Across the country, the threat of newly pending OSHA regulations has the business community up in arms. “This is a blank check for federal regulators,” says the U.S. Chamber of Commerce. “Ninety-nine and nine-tenths percent of the employers we deal with are opposed to it.” In Washington, a bipartisan group of 21 House members are offering legislation to block the OSHA regulation until at least 2001, causing Rep. Roy Blunt, R-Mo, to declare, “This is about jobs!”

What has OSHA done to cause such an uproar? They are finishing a controversial ergonomics regulation package designed to reduce workplace injuries caused by repetitive physical motions from heavy lifting to carrying a heavy piece of equipment.

The OSHA standard, as it is now proposed, does not require that an ergonomic program be set up for contractors. As it now stands, the proposed ergonomics standards are mandatory for manufacturing and manual handling operations, such as machine loading/unloading, warehousing, or assembly. “Problem jobs” that would result in an ergonomic claim derived from lifting/pushing/pulling activities would be included. These jobs can result in lower-back pain, muscle strains, or musculoskeletal disorders. Unlike certain industries, contractors will not be required to immediately establish a program. However, should a problem job arise, OSHA will require that an ergonomic program be established.

According to OSHA, musculoskeletal disorders among workers cost businesses $20 billion in annual workers’ compensation costs. More than 647,000 employees missed a day or more of work in 1996 because of work-related illnesses. The new OSHA standard would affect about 2 million workplaces.

The standard threatens to be tough, says OSHA’s head administrator, Charles Jeffress. “For many years, muscular degeneration was considered a cost of doing business. If you did a certain job, you could end up crippled. That is no longer tolerated.” Although the legislation has been blocked for three years by conservative members of Congress, many business owners fear the worst for the coming year — with an anxious eye on their checkbooks.

While many fear the coming OSHA standards, workers’ compensation expert Mary Murray of Work Smart America Inc., San Anselmo, CA, and ergonomic specialist Allison Welch see a much different picture: one where employees and employers come out ahead. “It is easy to see why employers oppose these new regulations,” says Murray. “They appear to be costly and intrusive. But the new regulations, which are sure to be enacted in some form in the very near future, can actually work to save employers thousands of dollars a year in workers’ compensation claim costs.”

What’s in a Mod?

Employers often try to overlook the costs of accidents by saying that they are covered by insurance. Their attitude is often that claims don’t cost them anything; that’s why they have workers’ comp. This is most employers’ biggest and most expensive misconception about their workers’ comp. policy.

A rating bureau is responsible for issuing an employer’s Mod number. The number represents a company-specific number that compares how an employer has handled their losses on average in comparison to their industry peers. It is also a means of rewarding coatings companies that exceed safety standards and penalizing ones that fall below it. The number is determined by looking at a company’s past payroll and claim information.

It’s true that when workers’ compensation premiums are too small to be experience rated, claims cost employers nothing extra. For example, a mom-and-pop grocery store with only two employees probably would be exempt from receiving a Mod number.

Assume a company has a current Mod of 1.25 and a low Mod (no claims) of 0.50. Subtracting 0.50 from 1.25 leaves 0.75. This figure represents the total “Mod point” cost of losses.

In theory, a company paying $125,000 in premiums can conceivably save $75,000 by dropping their Mod number down to the lowest possible industry Mod.

A medium or larger employer that adopts three or four simple cost-reduction measures can potentially save over 50% or more of the premiums caused by rating form losses.

The Real Cost of Workers’ Compensation Claims

Total accident costs in the workplace can be compared to an iceberg: the part of the iceberg that is visible is like the direct accident costs associated with a claim, while the larger, indirect, uninsured costs are buried below the surface. Direct costs include medical and indemnity costs. Indirect or hidden costs include employees being absent for extended periods of time due to injury, having to hire other employees, or a drop in production that can translate into late delivery of products and services. Loss-control experts say that these costs are 2 to 16 times the face value of the claim.

Using two common workplace injuries as examples, it is easy to see how the total costs of injuries can add up to an enormous financial burden for employers. For example, a $29,000 shoulder injury claim can cost an employer $37,400 in premiums over three years. Adding the indirect costs to the picture can push the employer’s total costs to $71,450. A back injury costing $65,000 can generate $58,465 in additional premiums over three years. Adding in the indirect costs can push the employer’s total injury costs to $131,385.

Achieving an Ergonomically Sound Workplace

Ergonomics is the study of how workers perform their job. Ergonomic claims have skyrocketed in the past decade for a variety of reasons. Additionally, as more companies downsize, workers are required to take on an increasing number of tasks, a situation that can lead to both physical and psychological stress. New work environments may enhance pre-existing injuries that turn into work-related claims.

Cumulative trauma disorders (CTDs), or repetitive-motion injuries, have been labeled the disease of the decade. They can affect nerves, tendons and muscles. The most common CTDs are carpal tunnel syndrome and back injuries. In one year, back injuries can cause 93 million lost work days, $5 billion in medical expenses, and $12 billion legal and insurance costs. In the United States alone, there are 2,000 to 3,000 ergonomic-related lawsuits per year.

Evaluating a company from an ergonomics standpoint requires taking a broad look at the work site and how workers interact in it. An effective ergonomics evaluation must examine areas as diverse as light, temperature and company culture.

Preparing for the OSHA Standard — And Coming out Ahead

Just as there are many hidden costs due to ergonomic-related injuries, there are hidden savings in accident prevention. According to OSHA, workplace injuries cost employers over $20 billion a year in direct costs and $100 billion in indirect costs. Sixty percent of all OSHA ergonomic inspections are done because of employee complaints. The willful fulfillment of an ergonomics program, besides helping employers steer clear of fines from OSHA, has the potential to create a bond of trust between employer and employee, all for a minimal investment.

Murray recalls a previous client who fell prey to the over-reporting of claims among its employees. “Employee perceptions play a big role in claims. Immediately after one of its employees went out on a carpal tunnel claim, several other employees also filed claims. It came down to a perception that the company didn’t treat the initial claimant with concern; employees ‘retaliated’ by filing their own claims. This incident dramatically raised the employer’s Mod.”

The bottom line is that the savings in costs from just one claim can easily pay for the creation and implementation of an ergonomics program. “An ergonomics program can cost a few thousand dollars to put in place yet provide tens of thousands of dollars in workers’ comp. savings,” Murray says. “An effective ergonomics program will reduce these costly claims, boost workplace morale and productivity, and return huge savings to employers by minimizing the direct and indirect costs of workplace injuries.”


It is important to track and allocate workers’ comp. claims to determine the real cost of company’s injury claims. Brokers should be able to determine these costs, or companies can purchase software programs that specialize in workers’ comp. analysis. Work Smart has developed a software package of the same name that addresses this and other key cost identification issues.

“Employers need to look at their workplaces to analyze trends that involve common workplace injuries,” Murray says. “It is fairly easy to determine what specific part of a plant is having trouble by tracking losses across the entire company, and in the end OSHA is interested in identifying trends of injuries in the workplace.” Furthermore, an analysis and identification of workplace injuries can empower an employer to target problem areas, and aim their financial resources directly at the problem area.

“It may seem like an inconvenience to track losses across an entire company,” says Murray. “But if you consider that just one $500 class on lifting techniques, or one $500 software package that tracks and allocates losses can potentially eliminate a $100,000 claim, I think it’s easy to see that this is not only an ergonomics issue but an investment companies can’t afford to pass up.”

For more information on ergonomics, contact Mary Murray at 415/925.4040; fax 415/925.4044.