Presented ToCommittee on Small Business House of Representatives
Speaker(s)Jeffress, Charles N.
ASSISTANT SECRETARY OF LABOR
FOR OCCUPATIONAL SAFETY AND HEALTH
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
Mr. Chairman, Members of the Committee, thank you for inviting me to testify about OSHA's effort to promulgate a rule on safety and health programs. Safety and health programs are systematic, simple approaches to managing workplace safety and health. They are widely recognized as fruitful ways to reduce the number of job-related injuries and illnesses and the number of job-related fatalities. OSHA has worked extensively with stakeholders from industry, labor, safety and health organizations, State governments, trade associations, insurance companies and small businesses to develop a draft proposal, which would require employers to develop basic safety and health programs to improve worker protection.
The draft proposed rule reflects the experience and suggestions of many of these participants and would require that safety and health programs include five "core" elements: management leadership and employee participation; hazard identification and assessment; hazard prevention and control; training; and evaluation of the program's effectiveness. The elements are simple and straightforward. Reduced to their basic level, the elements require an employer to work credibly with its employees to find workplace hazards and fix them, and to ensure that workers, supervisors and managers can recognize a hazard when they see it. The rule creates no new obligations for employers to control hazards that they have not already been required to control under the General Duty Clause of the OSH Act or existing OSHA standards.
Safety and health programs work. In the words of Occidental Chemical's Vice President for Health, Safety and Responsible Care, Stephen Kemp, safety and health programs "not only help you improve safety, but [also help] in many other areas of your business. We firmly believe that good safety performance leads to higher productivity, better product quality and overall improved performance as a company." However, even with OSHA's growing emphasis on safety and health programs, widespread action at the State level, and strong insurance company encouragement, many employers either are not aware of the benefits of such programs or have not elected to establish their own programs voluntarily. Therefore, OSHA believes a safety and health program requirement is necessary to foster the implementation of these worthwhile approaches to worker protection.
OSHA's interest in workplace safety and health programs has grown steadily since the early 1980's, when the Agency first developed its Voluntary Protection Program (VPP) to recognize companies in the private sector with outstanding records in the area of worker safety and health. It became apparent that these worksites, which had achieved injury and illness rates markedly below those of other companies in their industries, were relying on safety and health programs to produce those results. At VPP worksites, which today routinely achieve injury and illness rates as much as 60 percent below those of other firms in their industry, safety and health programs -- and thus the protection of the safety and health of the workforce -- have become self-sustaining systems that are fully integrated into the day-to-day operations of the facility. At these worksites, worker safety and health, instead of being relegated to the sidelines or delegated to a single individual, is a fundamental part of the company's business, a value as central to success as producing goods and services or making a fair profit.
The evidence has continued to accumulate as OSHA's stakeholders from industry, labor, State governments, small businesses, trade associations, insurance companies and safety and health organizations have all gained experience with safety and health management systems. OSHA has applied what it learned about safety and health programs from VPP companies and our other stakeholders to smaller businesses, through the addition of the agency's Safety and Health Achievement Recognition Program (SHARP), which is directed at high hazard businesses with 250 or fewer employees.
In 1989, OSHA published its voluntary Safety and Health Programs Management Guidelines to help employers establish and maintain management systems to protect their workers. OSHA's guidelines and others like them have helped thousands of companies adopt systematic, ongoing approaches to safety and health, which achieve injury and illness rates markedly below those of other companies in their industries, reduce their workers' compensation costs, improve employee morale, and increase worksite productivity. In fact, OSHA has found that programs implemented by individual employers reduce total job-related injuries and illnesses by an average of 45 percent and lost worktime injuries and illnesses by an average of 75 percent. For example, Mereen-Johnson Machine Co. worked with its 95 employees in Minneapolis, Minnesota to implement a program and achieve a lost workday injury rate 60 percent below the industry average. Applied Engineering, Inc., a manufacturer of specialties materials with 74 employees, located in Yankton, South Dakota, reduced its lost workday injury rate from 6.0 in 1993 to 0.0 in 1997, a success the company's president attributes to implementing a safety and health program.
Today, thirty-two states have some form of safety and health program provision, though few are as comprehensive as OSHA's draft proposed rule. Four States (Alaska, California, Hawaii and Washington) have mandated comprehensive programs that have core elements similar to those in OSHA's draft proposal, that cover businesses of all sizes within the State, and for which at least five years of data are available. In those four States, injury and illness rates fell by nearly 18 percent over the five years after implementation, in comparison with national rates over the same period. Several other States have studied the effectiveness of their own programs and found that average workers' compensation costs were reduced by as much as 20 percent per year, and that these benefits were even greater several years later when the program had matured. For example, Colorado evaluated a program that provides premium discounts to firms instituting safety and health programs. Over 50 percent of the more than 500 participants had fewer than 100 employees. Colorado's review found that in all of the five years after the program was established, lost work-time injury rates declined by at least 10 percent per year and the costs of workers' compensation claims declined by at least 20 percent per year. The State of North Dakota determined that participants in its program, which provided premium discounts to employers who implemented safety and health programs, reduced lost work-time injury claims by 42 percent over 4 years, with significant reductions occurring in each year of the program. The Texas Workers' Compensation Commission implemented requirements for safety and health programs for firms identified as "extra-hazardous." The program averaged 325 participants per year, and these employers reduced injuries and illnesses by an average of 61 percent in each year of the program's existence.
Experience with safety and health programs demonstrates that systematic, common sense efforts to protect workers have a direct impact on workplace injury and illness rates and on compliance with existing worker protections. However, more than 6 million reportable injuries and illnesses continue to occur each year. More than 6,000 job-related fatalities are reported to the Bureau of Labor Statistics (BLS) annually, with tens of thousands more job-related fatalities resulting from chronic occupational illnesses. The common sense advantages provided by safety and health programs will reduce these injuries, illnesses, fatalities and associated workers' compensation costs, bringing a clear new benefit to the many establishments that have yet to establish such programs.
Safety and health programs are proven solutions to basic problems. The search for straight-forward, common sense approaches to worker protection has led many businesses to implement safety and health programs and motivated business associations to adopt their own model programs and recommend them to their members.
The National Federation of Independent Business's (NFIB) Ohio chapter has developed a comprehensive document entitledWorkplace Safety Program Guidelines, which explains to NFIB members how to design and implement an effective safety program. The guidelines include the same elements that OSHA has identified as the keys to a successful program: leadership by top management; responsibility and accountability by managers, supervisors and employees; training in safety and health; identifying, reporting, investigating and controlling hazards; and involvement of employees. According to the NFIB guidelines, "Serious accidents or injuries can be very disruptive to any successful operation and to the lives of people involved. An important step that an employer can take to effectively prevent these losses is the development of an organized safety plan or accident prevention program."
The Synthetic Organic Chemical Manufacturers Association (SOCMA) has also developed SOCMA's Model Safety and Health Program, a document intended to help member companies, many of which are small, implement their own safety and health programs. Like the NFIB guidelines, SOCMA's model program calls for: management commitment and employee involvement; worksite analysis; hazard prevention and control; and safety and health training. The manual recommends that a company tailor its safety and health program to the company's site-specific needs and argues that "SOCMA member companies who incorporate this program into their operations will receive benefits by:
- reducing injuries, illnesses, accidents and property loss;
- saving time and resources by not having to develop a program from scratch;
- demonstrating management commitment to safety and health;
- giving employees an alternative means to address safety and health concerns before calling OSHA;
- avoiding a wall-to-wall OSHA inspection;
- assisting in conforming with the Responsible Care Employee Health and Safety Code."
Similar approaches are found in the safety and health programs advanced by other professional associations, trade associations and employers. The National Fire Protection Association, the American Society of Safety Engineers, the American Dental Association, the National Spa & Pool Institute, the BF Goodrich Specialty Chemicals division, the American Industrial Hygiene Association, and Argonaut Insurance Company have all developed model safety and health programs. OSHA has borrowed directly from these associations and employers in fashioning our draft safety and health programs rule. In fact, many companies have already put such model programs to good use. For example, in 1994 the Ryder Company instituted a safety and health program modeled after programs advocated by the International Loss Control Institute, the National Safety Council, and OSHA's own 1989 Safety and Health Program Guidelines. Between 1994 and 1998, Ryder reduced lost time cases by 50 percent, lost workdays by 58 percent and its lost workday incidence rate by 42 percent.
Earlier this year, the National Association of Manufacturers, in testimony before theSenate Subcommittee on Employment, Safety and Training, echoed the sentiments of those who proclaim the value of safety and health programs. At the hearing, Robert Cornell from Mon Valley Petroleum in McKeesport, Pennsylvania, told the Subcommittee that, "Today, we have an effective safety program resulting in fewer injuries and reduced workers' compensation costs." Mr. Cornell's company used a comprehensive analysis of its safety and health violations and employee involvement proactively to address potential hazards. As a result, they reduced lost workdays from 70 between 1992 and 1994 to zero from 1995 through 1998. Mr. Cornell did not testify on behalf of OSHA's proposal. However, he illustrated quite effectively the value of instilling safety and health in the culture of his workplace.
Although the preceding examples generally involve companies that implemented programs voluntarily, the results for mandatory programs are equally impressive. Data from the four States with mandates covering most employers and OSHA's enforcement experience, which has emphasized safety and health programs, show overwhelmingly the effectiveness of this approach. The General Accounting Office, in 1992, concurred with earlier OSHA assessments of the value of comprehensive safety and health programs. GAO also said consideration should be given to requiring high risk employers to have safety and health programs "because the potential number of lives saved or injuries and illnesses averted is high." OSHA believes that every employer, not just high risk employers, would benefit from a safety and health program.
At its heart, a safety and health program promotes the exercise of reasonable diligence in the workplace in order to protect workers. When Congress enacted and President Nixon signed the bipartisan OSH Act in 1970, they imposed on employers a general duty to provide employees with a workplace free of serious recognized hazards and a specific duty to adhere to rules promulgated by OSHA. Because State occupational safety and health and workers' compensation laws provided insufficient incentive to protect workers, the OSH Act, as some courts have held, required employers to exercise reasonable diligence in complying with these duties. Through its draft proposed rule, OSHA seeks to assure that employers exercise reasonable diligence in protecting their workers.
OSHA's draft proposal is based on years of experience with successful safety and health programs. OSHA used that experience to identify the core elements that have proven necessary to implement effective safety and health program efforts. The required elements in OSHA's draft proposal mirror those found in model programs produced by the NFIB of Ohio, SOCMA, and many other associations, insurance companies and employers. As those on the front lines have found, the elements all support each other. This experience shows all five must be present to ensure success.
The Agency recognizes that many companies have already embraced the program approach to managing safety and health in their workplaces. Because the draft proposed rule only includes those elements that OSHA believes are essential for program effectiveness, and because the rule is framed in broad and flexible performance language, OSHA believes that existing programs that are effective will already meet the proposal's requirements. To reassure those employers, OSHA has incorporated a grandfather clause into the draft proposed rule that would allow such programs to be "grandfathered in."
Management Leadership and Employee Involvement. A safety and health program will only work if management is fully committed to it and communicates that commitment to the entire organization. According to Michael Seitel from Norwalt Design, a 38-employee, New Jersey company that manufactures high-speed assembly machinery for the plastics industry, "One of the biggest things, I think, in regard to the safety and health program that a company needs is management commitment ... you're going to save money on your insurance and on workers not being out due to injury."
Employee involvement means actively engaging front-line employees, who are closest to workplace operations and have the highest stake in preventing job-related accidents, in developing, implementing and evaluating the safety and health program. In the words of Bill Harvey, Senior Vice President of Alliant (formerly Wisconsin Power & Light), "you must build a corporate culture that conditions employees to think of safety as their job, not someone else's job." According to the NFIB of Ohio's guidelines, "Many times employees who are most familiar with a job will be excellent sources of solutions to safety problems, just as they are for production or quality problems." Employee involvement spreads the responsibility for safety and health and ensures that more eyes seek and identify problems and more perspectives are used to develop solutions. When OSHA held stakeholder meetings on the draft proposal in 1996, there was widespread agreement that employee participation is crucial to an effective safety and health program.
Hazard Identification and Assessment. Hazard identification and assessment means, among other things, that the employer reviews workplace safety and health information, inspects the workplace, identifies hazards, and prioritizes covered hazards for elimination or control. Front-line employees are empowered to avert injuries and accidents by identifying and bringing hazards to the attention of their supervisors. In essence, this element calls on employers to look for hazards, decide how serious they are, and prioritize their control or elimination.
Hazard Prevention and Control. Once hazards covered by OSHA standards and the general duty clause are identified and assessed, they must be controlled. Put simply, the element calls for a workplace to obey the law as it already exists -- fix identified hazards in accordance with the relevant OSHA standards or the general duty clause. Hazard prevention and control provides the solutions to the safety and health problems discovered by the program's hazard identification and assessment activities. Unless hazards are prevented, controlled or eliminated, workers who are exposed to them will continue to be killed, hurt, or made ill.
Information and Training. Information and training ensure that both workers and management have the information, knowledge and skills to recognize identified hazards, understand what controls are in place to prevent exposure, and understand their roles in preventing or minimizing exposures. People need to know hazards when they see them, so they can protect themselves and their co-workers.
Program Evaluation. Program evaluation simply tells an employer to assess how well its safety and health program works, to ensure that it protects workers. Where the employer identifies deficiencies, they should be corrected.
Since OSHA last testified before the Small Business Committee regarding this issue, a Small Business Advocacy Review Panel has reviewed the draft proposed rule, as required by the Small Business Regulatory Enforcement Fairness Act. The panel, which consisted of personnel from OSHA, SBA's Office of Advocacy and OMB's Office of Information and Regulatory Affairs, submitted its report to me on December 18, 1998. The panel report was based in part on the advice and recommendations provided by 18 small entity representatives (SERs).
The version analyzed by the SBREFA panel was different from the one OSHA described to you when last we testified before your Committee. At that hearing, members of the Committee raised a number of questions about the rule. Since that time, OSHA has continued to respond to suggestions made by members of this Committee, small businesses and other stakeholders. OSHA incorporated a number of changes into the draft proposed rule the agency ultimately provided to the SBREFA panel. For example, when OSHA testified before you two years ago, the draft called for employers to conduct hazard assessments at a frequency "appropriate to safety and health conditions at the workplace." The draft discussed by the SBREFA panel provided that such assessments should occur at least every 2 years and when changes in workplace conditions indicate that a new or increased hazard may be present. The agency also added the "grandfather clause" discussed earlier in my testimony to the version of the draft proposal provided to the SBREFA panel. The grandfather clause responded to concerns raised by the Chairman and various small businesses that employers who already operate effective programs should not be required to change them.
OSHA has been clarifying the regulatory text wherever possible. In part because of the flexibility the rule provides, some small businesses questioned whether it incorporated sufficient guidance to help them comply without unnecessary difficulty. Several recommendations in the panel's report suggested that OSHA further clarify certain portions of the rule and its accompanying analyses. For example, the panel suggested that OSHA should clarify in its preamble how the Safety and Health Program rule interacts with other OSHA rules, with the existing requirements of the General Duty Clause, and with National Labor Relations Act requirements. The panel also recommended that OSHA "solicit comment on the possibility of providing guidance that contains all cross-references in the rule and explains such concepts as the General Duty Clause so that small firms can understand these issues without having to go to other sources."
OSHA is responding to the issues raised by SERs and the panel as it readies the proposal for publication in the Federal Register. In some cases, we will provide additional explanations in the preamble to the proposed rule and in the accompanying analyses. In other cases, we are clarifying language in the rule that some SERs thought to be too vague. For example, the draft provided to the SBREFA panel required training to be provided "as often as necessary to ensure that employees are adequately informed and trained." OSHA is considering a modification that would require training when the employer "has reason to believe" that employees lack the knowledge or understanding they need. With regard to evaluating program effectiveness, the panel draft included language requiring an evaluation "as often as necessary to ensure program effectiveness." We likely will replace this requirement with language calling for a review "when the employer has reason to believe" that all or part of the program is ineffective. These changes both clarify that an employer need not guess when a reevaluation or new training should be conducted, but instead must exercise reasonable care. In addition, the Agency is further evaluating the accuracy and transparency of its cost estimates and plans to solicit comments and raise, in the preamble of any proposed rule, regulatory alternatives for consideration. The issues raised by SERs and the panel are important and OSHA is considering them all carefully.
In addition, when the final rule is published in a few years, OSHA will provide a variety of informational and outreach materials to simplify compliance. Materials will include checklists, model programs, decision logics and other materials to help employers determine how to comply and when they have met their obligations under the rule. For example, the agency is already developing a new "Expert Advisor" to provide computerized guidance to employers who are attempting to implement or improve safety and health programs. Last year, OSHA released its Hazard Awareness Advisor, which has received excellent reviews from small businesses and is referenced on the Home Page of the National Federation of Independent Business. In addition to this extensive array of informational materials, small businesses will continue to have available to them free consultation services through OSHA's 50 state consultation programs. OSHA will also provide intensive training to its compliance officers to ensure that their enforcement of the rule is consistent with OSHA's intent to provide maximum flexibility to employers.
Because OSHA has drafted a flexible rule rather than a one-size-fits all requirement, it has not specified every action a business must take to comply. Nor should it. However, the agency is committed to providing the most instructive materials possible to help small businesses comply with ease. As Bill Pritchard from MASCO, which has facilities ranging in size from 5 to 2,700 employees, points out, "The program must be performance oriented. Give companies the flexibility to allow them to develop the process which will work for each facility. Don't specify the process, specify the key elements... let companies decide the way to implement the elements." Many models similar to the one OSHA is proposing already exist and should prove invaluable as businesses develop their own programs. Clearly, the flexibility OSHA has built into its draft proposal is preferable to a one-size-fits-all approach.
A particular area of interest to small businesses where the rule will provide significant flexibility is documentation. The program for small businesses, for example, need not be written. And employers with fewer than 10 employees are exempt even from those minimal requirements. Although some small businesses have expressed skepticism, feeling they will need to maintain written records regardless of this exemption, that is emphatically not OSHA's intent. Small businesses will have many ways to demonstrate their compliance. For example, they can simply describe to a compliance officer the hazards that have been or are being identified and what has been or is being done to identify, assess and control them. They may also demonstrate their compliance using receipts, order forms and other documents developed or obtained in the normal course of business.
Some small business stakeholders have questioned whether the rule should be universally applicable. OSHA believes there is strong evidence to support such coverage. Many stakeholders have expressed a similar point of view. For example, John Cheffer of the Travelers Insurance Company testified in 1995 before the National Advisory Committee on Occupational Safety and Health that, "We consider any proposed safety and health standard to be the centerpiece from which all other rules and standards flow, in effect, the ultimate safety and health guideline document for the Nation. If that view is accepted, by its very nature it must be generic, flexible and universally applicable." Another significant reason for applying the rule to establishments of all sizes is the risk currently posed to employees working in small businesses. Although small businesses with 10 or fewer employees account for only about 15 percent of employees, 30 percent of all work-related fatalities reported to the BLS in 1997 occurred in these very same workplaces. By comparison, businesses with 100 or more employees accounted for approximately 45 percent of employees, but experienced only 20 percent of all work-related fatalities in 1997. Based on these numbers, the risk of fatalities in businesses with 10 or fewer employees is 4 to 5 times higher than the risk in businesses with 100 or more employees. Although most stakeholders opposed exempting small businesses from coverage, they agreed with OSHA that every effort should be made to ease compliance burdens for small businesses. The compliance assistance materials that OSHA is now developing will address that need.
Safety and health programs already make a significant difference in the lives of many of our Nation's workers and in the financial bottom line of many businesses. But many businesses have yet to recognize their value. To fill this gap, OSHA is designing a rule that provides a general framework for employers to follow but leaves each individual employer free to add workplace-specific procedures and to adopt management practices that suit the characteristics of that particular workplace. OSHA is committed to working with employers of all sizes, both during and after development of its rule, to ensure that the rule provides sufficient flexibility, OSHA's compliance guidance furnishes suitable information to meet the compliance needs of employers, and that workers are protected.