OSHA is fairly straightforward. It imposes three major obligations on employers:

• ▪ To provide a safe and healthy work environment Each employer has a general duty to provide a place of employment free from recognized hazards that are likely to cause death or serious physical harm. This general duty provision recognizes that not all workplace hazards can be covered by a set of specific standards. The employer is obligated to identify and deal with safety and health hazards not covered by specific regulations.16

• ▪ To comply with specific occupational safety and health standards Each employer must become familiar with and comply with specific occupational standards (OSHA’s rules deal with specific occupations rather than with industries), and must make certain that employees comply as well.

• ▪ To keep records of occupational injuries and illnesses Under OSHA, employers must record and report work-related accidents and injuries. Organizations with eight or more employees must keep records of any occupational injury or illness resulting in death, lost work time, or medical treatment and retain these records for five years. The injuries and illnesses must be recorded on OSHA forms and posted annually on an employee bulletin board for all to see. The records must also be made available to OSHA compliance officers, and annual summaries must be prepared.17 Because record-keeping requirements have been unclear on some points, OSHA issued revised record-keeping standards that are meant to be more flexible and easier to follow.18 You can view current online materials in English and Spanish by visiting OSHA’s Web site at www.osha.gov .

MANAGER’S NOTEBOOK Keep ‘Em Honest: Preventing Workers’ Comp Fraud

Ethics/Social Responsibility

The number of workers’ compensation claims has been going down, but the percentage of claims that are considered questionable has increased. Questionable claims are those that are given closer review and investigation due to the possibility of fraud. A fraudulent workers’ compensation claim, if it is accepted as legitimate, can allow the employee to collect compensation while not working. Or, the employee could get another job and collect two incomes. Whatever the motives, fraudulent workers’ compensation claims are illegal and unethical. Certainly, valid worker compensation claims need to be supported. However, if fraudulent claims are supported, the increase in claims can increase the premium that the employer is required to pay. There can also be negative effects on the morale and work ethic of the other workers who may suspect or know that a fraudulent claim has occurred and a fellow worker is now being paid for not working.

As a manager, you have a responsibility to take steps to limit fraudulent worker compensation claims and assure that your workers perceive that there is a level playing field in regard to such claims. From a management perspective, it is useful to recognize that workers’ compensation fraud can take a number of forms. Probably most obviously, workers’ compensation fraud can involve a claim of an injury that is exaggerated or did not occur. Fraudulent workers’ compensation claims also occur when a worker is injured when not at work but claims that it happened while on the job. Additionally, fraud can occur through malingering, a situation in which the worker may have suffered a legitimate injury, but continues to display symptoms in order to extend the collection of benefits.

The following are some actions that managers can take to reduce fraudulent claims:

• ▪ Keep the workplace safe A safe work environment lowers the chance of accidents. A safe workplace can also make it more difficult for someone to fake an accident.

• ▪ Educate employees about the workers’ compensation system Workers should understand the purpose of the system and how it supports workers with legitimate injury claims. However, they should also understand that there are costs to the employer and that abuse of the system is not a free benefit, but causes real costs for the business. Employees should be made aware of the consequences of fraud and know how to report fraud.

• ▪ Communicate with the claimant and with others familiar with the incident Sharing genuine concern for the employee’s well-being is an important management action. However, communication with the injured worker and others can help to confirm that the claim is valid.

• ▪ Stay in contact with employees on workers’ compensation leave Let injured employees know that you are looking forward to their return to work. Being proactive in encouraging and helping employees return to work can help to maintain a good relationship with workers who have made a legitimate injury claim. Failed attempts to contact a worker on leave can indicate a possible problem and should be documented. Maintaining communication with employees on leave can also provide some pressure for those who might engage in malingering.

Sources:Based on Safety Compliance Letter. (2008, August). Eight tips for managing fraud, 12; Ceniceros, R. (2010). Comp fraudsters working while collecting benefits. Business Insurance, 44, 1; Abriola, J. J. (2013, July 1). 4 steps to limiting workers’ comp fraud. Property Casualty 360—National Underwriters; PR Newswire. (2013, September 24). NICB: Questionable workers’ compensation claims increase.▪▪

Under the new standard, failure to keep either written or electronic records can result in fines and citations. Falsifying records can result in a fine and a six-month prison sentence. The revised standard also makes it clear that an accident that could have caused injury—not just one that did cause injury—should be recorded. In other words, close calls count under the OSHA standard.

In addition, the standard clarifies who is an employee under OSHA. For example, a temporary worker from an employment agency doing clerical work for an organization is considered an employee of that organization. However, an independent contractor is an employee only if the business hires and supervises the person. Thus, the Perfect Lawn landscaping crew is not likely to be considered a law firm’s employees, but a software specialist the firm hires from an employment agency probably is. This distinction is important because an employer is responsible for keeping records on its employees.

Employees also have responsibilities under OSHA. Although they cannot be cited for violations, they must comply with the relevant safety and health standards. They should also report all hazardous conditions, injuries, or work-related illnesses to their employer. Employee rights under OSHA include the right to file safety or health grievances and complaints to the government, participate in OSHA inspections, and request information on safety and health hazards without fear of discrimination or retaliation by their employer.19

Under both OSHA and state right-to-know regulations, employers must provide employees with information about hazardous substances in the workplace.20 OSHA’s hazardous substance regulation, known as the Hazard Communication Standard , is explained in the Web page reproduced in Figure 16.1.

The U.S. Supreme Court has upheld an employee’s right to refuse to work under conditions where the employee reasonably believes there is an immediate risk of injury or death.21 If the hazard is of a chemical nature, another federal agency may also be relevant. The Chemical Safety and Hazard Investigation Board, funded by Congress in 1997, is charged with promoting safety and preventing incidents of chemical release.22 The board works closely with OSHA and the Environmental Protection Agency. A hazard in the form of a chemical spill would result in an accident investigation by the board. The focus of the board is to then make recommendations to companies and government agencies regarding changes in process or equipment that would prevent similar accidents.

Three agencies administer and enforce OSHA: the Occupational Safety and Health Administration (the OSH Administration, also known by the acronym OSHA), the Occupational Safety and Health Review Commission (OSHRC), and the National Institute for Occupational Safety and Health (NIOSH). States with federally approved safety plans have their own regulatory apparatus.

The Occupational Safety and Health Administration has the primary responsibility for enforcing OSHA. It develops occupational standards, grants variances to employers, conducts workplace inspections, and issues citations and penalties.

• ▪ Occupational standards Occupational standards, which cover hazards ranging from tools and machinery safety to microscopic airborne matter, can be exceedingly complex and detailed. Although many standards are clearly reasonable and appropriate, OSHA has frequently been criticized for adopting infeasible standards or standards whose costs exceed their benefits. The courts, however, generally do not require OSHA to balance the costs and benefits of particular standards, only to demonstrate their feasibility.23 Some criticize OSHA for not having standards. For example, the agency has been criticized for a lack of specific standards on combustible dust.24 See the Manager’s Notebook, “Danger in the Dust,” for information about combustible dust and its regulation.

  The development of occupational standards can begin with OSHA, NIOSH, state and local governments, or a variety of other sources, including industry groups and labor organizations. Proposed new standards are published in the Federal Register, the official legal news publication of the U.S. government. Comments from interested parties are sought, and hearings regarding the standards may be held. The full text of any adopted standard and the implementation date are then reported in the Federal Register. 25

  

  This excerpt from the OSHA Web site explains that employers must tell their employees how OSHA’s hazard communication standard is being put into effect in their workplace.

• ▪ Variances Employers may ask OSHA for a temporary (up to one year) variance from a standard when they cannot comply with a new standard by its effective date. OSHA may grant a permanent variance from a particular standard when an employer can demonstrate that it has in place alternatives that protect employees as effectively as compliance with the standard would.26

• ▪ Workplace inspections OSHA has the power to conduct workplace inspections to make sure that organizations are complying with OSHA standards. Because it would be impossible to inspect each of the hundreds of thousands of affected workplaces each year, OSHA has established an inspection priority system that calls for inspections to be made in the following order:27 (1) situations involving “imminent danger” in the workplace; (2) incidents resulting in fatalities or hospitalization of five or more employees; (3) follow-up of employee complaints of unsafe or unhealthful working conditions; and (4) “high-hazard” industries and occupations (for example, mining, farming, construction, and transport).

  OSHA inspectors have the right to enter an establishment without notice to examine work environment, materials, and equipment, and to question both employers and employees. However, this right conflicts with the employer’s constitutional protection from warrantless searches. In a 1978 case involving a company’s refusal to allow an OSHA inspection until the agency could produce a search warrant, the Supreme Court ruled that the employer does have a right to demand a search warrant before OSHA can make an inspection. Although OSHA can generally obtain a search warrant based on an employee complaint or on the agency’s own inspection priority system, some argue that forfeiting the element of surprise makes inspection less effective because it gives employers a means to alter unsafe conditions or practices (for example, erratically using safety equipment) until after the inspection.28

• ▪ Citations and penalties OSHA may issue citations and impose penalties for any violations of OSHA standards. The exact penalty varies with the employer’s good faith attempts to comply with OSHA regulations, its history of previous violations, the seriousness of the infraction, and the size of the business. These penalties may include criminal penalties as well as substantial fines. In fact, executives of firms that recklessly endanger workers can spend time in jail.29 For example, five senior executives of Chicago Magnet Wire Company were prosecuted for causing workers’ illnesses by allowing them to be exposed to hazardous chemicals, and a supervisor at Jackson Enterprises in Michigan was convicted of involuntary manslaughter in an employee’s work-related death.30

MANAGER’S NOTEBOOK Danger in the Dust

Emerging Trends

Dust may seem innocuous, maybe a housekeeping annoyance, but certainly not a safety hazard. Unfortunately, that is not the case. The reality is that dust from sources such as sugar, coal, wood, and flour production can be combustible if there is an ignition source or sufficient friction. A tragic explosion at a sugar refinery illustrates how deadly dust can be. In February 2008, the Imperial Sugar refinery in Port Wentworth, Georgia, suffered a horrific and fatal explosion. An explosion caused by sugar dust killed 14 workers and injured dozens of others. In 2010, Imperial Sugar announced that it had reached a settlement with OSHA and will pay a penalty totaling $6.05 million.

The dust explosion at Imperial Sugar is not an isolated occurrence. More recently, an explosion of combustible grain dust at a flour mill in North Carolina in April, 2013, collapsed several brick walls and seriously injured a worker. Over the past 25 years, there have been more than 280 dust-related explosions or fires. These incidents have resulted in 119 fatalities and more than 700 injuries. When a combustible dust is airborne and at a sufficient concentration, a flame, spark, or static electricity can result in an explosion.

OSHA is currently working on standards with regard to dust combustion. In the meantime, OSHA has contended that employers have a responsibility to provide a safe workplace and the agency has applied these general standards to regulate the accumulation of combustible dust and ventilation. OSHA has been proactive in regard to addressing the hazard of combustible dust. You can find a poster regarding combustible dust at the following OSHA Web site: www.osha.gov/Publications/combustibledustposter.pdf .

Sources:Based on Rubinger, J. (2013). Fight back! Combustible dust. [no longer online] FeedandGrain.com , accessed August 2, 2013; Occupational Hazards. (2008). Should OSHA adopt a combustible dust standard? 70, 15–16; O’Rourke, M. (2008). Ashes to ashes, dust to dust. Risk Management, 55, 20; Professional Safety. (2008). OSHA activity on combustible dust standards. 53, 22; Business Wire (2020, July 7). Imperial Sugar settles OSHA citations. New York; Maxell, M. A. (2010, February). Combustible dust: What you need to know. Material Handling Management, 25.▪▪

Fines for violations of OSHA standards may range from no fine for minor violations to mega fines of several million dollars for companies guilty of numerous, repeated, and willful infractions. However, companies can object to OSHA’s proposed penalties and may be able to negotiate a lower fine. For example, OSHA fined a BP plant in Augusta, Georgia, when three workers died in an explosion of molten plastic. OSHA accused BP of willfully violating safety rules and fined the company $141,000. BP negotiated a lower classification of violation and paid $119,000 in fines.31 Critics contend that the negotiation process can yield lowered fines that don’t provide companies with enough incentive to improve the safety levels of their operations. OSHA, however, contends that its primary focus is on improving workplaces to protect workers, not on punishing companies.

An important question is whether these fines have any meaningful impact on organizations. One approach to answering this question is to see whether the announcement of fines levied by OSHA has any impact on the value of the firm’s stock. If there is no such impact, top executives have little incentive to improve safety and health conditions and avoid future fines. Research suggests that the announcement of OSHA penalties does have a significant negative impact on the firm’s stock.32 However, the downturn in stock prices is a short-term effect that occurs only in the day or two after the announcement of the penalties. Furthermore, it appears that it is simply the announcement of a violation, not the amount of the fine, that impacts the company’s stock price.

OSHA offers a free consultation service that works with small businesses to help them identify potential workplace hazards and improve safety management systems. This service is especially useful for small businesses. It provides for a confidential inspection—completely separate from OSHA’s inspection program—that does not result in penalties or fines. However, the employer is obligated to correct serious safety and health hazards found in the inspection.

Further information about the consultation service can be found at www.osha.gov/Publications/3357consultation-sm.pdf , but the basic procedure works as follows:33

1. The employer must contact the OSHA consultant to get things started.

2. An opening conference is scheduled at the work site to discuss the consultant’s role and the employer’s obligations under the service.

3. Employer and consultant examine workplace conditions together. The consultant may talk to employees, discuss OSHA standards with them, and point out safety problems.

4. In a closing conference, the consultant reviews the findings of the inspection with the employer, detailing both what the employer is doing right and where improvement is needed.

5. After the closing conference, the consultant provides a written report explaining the findings and confirming proposed times within which the employer is to remedy hazards found in the inspection. (These are known as abatement periods.)