates of the inspections, when the inspection was closed, the type of inspection, and if there were any citations or penalties imposed on the establishment. Good information for employers in the beverage industry to review periodically in order to see the types of citations being abated by the establishments that have been inspected.
So how do employers keep out of that database? Employers with 11 or more employees are subject to a random inspection by OSHA. Employee count, however, does not exclude an employer with fewer than 11 employees if a current or former employee reports the employer to OSHA. The best way to avoid an inspection is to ensure that an effective safety program is in place.
Summary
Business owners can protect their liability and increase profitability by protecting their workers. Safety starts with development of a health and safety program, but will only be effective, protect workers, and contribute to the bottom line if it is supported and enforced by the business owner and top management.