Protect your business from the costs of employee accidents

Equipment maintenance is essential to the continued operation of your business. Operators should inspect equipment prior to operation.
Photos courtesy of Jary D. Winstead.

With the current economic situation, we are all looking for something with returns. Unfortunately, during tough times is commonly when most employers make cuts in their safety program. This is the wrong area to make cuts. A safety program, when administered right, will positively affect your bottom line, and when you have no safety program, it will most assuredly affect your bottom line negatively.

An employer can go for years without a workplace accident and may even have a few small ones that don’t cost them much money. Then, a more serious accident occurs, and the costs begin to mount.

Let’s review some of the direct costs of an accident, the first being the injured employee. Most companies have worker compensation insurance that will cover medical costs and lost wages when the employee is unable to return to work. The wages paid to the employee are not at their full wage—usually around 66 percent of the employee’s regular wage. These benefits normally begin after two days of time lost, depending on your state laws and the specifics of the accident.

The employer’s direct costs are initially due to increased payroll. To follow Occupational Safety and Health Administration (OSHA) standards, you, a supervisor or your safety committee will need to complete an accident investigation. If the position is vital, you will have to have someone else complete those tasks while the injured worker is away. In cases where an employee returns to work with restrictions, or has to be reassigned temporarily due to an inability to perform their regular job tasks, you will then be adding that payroll, as well. As an employer, getting an injured employee back to work in any capacity is a wise and cost-saving decision, even if it costs more up front.

Another direct cost is production loss. Unless you have the perfect replacement standing by, there inevitably will be production losses. Depending on how vital the position is, this can be costly. Lose a key equipment operator, decision maker or supervisor, and the losses will mount.

As for indirect costs that result from a workplace accident, morale is almost always affected. Although it is hard to put a dollar figure on poor morale, it can move through your business like the plague. Another cost is fines and citations from noncompliance to state and federal laws and OSHA standards. A serious accident will quite often initiate an investigation from the agency that oversees employee safety in your state, and if you’re not prepared, it can be an expensive visit.

The next indirect cost is from your worker compensation insurance rate increases. Landscaping and construction labor insurance rates are already high, and when you become a higher risk, it can cost you and your business. I have seen small businesses go from annual rates of a few thousand to $50,000 a year.

As most of you probably know, legal costs can be astronomical. When an accident occurs that involves a key piece of equipment, the losses could surpass your profits. There are a lot of businesses out there that could never absorb those kinds of costs.

Most accidents can be prevented through complying with OSHA standards, proper hiring practices, training, personnel management, an active safety committee, safety policies and procedures, proper equipment maintenance and safe equipment operation.

OSHA standards

For many business owners, the mere mention of OSHA causes anxiety. This should never be the case, unless you are willingly allowing unsafe work practices to occur. OSHA (www.osha.gov) is a free tool and a wealth of information. Utilize the free services of OSHA, your state and your worker compensation insurance provider.

Proper hiring practices

Safety starts before the hire. Proper screening, as in drug screening, background checks, reference checks and former employer inquiries, is essential. Quite often, we hire our accidents.

Training

OSHA requires that all employers provide their employees with safety training relevant to their job tasks at their initial assignment, as well as annual refresher training thereafter on certain topics. As an employer, you must assure that every employee receives a new employee safety orientation. For employees that will be performing hazardous duties, such as operating machinery or handling hazardous materials, they will require additional in-depth training on those job tasks. When providing training, if you don’t document it, you may as well not be doing it.

Personnel management

Safety starts from the top. You can provide the highest quality safety training, and if your management staff isn’t following the policies and procedures, your program will never work. Some of the most common violators to safety policies and procedures are the management staff. In order to assure employees follow your safety program policies and procedures, you and your management staff must practice what you preach.

An active safety committee

Unless your business is exempt, which few employers are, you must have a safety committee. Safety committees are an essential component to your safety program. Provide them with encouragement, training, tools, empowerment and support they need to do the job. Without those items, they will not succeed. The safety committee is a key component in a proactive workplace safety program.

Policies and procedures

Each workplace must have written workplace safety programs in accordance with OSHA standards and state laws. This is your guide for everything from training to what the safety committee is responsible for. The more hazardous your workplace, the more written programs will be required. In this program, you will have all of your safety program policies and procedures. Policies and procedures need to cover everything from equipment operation to what to do in case of a medical emergency. Train your employees on the policies and procedures, document and post them, and make sure that everyone adheres to them and enforces them.

Proper equipment maintenance

Equipment maintenance is essential to the continued operation of your business. Many people are injured because the equipment they are operating has not been properly maintained. Employees are key to proper equipment maintenance. Equipment operators should be inspecting the equipment prior to operation. When a defect is found, it should be repaired as soon as possible. If the defect is a safety concern, the equipment should not be operated until the repair has been made. Well-maintained equipment will result in more production and will be safer to operate.

Safe equipment operation

Most equipment accidents are a result of operator error and lack of training. Since equipment accidents are commonly related to serious injuries and deaths, equipment training is one of the most important components of your proactive workplace safety program. Teach them how you want your equipment operated, test them on what you have taught them, observe their operation of the equipment and document all of it.

Utilizing this information will improve the safety of your employees, reduce workplace accidents and help save your business money. Health, safety and labor laws differ from state to state, and employers must be familiar with those that relate to their business operation.

The author is an occupational safety consultant with over 25 years of occupational safety training and human resources experience. He has also written numerous articles related to workplace safety for agriculture and related industries.