The Financial Impact of Ignoring Health and Safety
We’ve all heard the horror stories and read the headlines.
“X Company kills employee” or “Y company is being sued for $10,000,000 for OSHA violation”. It seems outrageous and almost like clickbait.
Once you begin to read, it turns out that it is the unthinkable reality for many companies and employees. Safety isn’t addressed and someone pays the ultimate price for it.
There are many reasons why someone may not address a concern. Often, the urgency isn’t there because “nothing’s happened in X years”. Or maybe the budget is tight, and safety is left behind.
Whatever the reason, you need to know these 5 financial risks that come along with doing nothing.
OSHA Fines
It typically starts with a willful violation. OSHA defines a willful violation as “a violation in which the employer either knowingly failed to comply with a legal requirement (purposeful disregard) or acted with plain indifference to employee safety”. Once you are aware of a fall protection hazard on your site, you know that it exists. If you do nothing about it, you are now willfully violating the regulation.
It is a simple equation: knowing + ignoring = willful violation
OSHA Fine: Willful Violation: $156,260 per violation
The purposeful disregard for the law is the first of the 5 main financial risks that come along with doing nothing.
Civil lawsuit
The 2nd, almost immediate, cost will be a lawsuit. When a company acts with plain indifference to employee safety, the employees and their families become enraged. Mama and Papa bear do not take it lightly when you mess with their cubs. Get your best lawyer and get ready to lose.
In my conversation with a lawyer who has represented both the defendant and plaintiff in OSHA fall hazard lawsuits, he broke down the typical classifications and costs associated with civil lawsuits for slips, trips, and falls.
- Best Case: Broken leg, returns to work: ~$100,000 - $500,000
- Second Best Case: Broken leg, can’t return to work due to disability: ~$500,000 - $3,000,000
- Worst Case: Fatality: ~$1,000,000 – $10,000,000
At this point, we are ranging from ~$156,260 - $10,156,260 for the almost immediate costs. The final costs I break down are going to differ from company to company with a multitude of factors to consider. These risks will also go deeper than hitting the nail on the head with a round dollar value.
Reputation
The next risk is the company's reputation. This may not have an immediate financial impact like fines and a lawsuit. However, imagine if one of your high-value clients sees the news. How will that affect their trust in you?
Internally, the story isn’t any different. How will a tragic accident, which could have been avoided, change the trust your employees have in the company?
The workers will then report to news outlets that “the facility is a danger to everyone in it” and “they show total indifference, total apathy”. “Nothing has changed”. The company’s morale seems to be taking a dive along with trust in the employer.
When company trust and morale decrease, workers become less efficient and start to quit due to frustration. Finding new workers and training them is a whole other financial beast that you are faced with.
This could cause you to lose future and even existing projects, clients, and valuable employees.
Plant Shutdown
What happens next once an accident occurs?
When OSHA is involved, they will request a company shut down the plant to inspect the immediate dangerous areas. Most companies will work with OSHA’s request to hold onto the bits of reputation they still have. If your company has a plant that produces revenue, you probably have a rough idea of how much revenue is produced in one day. Now multiply that number by 7. It will take approximately 1 week for OSHA to perform the investigation.
Insurance increase
The final cost isn’t as intense as the others but still will cause a financial burden, which is an increase in insurance rates. Just like when you rear-end someone, typically your auto insurance increases because your insurance company doesn’t trust you as much as they previously did. Now apply that to your company’s insurance. Your reliability towards safety will go down, resulting in a higher cost to the organization.
Adding It All Up
So what is your total financial risk? You will know your business better than I ever will, so do the math. Put a number to what your company reputation is worth and what your revenue is per week on site. Then add that to the willful violation cost and best, second-best, and worst-case scenarios for lawsuits.
Total Financial Risk: it depends. Minimally, $156,260.
It seems scary, but the solution is simple: proactivity. Be proactive in keeping your people safe and advocate for those around you.
For example, if you’re worried about a hatch access point, a hatch railing will cost you $2,000 - $3,000. That is pennies compared to that willful violation fine.
Or if you are worried about your team cleaning drains or accessing HVAC units near the edge, our fall protection specialists can help come up with a solution.
Contact an expert today. It can save you time, money, and, most importantly, a human life.
