OSHA's Safety Pays program - Pro Construction Guide
Osha's Safety pays program

OSHA’s Safety Pays program

Safety pays program

The jobsite should be continually analyzed to identify existing and potential hazards.

If you’re concerned about controlling costs in your business, look at the cost of workplace injuries and illnesses. Experts estimate employers pay almost $1 billion per week for direct workers’ compensation costs alone.

Even more than the direct costs that weigh on the bottom line of contractors are the indirect costs of injuries and illness, which can be especially burdensome since they are usually not covered by insurance. Those costs can include:

  • Wages paid to injured workers for absences not covered by workers’ compensation
  • Wages associated with lost time because of work stoppage
  • Overtime costs
  • Administrative time of supervisors and safety personnel spent following an injury
  • Training costs for replacement workers
  • Costs of damaged material, machinery and property

OSHA (Occupational Safety and Health Administration) provides an interactive tool called Safety Pays (osha.gov/dcsp/smallbusiness/safetypays/estimator.html) that allows employers to see the dramatic effect of injuries and illnesses on profitability. Simply select an injury, insert your profit margin and you’ll see both the direct and indirect costs that will result, as well as how much in additional sales are needed to recover those costs.

For example, according to Osha’s Safety pays program, a single puncture injury has a direct cost of $22,716 and indirect cost of $24,987. At a 3-percent profit margin the firm would need an additional $1,590,100 in sales to recover both the direct and indirect costs.

That high cost is why businesses are increasingly partnering with OSHA to focus on prevention of workplace injuries and illnesses. An Injury and Illness Prevention Program is a process designed to help employers find and fix workplace hazards before workers are hurt.

OSHA’s Safety and Health Achievement Recognition Program (SHARP) provides compelling evidence that these programs can and do work for small businesses.

A study of 16 SHARP employers from 1999 to 2010 showed the average number of claims for these employers decreased 52 percent. The average claim cost decreased 80 percent. The average lost time per claim decreased 87 percent. Claims per million dollars of payroll decreased 88 percent.

In addition to decreased injuries, companies participating on Osha’s Safety pays programoften report higher productivity and quality, reduced turnover, reduced costs and greater employee satisfaction. Due to the success of Injury and Illness Prevention Programs, 34 states now require or encourage employers to implement these programs.


A website search on ‘Injury and Illness Prevention Program’ or ‘IIPP’ will provide a number of templates you can use to develop your own Safety Pays program at no cost.

In 15 states, Injury and Illness Prevention Programs are mandatory. If you work in one of those 15 states − Arkansas, California, Hawaii, Louisiana, Michigan, Minnesota, Mississippi, Montana, North Carolina, New Hampshire, Nevada, New York, Oregon, Utah, and Washington − your state government website will provide complete details on who must have an Injury and Illness Prevention Program and what it must include.

If you work in one of the other states, OSHA recommends the core elements be implemented at a basic level by small businesses and at a more comprehensive level for mid-size businesses. Briefly, those core elements are:

  • Management commitment and employee involvement – Management leads the way by setting policy, assigning responsibility, setting an example and involving employees.

“You can demonstrate the depth of your commitment by involving your employees in planning and carrying out your efforts,” says OSHA. “If you seriously involve your employees in identifying and resolving safety and health problems, they will bring their unique insights and energy to achieving the goals and objectives of your program.”

  • Worksite analysis – The jobsite should be continually analyzed to identify existing and potential hazards. It is your responsibility to keep your workers safe. “Periodically review each job with employees, analyzing it step-by-step to see if there are any hidden hazards in the equipment or procedures,” says OSHA.

As a small business, contractors can ask the local OSHA location for a free onsite consultation, which will provide confidential safety and occupational health advice. No fines or penalties will result from this consultation. Locations for each state are listed on OSHA’s website. OSHA’s booklet, “Job Hazard Analysis,” should also be helpful.

  • Hazard prevention and control  – Once you’ve identified existing and potential hazards, implement steps to prevent or control those hazards. Whenever possible, eliminate them.

“Set up safe work procedures based on an analysis of the hazards in your workplace and ensure that employees understand and follow them,” says OSHA. “Involve employees in the analysis that results in those procedures and be ready to enforce the rules for safe work procedures.”

Where indicated, be sure personal protective equipment (PPE) is available, used correctly and properly maintained.

  • Education and training – Train your employees on every potential hazard they could be exposed to and how they can to protect themselves. Then verify that they really understand it.

“Pay particular attention to new employees and employees who are moving to new jobs,” says OSHA. “Because they are learning new operations, they are more likely to get hurt.

For more detailed information on Osha’s Safety pays program, download OSHA’s “Small Business Handbook”. It provides comprehensive information on what a plan should include and tips for how you can get started.

While small businesses may be overwhelmed with creating an Injury and Illness Prevention Program, OSHA says “simple, low-cost approaches have been shown to be effective”

−By Jo Costin

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