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  1. Eastern Shore SHRM Tuesday July 24th, 2012 Cambridge, MD Ways to Reduce Workers Compensation Costs OSHA, Safety and Training

  2. Why the decline in workers’ compensation costs for the last two decades? • Employer Safety Efforts • Managed Care/Occupational Health Providers • Aggressive Claimant Fraud Investigation • Workers’ comp “Reforms” - reduced benefits in some states • Aggressive RTW Programs • OSHA outreach and state consultation programs • Curtailing/Discontinuation of certain programs • More enforcement on the ground • Work Comp Premiums/Costs have enjoyed a long “soft” market

  3. Work Comp Report Card By State Source: OSHA, BLS, Work Loss Data Institute http://www.worklossdata.com/SRC2010grades.htm

  4. Factors That May Reverse the Trend of the last few decades • Curtailing of Health Insurance Benefits – Changes in Health Insurance Benefits • Influx of New/Inexperienced Workers • Future Economic Downturn • Work comp used as form of disability insurance • EH&S Downsizing • Medical Inflation outpaces Overall Inflation • Employer Premium Fraud

  5. Factors That May Reverse the Trend of the last few decades – Cont. • Hardening WC Premiums • Q4 ‘11 first increase in Premiums overall for 20 Qtrs • Depends on structure of program • Guaranteed cost will see much fewer decreases than retained risk programs • High Hazard/Poor Loss Experience means larger increases • Combined Ratios higher – investment income down • Rising Tort verdicts • Record Catastrophic Losses

  6. Top Ways to Reduce Workers Compensation Costs Controlling Work Comp Costs

  7. Alignment of EH&S With Operations • Align Safety Metrics with Other Parts of the Business • Production • Quality • Customer Service • Direct Chargeback of Work Comp Costs • Division • Business Unit • Department • Assign Work Comp/Safety Coordinator/Manager • Cautious aligning monetary rewards tied to accident metrics • OSHA fines under general duty & Record keeping clause • Concerns of under-reporting • SMART Objectives Safety is not a cost of doing business…

  8. Accountability For Safety Performance • Train Supervisors & Managers and hold accountable for: • Uniformly enforcing all work rules • Promptly reporting all accidents, injuries and conditions • Participating in accident investigations • Completing accident corrective actions/follow-up activities • Providing light duty work

  9. Partner With Medical Providers • Set up local physician for employees, preferably with an occupational health focus. • Review Panel a couple times a year • Have the primary physician tour the facility • Educate the clinic on RTW program • Outline job descriptions and demands for medical provider • Hold regular disability reviews with provider • Use the emergency room only for emergencies.

  10. Injury Reporting Lag Time • Employee • Diligently Communicate Expectations from Day 1 • Coach and counsel • Line Supervisors/Managers • Hold accountable

  11. Reporting Claims ASAP – Saves $$$$ What are some reasons for this?

  12. Aggressive Return to Work • Assign light duty to return employees to work as soon as medically possible • Have physician review light duty assignments • Educate Supervisors on positive impact of light duty • Make light duty offers in writing • Employee should sign accept/decline • Include job duties • Send certified mail • Bona fide light duty offer

  13. This is not where you want your employees….

  14. Studies Have Shown • After 6 months of continuous lost time, less than 1% of employees ever RTW • A well managed RTW program can reduce direct and indirect costs by 30% • The average cost of a claim when an employee returns to work within a few weeks is $1,000, but injuries that involve lost time beyond 30 days average costs are $50,000

  15. Who is Responsible? OSHA Temporary Workers

  16. Managing the Temp Troops and Your Staff • What are your training responsibilities when hiring temps or for your internal staff employees? • Are you properly documenting? What are the responsibilities of both staffing service and your company – including OSHA, safety compliance, PPE, log reporting, and other Environmental, Health and Safety training in order to protect your company.

  17. Shared Responsibility The General Duty Clause – 5(a)(1) Day-to-Day Supervision “in addition to specifying the output, product or result to be accomplished by the person’s work, the employer supervised the details, means, methods and processes by which the work is to be accomplished.” A “shared responsibility” between staffing services and their clients for all standards. Staffing Services do General Training Host Employers do Site Specific Training Multi-Employer Citation Policy (CPL 2-0.124) Creating Employer Exposing Employer Controlling Employer Correcting Employer 17

  18. Multi-Employer Citation Policy Creating Employer - creates a hazardous condition Exposing Employer - exposes own employees to a hazard Correcting Employer - corrects a hazardous condition Controlling Employer - provides supervision of the site with the power to have safety & health violations corrected Two Step Process OSHA first looks to see if an employer fits one of the categories above (Employer may have multiple roles) Then to determine whether or not the employer reasonably went about fulfilling their responsibility under the various standards, regulations and rules. 18

  19. Supervision Generally, host employers who engage temporary staff to work in their facility supervise the temporary employees. Defining a temporary employee as a “team lead” or “supervisor” does not transfer the responsibility for compliance with OSHA from the host employer to the staffing service. Even when actual day-to-day supervision is provided by the staffing service, the host employer retains responsibilities for compliance with safety and health standards as well as retaining a significant amount of compliance risk. 19

  20. What is OSHA’s National Emphasis Program(NEP) on Recordkeeping All About? And Why We Need to Care…

  21. Target Industries & Data • Inspections increased 6+% in 2010 • Following sites will be Targeted – • Manufacturing establishments with a DART rate at or above 7.0, or a DAFWII case rate at or above 5.0 – • Non-manufacturing establishments (except for Nursing andPersonal Care Facilities) with a DART rate at or above 15.0, or aDAFWII case rate at or above 14.0 • Top 10 Most Frequently Cited Standards • 1926.451 – Scaffolding • 1926.501 – Fall Protection • 1910.1200 – Hazard Communication • 1910.134 – Respiratory Protection • 1910.147 – Lockout/Tagout • 1910.305 – Electrical, Wiring Methods • 1910.178 – Powered Industrial Trucks • 1926.1053 – Ladders • 1910.303 – Electrical, General Requirements • 1910.212 – Machine Guarding

  22. Target Industries & Data – Cont. • Targeted Standards/Industries • Combustible Dust • Food Flavorings - Diacetyl • Hexavalent Chromium • Microwave Popcorn Processing Plants [292 KB PDF*] • Petroleum Refinery PSM • Primary Metal Industries • PSM-Covered Chemical Facilities • Recordkeeping • Severe Violator Enforcement • Shipbreaking

  23. YES OSHA will inspect OSHA 300 Logs in every inspection – not just Recordkeeping NEP inspections. OSHA has also recently increased the amounts of recordkeeping related citations. Will Other Industries Be Impacted?

  24. 24 OSHA Recordkeeping • The employer who does the day-to-day supervision must record the injury or illness. • Only one employer is to record the injury or illness. • Host employers may keep a separate log for their permanent staff and their temporary staff. Both must be produced to OSHA or BLS when required. • Staffing Services are required to provide information to the host employer so that the Form 301 can be completed. • Host employer has the ultimate responsibility for making good-faith recordkeeping determinations regarding an injury or illness to any temporary employees they supervise. • Exempt SIC/NAICS codes & <10 Full time employees

  25. The Employer who has control over employees and the temporary workers day-to-day work activities would be responsible for reporting to OSHA. See OSHA Interpretation Letter Dated April 30, 1996 – Information on Temporary Workers 25 OSHA Reporting Fatalities/Inpatient Hospitalizations of 3 or more Inpatients Federal OSHA – 800-321-OSHA

  26. OSHA Required Training Host employers retain responsibility for compliance with safety and health training standards when staff and temporary employees are engaged. In the absence of a written agreement between the host employer and the staffing service that defines responsibilities for safety and health, host employers are responsible for all training and staffing services are responsible for knowing if that training is adequate. Documentation is key for both. A contract may be used to define which employer is responsible for which training items. Some items may not easily be transferred to the staffing service (for example/ phase 2 and 3 forklift training). The staffing services would have to have a reasonable basis for assessing the host employer training is adequate. 26

  27. 27 OSHA Powered Industrial Trucks • Staffing Services can provide the “phase 1” classroom training and the documentation of this training. • Host employers, or their agent, may provide the “phase 2” hands-on training and the “phase 3” operator evaluation. Both must be documented properly. • Host employers may require temporary employees to have prior experience. If this experience was within the last 90 days, then the “phase 1” training may be considered complete. Phase 2 and 3 must still be delivered and documented.

  28. 28 OSHA Hazard Communication • Staffing Services have a general responsibility to train employees who may be exposed to potentially hazardous substances in their “right to know”, how to read an MSDS, how to read NFPA symbols and available PPE. • Host employers have site-specific training responsibility for specific chemicals, protections, storage, use and where to find the MSDS.

  29. 29 OSHA Lockout/Tagout • Staffing Services may be responsible for training employees who will be considered “affected” by lockout/tagout procedures. • Host employers, or their agent, are responsible for training temporary employees to be “authorized” to implement lockout/tagout safeguards, and site training as an “affected” employee.

  30. 30 OSHA Bloodborne Pathogens • Staffing Services are responsible for: • General training in universal precautions • For ensuring that its employees have appropriate vaccinations. • For ensuring proper procedure and follow-up after an exposure incident • Ensuring records are maintained • Host employers are required to: • Have a compliant Exposure Control Plan (ECP) • Provide site-specific training and PPE to temporary employees. • Primarily responsible to control potential exposure conditions

  31. Do Host Employers need to include temporary workers in incentive programs? It would not be an OSHA violation, but OSHA does have issues with incentive programs that promote/encourage under reporting of injuries When medical surveillance or monitoring is indicated, who is responsible for monitoring and maintaining records? The Host employer must offer and perform required medical surveillance and testing (Audiograms, PFT’s, Lead Exposure, Radiation Dosage, etc.) IH Monitoring The Staffing service must ensure medical records are maintained in accordance with the law 31 Other

  32. Staffing Services take the following risks: workers’ compensation risk lost staff time needed to investigate an accident OSHA compliance risk Other risks as defined by the contract with a client. 32 Staffing Service • Host Employers take the following risks: • OSHA compliance risk • lost productivity risk by the injured and other employees • lost supervisor time needed to investigate an accident, • cost of overtime, re-hiring and re-training a new worker, • damage to equipment and tools, etc. • Could be protected by Exclusive Remedy – Kelly v. Geriatric and Medical Services, Inc., 287 NJ Super 567, 671 A.2d 631 (NJ Super. Ct. App. Div. 1996) Host Employer

  33. To Reduce Risks Host Employers Should: • Ensure the staffing service providing temporary workers has appropriate and adequate insurance coverage • worker’s compensation($500K), employers liability($500K), comprehensive general liability($2M), auto liability (if driving involved)($1M), and excess coverage($2M) • Additional insured endorsements, waiver of subrogation, alternate employer endorsement • Ensure contracts with temporary agency clearly describe safety responsibilities for both parties • Ensure all temporary employees receive the same safety-related training as the regular employees for a specific job – treat temps the same as all other employees in regards to safety training. • Have a reasonable basis for assessing that the temporary agency safety training is adequate. • Keep open lines of communication with the staffing service regarding injury reporting, general/site specific safety training, accident investigations, corrective actions, PPE and safe work practice enforcement, etc. • Invite staffing service to be represented on your safety committee(if applicable). • Review new hire orientation safety training periodically and make changes as necessary. • Invite staffing service staff and/or safety/risk professional in to assist with targeted claims reductions initiatives • Let the staffing service know anytime the job duties change • Make sure pre-qualification criteria for selecting temporary agency are ‘Apples’ to ‘Apples’ • Temporary agency does not pay small claims direct to artificially lower their Experience Modification Rates (EMR) • Temporary agency does not subrogate losses against their client • Don’t end a temporary employees assignment for filing a work comp claim, filing an OSHA complaint, assisting another employee with an OSHA complaint, participating in an OSHA interview • Don’t forget about Co-employment ,FMLA, ADA, EEOC exposures

  34. Questions

  35. Other Resources • Work Comp Comparison By State • http://www.worklossdata.com/PR_SRC2010.htm • National Safety Counsel (NSC) • American Society of Safety Engineers (ASSE) • Behavior Based Safety Resources • Professor Dominic Cooper: www.Behavioural-Safety.com • Scott Geller: www.safetyperformance.com • Terry McSween: www.qualitysafetyedge.com • Department of Labor/OSHA – www.osha.gov