|OSHA’s $afety Pays Program|
OSHA’s “$afety Pays” program can help employers assess the impact of occupational injuries and illnesses on their profitability. This program uses a company’s profit margin, the average costs of an injury or illness, and an indirect cost multiplier to project the amount of sales a company would need to cover those costs. The program is intended as a tool to raise awareness of how occupational injuries and illnesses can impact a company’s profitability, not to provide a detailed analysis of a particular company’s occupational injury and illness costs.The “$afety Pays” program will:
For additional information on how “$afety Pays” works, see Background of the Cost Estimates.
If you have safety or health problems in your workplace, please contact your local OSHA Area Office or the OSHA On-site Consultation Program in your state. Click on the link below to take you to the Cost Calculator Page
Disclaimer: This program is not a new standard or regulation, and creates no new legal obligations. It is intended to help raise employers’ awareness of the impact of occupational injuries and illnesses on profitability. The average claim cost estimates used in “$afety Pays” are provided by National Council on Compensation Insurance, Inc. (NCCI). The data reflects the average cost of lost time workers’ compensation insurance claims derived from unit statistical reports submitted to NCCI for policy years 2007-2009. NCCI makes no guarantees nor assumes any responsibility for the accuracy of or any results obtained through the use of the NCCI data provided through this tool. NCCI’s information and data may not be used or copied in any manner except as provided in conjunction with the OSHA website tool, “$afety Pays.” Information entered into the form fields is not captured by OSHA. The system is not programmed to capture or relay any information entered or calculated by the worksheet. For additional information on the data and calculations used in “$afety Pays,” see Background of the Cost Estimates.
Background of the Cost Estimates
The average claim cost estimates are provided by National Council on Compensation Insurance, Inc. (NCCI). The data reflects the average cost of lost time workers’ compensation insurance claims derived from unit statistical reports submitted to NCCI for policy years 2007-2009.
NCCI makes no guarantees nor assumes any responsibility for the accuracy of or any results obtained through the use of the NCCI data provided through this tool. NCCI’s information and data may not be used or copied in any manner excepted as provided in conjunction with the OSHA website tool, “$afety Pays.”
The National Council on Compensation Insurance, Inc. manages the nation’s largest database of workers compensation insurance information. NCCI analyzes industry trends, prepares workers compensation insurance rate recommendations, determines the cost of proposed legislation, and provides a variety of services and tools to maintain a healthy workers compensation system.
The indirect cost estimates provided in this program are taken from the Business Roundtable publication, Improving Construction Safety Performance, and are based on a study conducted by the Stanford University Department of Civil Engineering. The magnitude of indirect costs is inversely related to the seriousness of the injury. The less serious the injury the higher the ratio of indirect costs to direct costs. While they may account for the majority of the true costs of an accident, indirect costs are usually uninsured and therefore, unrecoverable. The indirect cost multipliers used in $afety Pays are general estimates based on the limited research on this issue. The indirect cost multiplier will vary depending on an employer’s unique circumstances.
These estimates include the following kinds of indirect costs:
- Any wages paid to injured workers for absences not covered by workers’ compensation;
- The wage costs related to time lost through work stoppage associated with the worker injury;
- The overtime costs necessitated by the injury;
- Administrative time spent by supervisors, safety personnel, and clerical workers after an injury;
- Training costs for a replacement worker;
- Lost productivity related to work rescheduling, new employee learning curves, and accommodation of injured employees; and
- Clean-up, repair, and replacement costs of damaged material, machinery, and property.
Some of the possible kinds of indirect costs not included in these estimates are:
- The costs of OSHA fines and any associated legal action;
- Third-party liability and legal costs;
- Worker pain and suffering; and
- Loss of good will from bad publicity.
|Direct Costs||Indirect Cost Ratio|
|$0 – $2,999||4.5|
|$3,000 – $4,999||1.6|
|$5,000 – $9,999||1.2|
|$10,000 or more||1.1|
“$afety Pays” uses the sliding scale table at right to calculate the indirect costs of the injuries and illness.
Source: OSHA : http://www.osha.gov/dcsp/smallbusiness/safetypays/index.html