The True Cost of Employee Health and Safety

Never has our title phrase rung more true than when it comes to workplace health and safety. It is a classic case of “Pay me now, or pay me later” and occurs all too frequently and with increasingly serious consequences in research laboratories. We hope to convince you that following the former instead of the latter makes more sense, for your bottom line as well as for your employees.

When we view the whole picture of employee and workplace health and safety, you can quickly see that it is very complex and involves people from many different agencies in addition to your employees. Depending on your facility focus, your location and whether your business is in the public or private sector, entities that may exert jurisdiction over you can include the Occupational Health and Safety Administration (OSHA), the Environmental Protection Agency (EPA), the Food and Drug Administration (FDA), a state fire marshal, a state environmental department, and others, right down to local environmental and emergency management officials.

To get started, let us give you a few sobering statistics that we hope make an impression. According to the U.S. Bureau of Labor Statistics 2008 data, there are about 4 million work-related injuries per year.¹ That equates to around 11,000 injuries per day! There were 5,657 work place fatalities in 2007. That is almost sixteen deaths per day, or one every hour and a half! If we include deaths from occupational illnesses, which are about ten times the fatalities, we have one work-related death every eight minutes. It is hard to fathom these numbers when living in 2010 and considering all the information and knowledge we have compiled leading us into the 21^st century. We are the first to admit these statistics are a little disheartening. But they are also motivating, pushing us to work diligently every day to bring the numbers down and reinforcing why we do what we do.

Why so many illnesses, injuries and deaths?

Recently, Charles Jeffress, the former assistant secretary of labor, commented in a Public Broadcasting Service Frontline interview that our current laws, particularly penalties for violations, are ineffective and that companies find it less burdensome (read more profitable) to take the risk of not having safety programs in place than to comply with the law.² This is disturbing, but not the only reason for those rueful statistics. There are about 30 million employers in the United States, but only about 1.5 million have to report to OSHA. In addition, the Occupational Safety and Health Act, basically unchanged since its inception in 1970, does not cover public employers in states without safety and health laws, leaving about 8 million U.S. workers with no legal protection at all.³ The Occupational Safety and Health Administration, with an average of fewer than 2,000 inspectors, struggles to enforce the laws. And too often the penalties and fines levied for violations are trivial compared to the cost of implementing technologies and programs consistent with OSHA standards.⁴ This circles back to the statement by Mr. Jeffress and explains why it is true.

In summary, our dismal statistics for workplace illnesses, injuries and fatalities are due to our outdated law, millions of businesses and workers without coverage, little or weak enforcement, and insignificant penalties. This is totally unacceptable, and we need to flip the table, not just because it is “the right thing to do,” but because it also makes good business sense.

The new sheriff in town—OSHA

This past March, Assistant Secretary of Labor David Michaels said he wanted to “make it clear that 5,000 preventable worker deaths and 4 million injuries recorded in our nation every year are expensive, disruptive, wasteful, and completely unnecessary.”⁵ The new OSHA management promises to be more aggressive in making sure everyone obeys the law. The top priority is giving emphasis to strong enforcement. Michaels admits that current OSHA penalties are not great enough to provide sufficient incentives. For example, if you wilfully commit a workers’ safety violation that results in death, you are guilty of a misdemeanor and a serious violation—those with a high chance of death or serious physical harm are subject to a maximum civil penalty of only $7,000. This could change significantly should H.R. 2067 become law.

Known as the Protecting America’s Workers Act (PAWA), H.R. 2067 is designed to provide OSHA with significant new tools to improve workplace health and safety. Included are higher penalties, enhanced enforcement and expanded victims’ rights. Highlights of the legislation include the following:

• Increased maximum civil penalties from $70,000 to $250,000 for willful violations and increased criminal penalty from six months’ imprisonment to ten years (for willful violations resulting in death)
• Expanded OSHA coverage for millions of workers who are currently unprotected, such as state/municipal employees and airline and railroad workers
• Expanded protection for whistle-blowers to provide a 180-day statute of limitations
• Provision of additional workers’ rights such as refusal to perform hazardous work and private right of action for workers and families if OSHA does not prosecute
• Prohibition of employers from discouraging the reporting of work-related injuries and illnesses by employees⁶

   

While the PAWA is debated, OSHA took action recently to crack down on employers that repeatedly ignore the law and endanger workers. The new Severe Violator Enforcement Program (SVEP) will focus OSHA enforcement activity on targeted worksites with histories of OSHA violations.⁷ SVEP will include more intense examinations of employer practices, increased inspections and follow-up inspections as well as inspections of other worksites under the same employer where similar hazards and deficiencies exist.

In addition to SVEP, OSHA issued revised penalty policies that allow increased potential fines and expand the timeframe for an employer’s history of violations from three years to five years.

The new directive puts a gravity-based penalty structure in place, but with reductions available for a clean history, number of employees and good-faith procedures. Both the SVEP and the new penalty structure take effect in the coming months.⁷

So, we can see that with the new OSHA management and potential new legislation taking the risk of noncompliance could prove very costly and a bad business decision. And this is not just for heavy industry. Recent serious lab accidents and a couple of tragic fatalities have drawn the attention of the Chemical Safety and Hazard Investigation Board.⁸ CSB Chairman John Bresland stated, “I believe it is time to begin examining these accidents to see if they can be prevented through the kind of rigorous safety management systems that we and others have advocated in industrial settings.” So, it would only take one serious accident to put you under the microscope.

A bigger hammer—EPA

We mentioned in the beginning that other agencies besides OSHA may regulate your activities. As it turns out, a definite connection exists in that facilities that tend to ignore worker safety violations also tend to ig- It Pays to Protect nore environmental laws.^9,10 In many instances responsibilities for worker safety and environmental compliance are in the same hands within a company. Most of the environmental laws carry felony sanctions for criminal violations that can result in serious jail time and much heavier fines and penalties.

Mr. Uhlmann, the current director of the Environmental Law and Policy Program at the University of Michigan School of Law and former chief of the Department of Justice’s Environmental Crimes Section, provides one stark example—an Idaho business with cyanide waste tanks. Workers were sent into the tank to clean it. The hazardous wastes were dumped on the ground, and one worker collapsed in the tank and suffered severe and permanent brain damage but lived. Under OSHA no crime was committed (though many OSHA violations were) because the worker lived; therefore, no OSHA sanctions were levied. Under EPA, however, improper disposal of hazardous wastes resulted in a 17-year jail sentence.

The moral here: if your worker safety record is not so hot, you had better take a close look at your compliance with the Resource Conservation and Recovery Act and its Hazardous and Solid Waste Amendments, the Clean Air Act, the Clean Water Act, and the Toxic Substances Control Act, for starters. It might seem unfair that environmental sanctions are much more severe than those for worker safety, but regulators will use the tools available to them when justified and needed.

Let us inject one more warning here. In our experience, research laboratories are more apt to run afoul of environmental regulations, as evidenced by numerous and substantial EPA fines levied against both private and academic laboratory facilities. Since the connection flows both ways, if you have been stung by environmental compliance issues, you could be selected for a visit by OSHA.

Mr. Uhlmann states, and most would agree, that a strong enforcement program is needed to get consistent violators to toe the line. To that end the Department of Justice, EPA and OSHA started the Worker Endangerment Initiative, a cooperative effort to corral chronic and persistent violators of worker safety laws. By forming this partnership, OSHA and EPA inspectors are more knowledgeable regarding regulations that can form the basis of criminal charges and lead to convictions.

The rest of the story—when something bad happens

Perhaps the threat of serious fines and possible jail time has started us thinking and spurred us to action, beginning with a thorough review of our environmental, health and safety programs. It has been said many times, and most would agree, money is the best change agent, especially when it comes to safety standards and enforcement. But this is not the strongest argument for compliance, in our humble opinion. We believe it pays to protect because of the far-reaching and devastating effects on individuals, family and coworkers. What will be the fallout and subsequent direct and indirect costs? And will these really be less than the costs of taking precautionary steps and having proper safety programs in place?

and having proper safety programs in place? How many times have you heard or read these explanations? “It has never happened before.” “We’ve been doing it that way for years.” We hear them a lot, and they may be true, until you read them on the accident report. If you are a frontline lab supervisor, you may have immediate knowledge when an employee is hurt, but most managers will know only when they receive the first report of injury or a call from the workers’ compensation office. And, of course, when someone is injured, that is too late and the chain reaction of costs and consequences has started and cannot be stopped.

We all know that when someone is injured on the job it is going to cost us. But, in fact, the potential regulatory fines that we have discussed above may be one of the least amounts after everything is said and done. When we look at all the various costs associated with an occupational illness or injury, we can separate them into two major categories: direct costs and indirect costs. Let’s take a closer look at each of these so we have a clear picture of everything involved.

Direct costs are the easier of the two to evaluate. Each item is a defined task with a known dollar amount attached. It begins with the initial trip to the emergency room. Costs quickly add up when the bills arrive from the physicians, the hospital, the diagnostic lab and the pharmacy. All these are repeated with each follow-up visit, and we then add in the costs of independent medical exams, physical therapy, surgery and other treatments. We have seen data from workers’ compensation cases where even minor injuries such as cuts or small chemical burns, two of the most common laboratory accidents, have costs that easily run into thousands of dollars. Step up the seriousness of the injury or add in a complication or two and we are into tens of thousands of dollars or much more.

Depending on the time away from work and the treatment outcome, other direct costs might include nurse case management, workers’ compensation hearings, lost wages and attorney fees (for both employee and employer). And don’t forget the replacement costs for temporary hires and/or overtime for other employees to fill in while the injured employee completes recovery and rehabilitation and returns to full work duties.

Indirect costs are a little harder to fit numbers to and are those not directly tied to the injured employee but resulting from the repercussions of the injury and lost work time. Most are associated with internal or in-house management time. The laboratory manager and safety coordinator have to investigate the accident and the workers’ compensation claim and issue reports. The finance department and insurance coordinator have to track and pay bills, premiums and deductibles and adjust the payroll. Other unit or midlevel managers will deal with staffing issues, claim reporting and monitoring and other reporting as necessary. These hours add up and are usually significant.

As Assistant Labor Secretary Michaels has pointed out, all workplace injuries are extremely disruptive. Immediately we have to deal with the loss of production of the injured employee. This creates staffing issues whether we turn to temporary workers or attempt to cover with existing employees or coworkers. Specialized training may be necessary, and time on the job will be needed before they reach full capability. Dealing with this disruption will definitely affect the laboratory’s function no matter if you are a research lab or production facility.

Finally, we turn to the injured employee, and indirect costs attributed here may be the most significant and long-lasting of all. Obviously, the employee first has to deal with the pain and discomfort during treatment and recovery. The severity of the injury dictates this process. Even if he or she is able to return to work in a reduced capacity, there will be follow-up visits to medical providers and treatment facilities, travel time to and from these, and time in the waiting room. It is too late for apologies. Address the root cause of the accident thoroughly and quickly. Treat the employee fairly, and ensure he or she receives all entitled benefits in a timely manner.

There are going to be definite family impacts as well, especially if the employee is unable to perform daily functions. The family’s (and the employee’s) quality of life will change. The effects of these changes cannot be predicted or measured. Make sure the family stays fully informed every step along the road to recovery.

The employee’s coworkers are also going to be affected. You can bet they will be watching closely how the injured employee is treated and how the company addresses the loss and disruption. Do not try to downplay or ignore the event. Involve all coworkers in the accident investigation; their insights are invaluable. Address corrective actions as quickly as possible, whether they are safety issues, personal protective equipment needs or additional training. The last thing we want is another accident or injury.

References

1. Injuries, Illnesses and Fatalities. U.S. Department of Labor, Bureau of Labor Statistics. Washington, D.C. 2008 http://www.bls.gov/iif/
2. A Dangerous Business. Lowell Bergman & David Rummel and Linden MacIntyre. Public Broadcasting Service, Frontline. January 2003. http://www.pbs.org/wgbh/pages/frontline/shows/workplace/etc/script. html
3. Sixteen Deaths per Day. Brave New Foundation. Culver City, Calif. 2009 http://16deathsperday.com/
4. OSHA: Beyond the Politics. David Weil. Public Broadcasting Service, Frontline. January 2003. http://www.pbs. org/wgbh/pages/frontline/shows/workplace/osha/weil.html
5. Remarks to Joint Meeting of ASSE and AIHA. David Michaels, Assistant Secretary of Labor, OSHA. Washington, D.C. March 2010. https://www.osha. gov/pls/oshaweb/owadisp.show_document?p_ table=SPEECHES&p_id=2143
6. Testimony of David Michaels before the Subcommittee on Workforce Protections. David Michaels, Assistant Secretary of Labor, OSHA. Washington, D.C. March 2010 http://www.osha.gov/pls/oshaweb/owadisp.show_ document?p_table=TESTIMONIES&p_id=1062
7. News Release: U.S. Department of Labor’s OSHA Takes Action to Protect America’s Workers with Severe Violator Program and Increased Penalties. U.S. Department of Labor, Occupational Safety and Health Administration. Washington, D.C. April 2010 http://www. osha.gov/pls/oshaweb/owadisp.show_document?p_ table=NEWS_RELEASES&p_id=17544
8. University Lab Accident under Investigation. Jeff Johnson. Chemical and Engineering News, American Chemical Society. Washington, D.C. January 2010 http://pubs. acs.org/cen/news/88/i04/8804notw1.html
9. Prosecuting Worker Endangerment: The Need for Stronger Criminal Penalties for Violations of the Occupational Safety and Health Act. David Uhlmann. American Constitution Society for Law and Society, Forthcoming; U of Michigan Public Law Working Paper No. 120. September 2008. http://ssrn.com/abstract=1262922
10. A Dangerous Business Revisited: an Interview with David Uhlmann. Public Broadcasting Service, Frontline. February 2008. http://www.pbs.org/wgbh/pages/frontline/ mcwane/interviews/uhlmann.html