Creating a safe workplace to benefit employers and employees

February 2018 • Lockton Companies

L O C K T O N C O M P A N I E S

ANNAMARIE GIBBS, ASP, CSP, CRISSenior Vice President

Risk Control Services Leader816.960.9590

agibbs@lockton.com

All US employers are legally required to provide a safe

workplace. However, not all employers are aware of the resources

from the Occupational Safety and Health Administration (OSHA),

state plans or the workers’ compensation credits available to

them. Both employees and employers benefit from a robust

safety program. Knowing which elements to include may reduce

insurance premium spend and help the bottom line.

Businesses spend $170 billion a year on costs associated with occupational injuries and illnesses.

Lost productivity from injuries and illnesses costs

companies $60 billion each year.

Workplaces that establish safety and health management

systems can reduce their injury and illness costs by

20% to 40%.

Safe environments improve employee morale, which often leads to increased

productivity and better service.

Source: OSHA

February 2018 • Lockton Companies

2

Mandatory regulation — injury and illness prevention programs

“An injury and illness prevention program is a proactive process to help employers find and fix workplace hazards before workers are hurt.”1 Currently, 34 US states have regulations requiring or encouraging injury and illness prevention programs, including 15 states with mandatory regulations for all or some employers.

Other states, while not requiring programs, have created financial incentives for employers to implement injury and illness prevention programs.2

Financial incentives are in the form of potential workers’ compensation insurance premium reductions; however, the company must meet state-specific prerequisites.

State OSHA plans

OSHA covers most private-sector employers and workers in all 50 states, the District of Columbia, and the other US jurisdictions, either directly through OSHA or through an OSHA-approved state plan. State plans are OSHA-approved job safety and health programs operated by individual states rather than federal OSHA. Section 18 of the OSH Act encourages states to develop and operate their own job safety and health programs and precludes state enforcement of OSHA standards unless the state has an OSHA-approved state plan. OSHA approves and monitors all state plans and provides as much as 50 percent of the funding for each program. State-run safety and health programs must be at least as effective as the federal OSHA program. OSHA provides coverage to certain workers specifically excluded from a state plan (for example, those in some states who work in maritime industries or on military bases).2

HERE IS WHAT YOU SHOULD KNOW ABOUT REQUIRED PROGRAMS

AND WORKERS’ COMPENSATION CREDITS:

Learn the specifics about your state starting on Page 7.

Puerto Rico

US Virgin Islands

See the map on Page 3.

February 2018 • Lockton Companies

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Puerto Rico

US Virgin Islands

Source: https://www.osha.gov/dcsp/osp/index.html

Map 1: OSHA-approved state plans OSHA-approved state plan

State plans covering state and local government workers only

State plan covering private, state and local government workplaces

February 2018 • Lockton Companies

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Consultation and recognition

Some states provide free voluntary guidance, consultation, training programs, and other assistance to urge employers to implement injury and illness prevention programs. This is funded by OSHA. Depending on the state, these programs apply to all employers, employers above or below a certain size threshold, employers with injury and illness rates above industry average, employers in high-hazard industries, or employers with above-average workers’ compensation experience modification rates.2

Insurance premium credits

Workers’ compensation premium reduction programs are offered in some states by the Department of Labor to help employers earn a reduction in their workers’ compensation insurance premiums. Employers earn certification by demonstrating a strong commitment to workplace safety and health, which is reflected in a reduced occupational injury/illness experience.2

Mandatory safety committee (MSC) and safety committee credit (SC) requirements

Qualifying for a safety committee premium reduction requires more than simply setting up a safety committee. Rules vary by state, but generally the insured must:

� Be inspected by an external safety company.

� Pick the safety committee from among the employees and management.

� Train the committee members on general safety issues and those specific to their operation.

� Conduct and document the finding of regular safety inspections of the facility.

� Hold regular safety committee meetings. As proof, each meeting’s agenda, minutes and attendance records must be kept and available for review.

� Conduct extensive postaccident investigations.

State-specific details are found in the table on Page 7.

See the insurance premium credits available in your state on Page 6.

Puerto Rico

US Virgin Islands

DF Drug free credit

MC Managed care credit

CC Contractor credit

SC Safety committee credit

M Mandatory regulation IIP

MSC Mandatory safety committee

D/R Denied or reduced — positive drug test

DF

CC

SC

MSC

D/R

DF

CCSC

D/R

DFDFMC

D/R

M D/R

D/R

CCMSC D/R

Washington DC D/R

DF

MC

CC

SC

D/R

DFMC

D/R

DF

CCM

MSC

D/R

DFSC D/R

CC

D/R

D/R

D/R

SC D/R

DF D/R

SC

M

D/R

D/R

CC D/R

SC

M

D/R

CCM

MSC D/R

DF

M

D/R

CC D/R

DFCCM D/R

CC

SC

MSC

D/RM

MSC

D/R

CC D/R

DF

SC

M

D/R

MC

SCM MSC

D/R

DFCCSC D/R

SC

CC D/R

D/R

M MSC D/R

D/R

DF D/R

CC D/R

DFCCM D/R

DF

CC

D/R

D/R

DF D/R

D/R

MSC D/R

D/R

DF

M

D/R

MSC

D/R

DFCC

D/R

D/R

M

MSC

MSC D/R

CC D/R

DF

D/R

SC

DFCC

SC

CC

MC CC

Puerto Rico

US Virgin Islands

DF Drug free credit

MC Managed care credit

CC Contractor credit

SC Safety committee credit

M Mandatory regulation IIP

MSC Mandatory safety committee

D/R Denied or reduced — positive drug test

DF

CC

SC

MSC

D/R

DF

CCSC

D/R

DFDFMC

D/R

M D/R

D/R

CCMSC D/R

Washington DC D/R

DF

MC

CC

SC

D/R

DFMC

D/R

DF

CCM

MSC

D/R

DFSC D/R

CC

D/R

D/R

D/R

SC D/R

DF D/R

SC

M

D/R

D/R

CC D/R

SC

M

D/R

CCM

MSC D/R

DF

M

D/R

CC D/R

DFCCM D/R

CC

SC

MSC

D/RM

MSC

D/R

CC D/R

DF

SC

M

D/R

MC

SCM MSC

D/R

DFCCSC D/R

SC

CC D/R

D/R

M MSC D/R

D/R

DF D/R

CC D/R

DFCCM D/R

DF

CC

D/R

D/R

DF D/R

D/R

MSC D/R

D/R

DF

M

D/R

MSC

D/R

DFCC

D/R

D/R

M

MSC

MSC D/R

CC D/R

DF

D/R

SC

DFCC

SC

CC

MC CC

February 2018 • Lockton Companies

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Drug-free workplace requirement (DF)

Companies seeking credit for a drug-free workplace requirement in the applicable states generally must:

� Develop a written drug-free workplace policy and distribute it to all employees.

� Conduct training on the policy for all employees.

� Establish a drug testing policy that includes pre-employment, routine, postaccident, reasonable suspicion and follow-up testing.

� Establish an employee assistance program (EAP).

� Complete all the necessary paperwork required by their state and renew eligibility on an annual basis.

Workers’ compensation laws can play a critical role in workplace drug testing. Some states encourage employers to conduct drug testing by offering workers’ comp premium discounts as an incentive. While compliance with these laws is typically voluntary, some states allow employers to reduce or deny workers’ compensation benefits if there is a connection between an accident and a positive drug test result.

Positive drug test impact on workers’ compensation (D/R)

Workers’ compensation benefits can be denied or reduced if the employee sustains injures as a result of intoxication or illegal drug use. States or employers can impose drug and alcohol tests on an injured employee, and they can deny workers’ compensation benefits if tests show the employee was under the influence at the time of the accident.4

Managed care credit (MC)

Work-related injuries that are properly managed in a cost-containment program can be less expensive. Medical costs are lower due to the prenegotiated fees, and the provider is specifically trained to work with work-related injuries, which may lower the indemnity benefits. Businesses may be eligible for a credit by participating in a managed care program.

Contractor credit (CC)

Some contractors may pay their employees comparatively high wages in relation to other construction employers. Since premium is based on payroll, some states created a premium adjustment program to avoid penalizing these construction class employers.

States differ regarding the fundamental application of this premium credit program. Most require that at least 50 percent of the payroll come from a construction code. A few states require that only one construction-related class code be present (this is the exception rather than the rule). Beyond this, the differences among the states offering this program relates to the minimum qualifying average hourly wage and the maximum credit available.3

Lockton’s role

The sole purpose of Lockton’s Risk Control Services team is to help our clients reduce insurance costs by controlling the risks that drive them. Our insurance professionals can assist clients in evaluating what is required by their state and what credits they could be offered by their insurance carrier.

February 2018 • Lockton Companies

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Map 2: State-by-state comparison — insurance premium credits

Puerto Rico

US Virgin Islands

DF Drug free credit

MC Managed care credit

CC Contractor credit

SC Safety committee credit

M Mandatory regulation IIP

MSC Mandatory safety committee

D/R Denied or reduced — positive drug test

DF

CC

SC

MSC

D/R

DF

CCSC

D/R

DFDFMC

D/R

M D/R

D/R

CCMSC D/R

Washington DC D/R

DF

MC

CC

SC

D/R

DFMC

D/R

DF

CCM

MSC

D/R

DFSC D/R

CC

D/R

D/R

D/R

SC D/R

DF D/R

SC

M

D/R

D/R

CC D/R

SC

M

D/R

CCM

MSC D/R

DF

M

D/R

CC D/R

DFCCM D/R

CC

SC

MSC

D/RM

MSC

D/R

CC D/R

DF

SC

M

D/R

MC

SCM MSC

D/R

DFCCSC D/R

SC

CC D/R

D/R

M MSC D/R

D/R

DF D/R

CC D/R

DFCCM D/R

DF

CC

D/R

D/R

DF D/R

D/R

MSC D/R

D/R

DF

M

D/R

MSC

D/R

DFCC

D/R

D/R

M

MSC

MSC D/R

CC D/R

DF

D/R

SC

DFCC

SC

CC

MC CC

REFERENCES Source: https://www.osha.gov/dcsp/osp/index.html1

Source: https://www.osha.gov/dsg/InjuryIllnessPreventionProgramsWhitePaper.html2

Source: http://www.mynewmarkets.com/downloads/wc-credit-map.pdf3

Source: https://blogs.findlaw.com/ injured/20164

Source: http://www.linjen.com/newsletters/2012/March/March2012_Safety.html

Source: https://www.edrugtest.com/Messages_from_Admin/Statebystatelaw_Guide_89046.pdf

Puerto Rico

US Virgin Islands

DF Drug free credit

MC Managed care credit

CC Contractor credit

SC Safety committee credit

M Mandatory regulation IIP

MSC Mandatory safety committee

D/R Denied or reduced — positive drug test

DF

CC

SC

MSC

D/R

DF

CCSC

D/R

DFDFMC

D/R

M D/R

D/R

CCMSC D/R

Washington DC D/R

DF

MC

CC

SC

D/R

DFMC

D/R

DF

CCM

MSC

D/R

DFSC D/R

CC

D/R

D/R

D/R

SC D/R

DF D/R

SC

M

D/R

D/R

CC D/R

SC

M

D/R

CCM

MSC D/R

DF

M

D/R

CC D/R

DFCCM D/R

CC

SC

MSC

D/RM

MSC

D/R

CC D/R

DF

SC

M

D/R

MC

SCM MSC

D/R

DFCCSC D/R

SC

CC D/R

D/R

M MSC D/R

D/R

DF D/R

CC D/R

DFCCM D/R

DF

CC

D/R

D/R

DF D/R

D/R

MSC D/R

D/R

DF

M

D/R

MSC

D/R

DFCC

D/R

D/R

M

MSC

MSC D/R

CC D/R

DF

D/R

SC

DFCC

SC

CC

MC CC

February 2018 • Lockton Companies

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Summary of state safety program requirements and insurance premium credits

StateMandatory

regulation IIP (M)

Mandatory safety

committee(MSC)

Safety committee credit

(SC)

OSHA consulting or recognition

Workers’ comp insurance

premium credit

Managed care credit(MC)

Contractor credit(CC)

Drug-free workplace credit

(DF)

Positive drug test — WC denied or reduced(D/R)

If a safety committee is

mandatory, who is covered?

Alabama AllDF, CC,

SC — Assigned risk

All employers

Alaska Self-insured AllDF, CC

SC — Assigned risk

Arizona Self-insured All DF Prohibited

Arkansas High incident rate

High incident rate;

insurer providedDF, MC Hazardous

employers

California > 10 employees All All employers

Colorado Small

Connecticut

Self-insured; > 25 employees or high incident

rate2

All CC

Employers with >25 employees

Hazardous small employers

Delaware Small/medium DF, CC, SC

District of Columbia Private sector SC

Florida Self-insured All DF, MC, CC, SC

Georgia Small DF, MC

Hawaii Self-insured; > 25 employees All

DF, CC, SC-Individual company

Individual company

Committee required if no

qualified/trained person

Idaho Public sector Small DF, SC

Illinois Self-insured Small/medium CC

Indiana All

Iowa All

Kansas Assigned risk All; insurer provided

SC — Individual company

Kentucky All; insurer provided DF

Louisiana Self-insured; > 15 employees

All; insurer provided SC Employers with

> 15 employees

Maine Self-insured; EMR > 2 All

Maryland Self-insured Small/high hazard CC

Massachusetts Self-insured; public sector

Small/high hazard CC Willful

misconduct

Michigan Construction All SCEmployers in construction

industry

Minnesota All6 Small/high hazard CC

Employers with > 25 employees

Committees required for hazardous employers.

Mississippi Small/medium/high hazard DF

Missouri Self-insuredSmall/high

hazard; insurer provided

CC, DF All employers

Montana All Small/high hazard DF, CC Individual

companyEmployers with > 5 employees

Nebraska All Private sector CC All employers

February 2018 • Lockton Companies

Summary of state safety program requirements and insurance premium credits

StateMandatory

regulation IIP (M)

Mandatory safety

committee(MSC)

Safety committee credit

(SC)

OSHA consulting or recognition

Workers’ comp insurance

premium credit

Managed care credit(MC)

Contractor credit(CC)

Drug-free workplace credit

(DF)

Positive drug test — WC denied or reduced(D/R)

If a safety committee is

mandatory, who is covered?

Nevada Self-insured; > 10 employees All

Employers with > 10 employees

Committees required for

employees with > 25 employees

New Hampshire > 15 employees Assigned risk Private sectorMC

SC — Assigned risk

New Jersey Small MC — Individual company and CC

New MexicoSelf-insured; high incident

rate2

High hazard industries CC

New York Payroll > $800K and EMR > 1.20 All SC, CC, DF

Employers with payroll > $800K

Other hazardous employers

North Carolina High incident rate

Small/high hazard

Hazardous employers

Committees required for

employers with > 5 employees

North Dakota All

Ohio Self-insured All DF

Oklahoma Small CC

Oregon Self-insured; forestry Small DF, CC

All construction employers

All other employers with > 10 employees (except logging and agriculture)

Pennsylvania Self-insured All DF — Individual company CC, SC

Rhode Island Small

South Carolina Small DF

South Dakota Private sector

Tennessee Small DF — Individual company, CC

Hazardous employers

Texas High risk employers

Private sector; insurer provided

Utah All DF Hazardous employers

Vermont High incident rate All Hazardous

employers

Virginia Small/high hazard

DF — Assigned Risk, CC

Washington All All D/R All employees

West Virginia All Hazardous employers

Wisconsin Self-insured; public sector Private sector CC

Wyoming All DF

This guide is provided for informational purposes only; Lockton is not a law firm. This guide is not intended as a substitute for the insurance or legal

advice. Individuals using this guide must be aware that legislative, regulatory and case law developments regularly impact and can change the legal

status by state.

© 2018 Lockton, Inc. All rights reserved.KC: 38458