NEW ORLEANS — Vic Marchetti, senior vice president of Haylor, Freyer & Coon, a firm that provides insurance and risk management solutions based in Syracuse, N.Y., says there are trends and issues that can potentially cost employers a lot of money when it comes to labor.
“They’re expensive issues, and they’re problems that we all face day-to-day, like employee turnover, compliance violations, HIPAA violations, workers’ compensation, OSHA penalties, EEOC violations, legal costs, attorney fees, employee morale,” he points out. “What happens in an organization when there is a claim and it starts affecting your customers, it just hurts general morale in the organization as a whole.”
Marchetti says there’s a lot happening on the labor front, and the risk of not caring about these issues is great.
During an educational session at the Clean Show in June titled Labor Law Compliance: Current Issues and Trends, Marchetti and Haylor, Freyer & Coon colleagues Tom Flynn, vice president and director of group benefits, and Mike Halter, vice president and director of loss control, covered a few of these issues, along with presenting some solutions for mitigating them.
The agency a business is most likely to come into contact with in terms of labor law compliance is the Occupational Safety and Health Administration (OSHA), so Halter shared a few thoughts on inspections, penalties, requirements and how to interact with OSHA.
First, he went over the numerous violations and penalties OSHA can “tag” a business with.
To start, there are “other than serious” violations, shares Halter. Basically, these are things that OSHA doesn’t think is going to significantly hurt, harm or kill someone. He says that when these types of violations are cited, sometimes there are no fines associated—but the department can levy a fine of up to $7,000.
The next level is a “serious” violation. That’s a violation that could cause significant harm, cause the loss of a body part or even get someone killed.
“In the past, the maximum citation or fine amount for those was $7,000,” Halter shares. “Today that’s been increased to $13,260, and we’ll see those numbers increase every year because there’s a 2.5% inflationary increase.”
Then there are “willful” and “repeat” violations.
“So, if you’ve been cited for something before and OSHA comes back and they cite you again, all the sudden your fine structure can go up tenfold,” he says “The max used to be $70,000, now it’s $132,000.”
Halter points out that this type of violation must be addressed at every facility a business has, not just the one cited.
“If OSHA comes into one of your facilities and they see that someone’s entering into a confined space, and they cite you for a confined space violation and you fix it, you’re all good at that facility,” he says.
“But then they go to another one of your facilities and they cite you for a similar confined space violation, that could be considered a repeat or willful violation because you should have known better, because you’ve already been tagged for that one at another facility.”
The next level of violation is failure to abate. Halter says when OSHA gives a citation, the business gets an abatement date, a certain time period to fix the problem. The fine for failure to fix the problem by the abatement date used to be $7,000. Today, it’s $13,000.
“Now, if you can’t fix it by that abatement date, you have an opportunity to ask for an extension,” he points out.
OSHA, like every employer, has limited resources, with roughly 2,100 inspectors, which averages out to about 42 per state. So, how does OSHA decide to inspect? Halter says the agency has a “hierarchy” of how it picks and chooses which companies to inspect.
The first level of the hierarchy is “imminent danger.” As an example, he says if an inspector was driving past a facility and saw an employee working in an unsafe manner, that would likely trigger a visit right then.
Next is if a fatality or hospitalization occurs.
“If you have a fatality, you have to call OSHA, you have to call them within eight hours and let them know that you had a fatality,” Halter says, “or if you had a hospitalization where the employee got admitted to the hospital.”
The next inspection trigger he shares is worker complaints. Being resource constrained, OSHA will take the time to determine if the complaint is valid, or just “sour apples,” before sending an inspector.
Then there are referrals. Halter says many organizations, such as the police or a hospital, are obligated to contact OSHA if an incident occurs, like an injury.
Next is a national or special emphasis program, such as targeting employers who use highly hazardous materials.
Site-specific targeting takes place when OSHA examines a company’s OSHA 300 log report and sees that the DART (days away, restricted or transferred) rate is above the national average, or well below the average, according to Halter.
Finally, there are program inspections.
“This is, it’s just your turn,” he says. “They do a number of inspections, and they said well we’re going to be in this area, and we’re going to come visit you.”
Halter then posed a question: Do you have to let OSHA in? The answer is no, but he cautions that the agency will get a warrant and be back.
“When would you want to say no?” he says. “Generally, I’d say let them in, but if you don’t have the right people there, if you think your place is a disaster and you need some time to clean it up, maybe say no, but generally, unless you have a really good reason to not let them in, you want to. You want to look like you want to play ball.”
Halter goes on to say that OSHA can’t find a violation during an inspection and then say it’s really dangerous and shut a business down immediately. However, the agency can make it financially onerous, so the company will be compelled to fix the issue. He does points out, however, that businesses can contest citations and fines.
“When OSHA shows up, be really considerate to them,” he says. “Treat them the way you want to be treated. They can stay for up to six months if they want. They have the right to do that.”
Marchetti wrapped up the session sharing how labor law can impact a company’s overall insurance program.
“Costs are on the upswing,” he says. “It’s more risk-specific and industry-specific. What’s going on is the underwriters are going through a more disciplined underwriting process. Underwriters are researching accounts pretty comprehensibly before they start the process.”
He says many factors are impacting insurance costs, ranging from catastrophic events to cyber incidents, from property considerations to fleet issues.
“Take the time to look at your information, what is out there, and take the time to do the gap analysis and identify your risk hazards,” suggests Marchetti. “Work to mitigate risk exposures before anything happens.
“Make sure you’re taking the time to make sure you’re in compliance, the sexual harassment training, wages, etc. Make sure your folks are educated.
“If you do all of these things and you bring it all together and take advantage of what’s out there, you should have a positive impact on lowering your overall total cost of risk. That’s ideally what you want to accomplish to put your business in a better position to help you grow.”
Miss Part 1 on human resources? Click HERE to read it.