Small Business Success Podcast: OSHA AND WORKPLACE SAFETY

Transcription

1 Small Business Success Podcast: OSHA AND WORKPLACE SAFETY The SCORE Small Business Success Podcast features interviews with the best and brightest in the world of small business, covering topics such as business plans, financing, marketing, human resources, SEO, social media and more. In this podcast, SCORE mentors chat with Laurel Ferguson. * Laurel Ferguson graduated Rochester Institute of Technology with a BS in Occupational Safety, an MS in Environmental Health and Safety and a degree certificate in Crisis and Disaster Planning. Laurel has obtained certifications of CSP, Certified Safety Professional and CHMM, Certified Hazard Materials Manager. She has over thirty-five years of experience working with Eastman Kodak Company in the health safety environmental division. She works for Paychex in safety and loss control. Again, welcome to our show. Laurel let's start with just talking about what OSHA is and if you could tell me about OSHA and safety and what OSHA is all about. Laurel Ferguson: OSHA is a government agency that oversees the safety and health requirements that companies have to meet in order to comply with regulations just like you have taxes, just like you have environmental and disposal regulations. There are very specific safety regulations that OSHA enforces. They have different divisions. They have an outreach division which goes out into small businesses and advises them on the regulations that those specific businesses have to meet, very similar to an OSHA or a safety consultant would do if you wanted to pay them instead of OSHA. They also have an enforcement division where if something goes wrong, they're going to come in and they're going to do an inspection. If they drive by and they see you doing something wrong, they're going to stop and they're going to do an inspection. Just like a police officer that sees a crime in progress where you can get arrested or you can get cited or fined for your activities so can OSHA fine your company for a violation of the regulations. What does an employer need to know about OSHA? Laurel Ferguson: Primarily that OSHA applies to every company that's out there. There really isn't a company that is in business that doesn't have at least one OSHA regulation that applies to them. Emergency action for example, everyone has to know how to get out of the building in an emergency and where they're supposed to go once they're out of the building so that we can make sure that everyone is out safely and that way we don't have to send the fire department into the burning building to look for someone. That is one of the primarily regulations that applies to everyone. There are many other regulations that apply unilaterally across the board. What would an employee need to know about OSHA? Laurel Ferguson: OSHA is out there primarily to protect their health and safety and make sure that the company that they work for is doing things properly. If you work on a piece of equipment or machinery it has to have very specific guards to protect you from getting your fingers cut off for example. If you work with chemicals, there has to be specific information available to you on what the hazards of those chemicals are and how to obtain that information at a company level. There's many things that OSHA does to protect the employees and that's their primary goal to make sure that everyone goes home at the end of the work day in as good or better condition than they came to work that morning. How does Paychex primarily known as a payroll company fit in with OSHA compliance? Laurel Ferguson: Well there are many just like with OSHA and other governmental agencies there are many divisions within OSHA. You can subscribe to our payroll division. You can subscribe to our handbooks division where we will give you an HR related handbook for your company. You can subscribe to an entire HR services package and as part of that HR services package that goes through Cobra and SUI and 401K and hiring and firing and all of those health and benefits and all of those other HR services that companies have to deal with, with that package comes a safety

2 service which means you would get me or one of my colleagues as your safety consultant so that we can assist you in compliance with the regulations that apply to your business. What do you see as some of the biggest examples of a problem that a company may face as it relates to OSHA? Is there a certain behavior that tends to show up more often than other behaviors? Laurel Ferguson: There are several regulations again that apply to most companies across the board. For example if you have an injury to one of your employees, there's a specific process that OSHA makes you go through to document the circumstances of that injury or that incident. Then depending on how many employees you have under your company would depend on other regulations that apply. Again emergency action applies to everyone. Hazard communications if you have chemicals applies to everyone. If you don't have chemicals, then obviously it doesn't apply to you. Electrical safety if you have a building that you work in and the electrical service panel box is in your section of the building then that service panel box has to have a cover, the cover has to stay closed. You can't store stuff in front of the panel box. Things like that that OSHA looks for when they walk through or do an inspection of your facility. Those are the things that if they re wrong they're going to cite you for. Does a company pay when OSHA comes to inspect? Laurel Ferguson: No, they should never be paying OSHA under any circumstances. OSHA is a governmental agency that is a service provided for the health and safety of the employees or in terms of their outreach as a community service for that geographical area. Can you give me an example, let's take maybe a medical client and give me an example of a typical program that you would provide for a medical client? Laurel Ferguson: For medical clients there are five or six programs that almost always apply across the board. Again, accident investigation for example, and emergency action always apply, but in most medical areas you have exposure to human blood or body fluid so then you have to have a bloodborne pathogens program which means you have to have training. You have to have very specific written documentation to comply with that type of exposure. You've got to have some way of dealing with your medical waste. There's a specific program for that. Again, chemicals that you have, personal protective equipment, the gloves, the masks, the safety glasses or the face shields that you wear are all part of a standard medical practice. Then from there depending on what risks and exposures in addition to those standard programs that you have would depend on what else needs to be in your manual. Do you have oxygen cylinders or other compressed gases? Do you live in a geographic area where you're required to have a crisis and disaster plan? Do you have an eye wash station? Do you use lasers or x-ray equipment? Those are questions that we would need to ask to specifically make a program that is customized to that business. Then from there you may also have state regulations that apply. Regarding bloodborne pathogens is that what they refer to as universal precautions? Laurel Ferguson: Yes it is, but there's also additional items that would need to be brought into compliance for a company that has that type of exposure. Let's take a different kind of company for a moment, maybe a manufacturing shop and can you provide me with an example of a typical program for them? Laurel Ferguson: Sure. Again accident investigation, emergency action are your basics. Hazard communication for chemicals. If you have more than ten employees on your payroll you're likely subjected to OSHA record keeping requirements which is in addition to the accident investigation program that you have to have. Then again your electrical and your hazard communication for your chemicals.

3 Then you have specific personal protective equipment that your employees may have to wear, hearing protection, respiratory protection, eye wash stations. Then you may have chemical exposures. Again, your hazard communication, but also flammable liquids, compressed gases, hazardous wastes or lead safety. If you work at height, you might have a fall protection regulation that you have to comply with. If you go up in an aerial lift or a scissors lift or on a scaffolding system or if you work on ladders you'll have to have programs for those. Heavy equipment or machinery, lock out, tag out, machine guarding, cranes or hoists or forklifts. If you have a forklift, you have to have a license to drive the forklift. Then there are special items, confined space entry, lasers, welding, and again your state's specific regulations. You mentioned over ten employees, what about less than ten employees? Does that mean you don't have to pay attention to any of this? Laurel Ferguson: There are regulation that are size dependent, but most of the regulations apply to you if you have that exposure. Again for example a forklift, if you don't have one, you don't have to comply with the regulation but if you do have one then you must comply. It doesn't matter the size of your company. There are a couple of regulations that are size dependent for your company so if you have ten or more employees there are two or three regulations that would then kick in again if you have that type of exposure. Can you tell me more about documentation requirements that OSHA has? Laurel Ferguson: There are very specific forms and requirements that OSHA has for documentation. For example, personal protective equipment. If you require your employees to wear personal protective equipment you must document what protective equipment you have and why you need it. If you have chemicals, you must have what we call safety data sheets for each one of those chemicals and information available to your employees on the hazards of those chemicals. If you have more than ten employees then you have to have an emergency action plan that is in writing that specifically designates all of the responsibilities. Now again, going back to our previous question if you have fewer than ten employees you still have to have a plan you just don't have to write it down. Laurel Ferguson: MSDS, is that material data safety sheets, is that correct? Right and they're now called safety data sheets under the change for the regulation. If you have different chemicals in your business you have to have a binder and a different sheet for each one and what to do in case there's a problem with that chemical, you get it in your eyes, is that correct or you swallow it? Laurel Ferguson: That is correct. Employees have the right to know about the hazards of the chemicals that they work with. The safety data sheets that a company is required to keep whether hard copy or in a file electronically, then that information is always available to those employees who want to learn more about the hazards or if they have a chemical spill or if they get over exposed to this material, then they know what to do. Do you find that employees actually look at them? Laurel Ferguson: Actually yes. I get calls from many of my clients' employees that have questions on the ph of a material, how to handle it, what protective equipment they need, absolutely. Good. I'm glad. Tell me more about safety training requirements that OSHA has. Laurel Ferguson: Again very much like their documentation requirements many regulations have very specific OSHA requirements for training, emergency action for example. You have to know where your exit doors are, you have to understand where you're supposed to go once you're out of the building, so again we can account for you. For forklift training, you have to have a license to drive a forklift just like you have to have a license to drive your car on the road. There are very specific requirements that you have to go through to get that license. The training

4 that OSHA requires that you go through is part of that information to keep everyone safe so that if you have to use a respirator you know how to do it properly. If you have to put hearing protection in your ears, you know how to do it properly, so that you can protect yourself from the hazards that you have potential exposure to. This brings back a lot of memories. I had a durable medical equipment company and I remember going through a lot of this stuff. That's why I'm familiar with the safety sheets and those kind of things. What about state specific requirements. I know some states have their own regulations. How does a company deal with that? Laurel Ferguson: You have to understand the requirements, not just the federal government, but also each state that you work in. In some cases it's down the county or the city level. For example California has a regulation that applies to every company that has premises or a location in the State of California. It's call the IIPP or the injury, illness, prevention plan. New Hampshire has a requirement that if you have more than fifteen employees on your payroll, you have to have a safety committee. Again, it's not just the federal regulations that a safety consultant has to advise a company on, it's also their state requirements. There are very specific things that some states regulate more stringently than others. What happens if as a business I don't follow the regulations? What are my risks? Laurel Ferguson: If somebody gets hurt, then believe me OSHA is probably going to find out about it because there are requirements for example for reporting accidents and injuries. If you send someone to the hospital, then that medical provider will likely, they may have to call OSHA, very similar to if you're shot by a gun the medical professional has to notify the police. They have reporting requirements for accidental injuries that are very serious in nature. If that's the case, then OSHA is going to find out about it. Then they're going to come in and they're going to do an inspection. If you have an employee that does not feel safe in the workplace, again it's that their right to be able to call OSHA and OSHA will contact that company to say, "Okay we have an allegation here. Tell me what's going on." If the allegation is serious enough, OSHA will come and knock on your door. The question that I have for all of my clients who don't think that they need a safety program is "If OSHA were to knock on your door tomorrow, would you feel confident that you could pass an inspection without any citations or violations?" Let's look at an example like BP with the Deep Water Horizon I believe it was called. Does OSHA monitor oil rigs out in the middle of the ocean as well? Laurel Ferguson: There's a division of OSHA that does that. There's a division of OSHA that deals with farms and agriculture. There's a division of OSHA that deals with wharfs and long-shoring. There's a division of OSHA that details with general industry, one for construction activities, again there's different sections of OSHA that deal with different occupations. Does having a safety program affect my bottom line? Laurel Ferguson: Oh, absolutely it does. If you don't do things properly, again you are subjected to the potential for OSHA fines and violations. Also if you look at the injury costs of regulation or an injury if you have someone that goes to an urgent care and they need three stitches, that urgent care bill for your company is going to be about eight hundred to a thousand dollars. There's a process that we go through to figure out how much these injuries actually cost you to your bottom line. Let me explain that a little bit more in a little bit more depth and detail. It's a little bit confusing so bear with me here. The first step that you have is to figure out the total cost of your injury, again what are your medical bills, what are your transportation to get that person to the urgent care or the hospital, what's your loss of production, what's the administrative time that you have to investigate and document the accident, and record the circumstances of the injury, clean up the mess, all of those things are direct bottom line costs that you have for an injury.

5 Depending on the dollar value that is there would depend on a specific multiplier that we use because you always have those basic costs, but then as your medical bills get higher and higher, maybe you have someone that has a broken arm instead of just three stitches or you have someone that fell from a height and now they have some serious back or head injuries. Those medical treatment bills go up and up depending on the seriousness of the incident. You have to figure all of those costs in and use that multiplier again depending on what you do. Step two and it's basically a three step process so bear with me here. From there you have to calculate the cost on your bottom line. You have to figure out what your profit margin is for your company. If you calculate your total company's profit off your net earnings statement from the previous year and divide that number by your total sales you generally get your profit margin so whether it's three percent, five percent, ten percent whatever your profit margin is. We're going to use that number as well as the total cost multiplier to figure out the bottom line costs. If you take your total injury costs and you follow a specific table, it will tell you approximately how much in sales you would need in order to offset the cost of that injury. For example if our injury costs are eight hundred dollars at the urgent care for the three stitches that you had and using your multiplier your total direct cost for you injury is considered to be thirty-six hundred dollars. Now because we use a multiplier four point five. Now if our profit margin is three percent then your company has to sell approximately a hundred and seventeen thousand dollars in service contracts or in widgets in order to offset just the cost for that injury, so yes it definitely affects your bottom line if you don't have a safety program because the littlest injury eight hundred dollars at an urgent care facility that your company might be able to absorb is actually a lot in sales or service contracts that you have to produce just to offset that, not necessarily to make a profit for you company. Fred Dunayer: Laurel as a business consultant I'm sure you also hear a lot of complaints from small businesses about over regulation and OSHA. It seems to be the whipping boy for - in political environments. I realize this is just your opinion but given that you are a safety expert do you believe that OSHA is seriously over-regulating or under-regulating or is pretty much on target. Laurel Ferguson: Honestly because I care about the health and safety of my employees and my fellow man I want them to be able to go home at the end of the work day with their two eyes, with their hearing intact, with all ten fingers and all ten toes and no other injuries to their body. OSHA has a definite place in the industry. Although there are a lot of complaints about how OSHA goes about doing things and the requirements that they make you meet for documentation and things like that what they're trying to do is they're trying to make sure that the companies do it right. To answer your question, I don't think that they over-regulate. I don't think that they're going overboard in many instances. There have been potential regulations in the past that have been stamped down. An ergonomics regulation for example, that's very difficult to police and is very difficult for companies to put something like that in place when they only have three, five, ten, fifteen employees. If you're a company that has several hundred employees, that's a whole different story. For the very small businesses, yeah they still have to comply and OSHA is not trying to make it onerous for you. They're just trying to make sure that your employees can go home to their families and hug their kids at the end of the day. Fred Dunayer: Fair enough. Can you work proactively with OSHA. In other words, I think the impression is that they come in after the fact after an accident or something and then start throwing fines around. Can you call them in when you're in the process of setting up your organization to make sure that you're in compliance in a proactive way? Laurel Ferguson: Oh, absolutely. You don't even need to wait until you're setting up a business. At any time, each state has its own OSHA outreach center. If you don't want to pay a safety consultant to come in to your facility, you can call these OSHA outreach centers and they will come out just like they're going to do an actual inspection, they will do the inspection but you don't get any citations or fines associated with it.

6 You do however have to fix a problem if they find one. Unlike if you go to a safety consultant, then if they tell you, you need an exit sign here you don't necessarily have to put one there however you run the risk that if OSHA comes in and does an inspection of your facility that you run the risk of having that twelve hundred, forty-eight hundred dollar fine for not having the exit sign. Again, the fine level depends on the seriousness of the violation. It goes from anywhere between two hundred dollars to a quarter of a million dollars. The average fine for an OSHA compliance audit I would probably venture to guess it's somewhere around thirty or forty thousand dollars. Most smaller companies generally will have ten thousand, seven thousand dollars in fines. The larger companies may have more than that because they have higher risks to their employees. Depends again on what you do, where your risks are and how willing you are to reach out to someone for assistance and whether that's the OSHA outreach center or whether that's your local safety consultant that's really up to you. How does OSHA measure success? Is it in lives saved? Do they have statistics to show what impact they've had since it was formed? What year was it formed? Laurel Ferguson: OSHA was formed in 1972 as an official organization. They had health and safety organizations before that but OSHA officially came into being in 1972, but to answer your initial question things like the record keeping standard, there are letters that go out to different companies at the beginning of the year that says, "Okay whether or not you have to comply with OSHA record keeping requirements for accidents and injuries, we want you to keep track of them in these specific ways on these specific forms and send us those forms." That's how they know because of that compliance with that requirement that's how they know how many injuries for different types of companies and different types of businesses there are. If you're an office, you can expect to see for a ten percent office this many injuries of this type. For a construction company that goes down into trenches or excavations that's of this number of employees we can expect to see this type of injury and this number of them. Yes there's a great deal of statistics that OSHA uses and relies on to figure out where they want to spend their resource dollars to go out and do unscheduled inspections. The higher risk injury you are, the more likely you are to have an OSHA inspection done. Fred Dunayer: Laurel can you speak a little bit to the impact of safety, OSHA and your worker's compensation rates? Laurel Ferguson: Yeah, worker's compensation rates are based on the number of injuries and the risks that you have. If you have people that climb trees or people that work in an office or people that go into a trench or an excavation or people that work with highly hazardous chemicals there are specific worker's compensation rates for each one of those employees based on again their risk that's applied to them. Your worker's compensation insurance is based on that. Then secondarily your worker's compensation rates are based on the number of injuries or your experience modification rate or your accident history basically for the last several years. If you haven't had any injuries then you're at a baseline of zero or one. If you've had twenty injuries then you're probably at an experience modification rate of four or five which means for the same company that does your type of business you pay four or five times the amount that the company that doesn't have any injuries would pay. Laurel how much does a typical safety program cost a company? Laurel Ferguson: The first year of a program which includes generally a written manual, all of your initial safety training because not all of your trainings are ones that have to be done every year, there are many, many of them that are only one time trainings. Then if something changes then you have to retrain. The initial cost for the first year is probably somewhere around three to five thousand dollars. Then probably a maintenance fee of one to three thousand dollars after that for every year depending on again what your risks are. It may be less than that it may be more than that. Fred Dunayer: Laurel is there anything that we haven't talked about in the course of this discussion that you would like to bring forward?

7 Laurel Ferguson: No I love what I do. I do my best to try to help my clients with the requirements that they have to meet. Again, it's really all up to the clients in terms of what they want to do and how far they want to take this. Again, most small companies are family type of environments. You work with these people, one-third of your daily life five out of seven days a week. You feel like each other are friends or family and you don't want to see anybody get hurt. That's the goal really of OSHA. That's my goal to make sure again that nobody has to deal with that pain individually or as a family when someone that's in their family gets hurt. That. Laurel Ferguson: Laurel thank you for enlightening us today on OSHA and safety and being a guest on Been There, Done Fred Dunayer: Thank you Laurel. You are most welcome. It's my pleasure. Speaker 1: You've been listening to the SCORE Small Business Success Podcast Been There, Done That. The opinions of the hosts and guests are theirs and do not necessarily reflect those of SCORE. If you would like to hear more podcasts, get a free mentor, view a transcript of this podcast or would like more information about the services we provide you can call SCORE at or visit our website at again that's or visit the website at