The Occupational Safety and Health Administration (OSHA) has developed an online “Safety Pays” program to provide an easy-to-use tool to help employers assess the impact of workplace injuries and illnesses on their companies’ profitability. This program uses a company’s profit margin, the average costs of an injury or illness, and an indirect cost multiplier to project the amount of sales a company would need to cover those costs. For example, here are the costs and total sales needed to recover losses from one burn injury (assuming a default profit margin of 3 percent).
The extent to which the employer pays the direct costs depends on the nature of the employer’s workers’ compensation insurance policy. The employer always pays the indirect costs. The magnitude of indirect costs is inversely related to the seriousness of the injury; the less serious the injury, the higher the ratio of indirect costs to direct costs.
“OSHA hoped to show employers, especially small and medium-sized employers, that workplace injuries and illnesses can have an enormous impact on a company’s bottom line,” said Kimberly Darby, an OSHA spokesperson. “The program is intended to raise awareness of how occupational injuries and illnesses can impact a company’s profitability, not to provide an analysis of a particular company’s occupational injury and illness costs.” According to “Safety Pays,” here are some of the most expensive injury types when it comes to average direct cost:
• Asphyxiation — $138,043
• Enucleation — $96,925
• Multiple injuries including both physical and psychological — $125,155
• Severance — $103,998
• Vascular — $152,764
According to Darby, OSHA recently updated the program to include more recent workers’ compensation data from the National Council on Compensation Insurance (NCCI).
“Employers who implement an effective safety and health program can help prevent workplace injuries, illnesses and deaths, thereby reducing costs such as workers’ compensation premiums,” Darby stated. “Other, less quantifiable benefits include reduced absenteeism, lower turnover, higher productivity and increased morale.”
OSHA hopes this information will encourage employers to take steps to make their workplaces safer. Another tool available to employers is OSHA’s On-site Consultation Program, which offers free and confidential safety and occupational health advice to small and medium-sized businesses nationwide.
“Consultants help employers identify workplace hazards, provide advice on compliance with OSHA standards, and assist in establishing safety and health programs,” Darby said. “On-site consultation services are separate from enforcement and do not result in penalties or citations.”
For more information, visit www.OSHA.gov or call (800) 321-6742.
