Risk Management

The OSHA Ergonomics Rule’s Fatal Flaw

The new regime sets up "most-favored-injury" status for ergonomics-related injuries.
David KatzJanuary 25, 2001

The Occupational Safety and Health Administration’s new ergonomics rule is an unstable compound, ready to blow at some future date. And that should make many CFOs happy—but only in the long term.

The standard, which took effect January 16, requires stricter guidelines from employers who have little or nothing in the way of ergonomics programs. Some requirements include analyzing and reducing job hazards and training employees. Think big consulting fees.

But such fee-based costs can be budgeted for, and although estimates vary in regards to how many employers have programs in place to prevent carpal tunnel syndrome and other “soft- tissue” injuries, many managers have taken a stab at prevention. Further, the OSHA rule has a provision that says some existing corporate safety programs may be “grandfathered” into compliance.

Indeed, the regulation has its merits. It’s high time that employers who haven’t yet done so begin to grapple with the issue of providing safer workplaces from an ergonomics standpoint.

Many musculokeletal injuries are real, contrary to employer whisperings about fraud. These types of injuries can be seen as the products of a changing workplace in which computer technology holds greater sway. Adjustments are needed.

That much isn’t under dispute, and if the ergonomics standard were merely a workplace safety rule, it would have stood a much better chance than it does now of not eventually being overturned.

But the rule contains a provision that puts it on a direct collision course with the venerable state workers’ compensation system. And that, as George H.W. Bush was fond of saying during the Gulf War, will mean that, ultimately, the OSHA ergonomics rule “will not stand.”

The problem with the rule is that it sets up a new system of compensating workers for injuries. Under the standard, if an employer puts limits on an injured employee’s work activities or transfers the worker to a temporary alternative-duty job, the employer must maintain the employee’s benefits and pay the employee 100 percent of earnings until one of three things has happened: The employee is able to resume former work activities, a health care professional decides the worker can never resume the past level of work, or 90 calendar days pass from the time of the incident.

Similarly, the employer must provide all of an employee’s benefits and 90 percent of his or her wages over the same time period if the employee can’t work at all.

In contrast, most states’ workers’ comp laws mandate that employees injured in the workplace get about two-thirds of their wages while they’re out of work.

Flat-Out Unfair

There are two fatal problems with the OSHA standard’s pay scheme–one ethical and one legal.

In the first case, the regime is flat-out unfair.

OSHA’s compensation scheme sets up, in the red- meat rhetoric now being used by employer groups, a “most-favored-injury” standard. Under it, a worker with a broken arm gets paid less, say, than one with carpal- tunnel syndrome, a wrist-and-arm malady commonly linked to poor workplace ergonomics.

That distinction between injured parties is bound to get people riled, because it’s, well, wrong to discriminate against someone on the basis of the type of injury he or she has suffered.

The legal argument is simple. The Occupational Safety and Health Act of 1970–the law that governs OSHA–spells it out straight.

The act states, “Nothing in this Act shall be construed to supersede or in any manner affect any workmen’s compensation law…[.]”

I’m no lawyer, but I think it’s obvious that the conflict the OSHA rule sets up between its compensation scheme and the workers’ comp system is a telling argument against the rule and one which could—years hence—sink it.

In fact it’s an argument the National Association of Manufacturers will probably use in a lawsuit filed last November against OSHA in the U.S. Court of Appeals for the D.C. Circuit, according to Quentin Riegel, NAM’s deputy general counsel.

The suit, for which Washington-based NAM must file legal arguments by Feb. 15, will be huge in terms of the number of plaintiffs, combining the complaints of many employer groups and unions (on opposite sides of the issue, of course).

Then there’s the legislative route. Employers can encourage Congress to pass a resolution of disapproval under the Congressional Review Act, which enables Congress to overturn a major piece of legislation passed in the last 60 days of a prior Congress, notes Riegel, adding that such a resolution will be introduced shortly.

Employers shouldn’t hold their breath until the Bush administration overturns the rule administratively. It took 10 years of hearings and revisions to become enacted and could take longer than a mere single presidential term to be turned back.

As a matter of fact, given the current balance in Congress and the arduous legal processes that the NAM lawsuit will no doubt produce, companies can’t expect a legislative or a legal fix anytime soon.

In the meantime, employers would do better to start managing their own risks and complying with the OSHA rule—at least until its compensation scheme sinks it.

Grappling with Insurers

For corporate risk managers, that means assessing their ergonomics programs, negotiating with their CFOs to boost their loss control efforts, and grappling with their workers’ comp insurers.

Lance J. Ewing, director of insurance and loss prevention for GES Exposition Services, says, for instance, that he’s in discussions with his company’s workers’ comp insurer, Stevens Point, Wisc.-based Sentry Insurance Co., to determine levels of coverage under the rule.

Ewing says he’s trying to determine if the insurer will only be obligated to pay the two- thirds of compensation it would have paid in a conventional workers’ comp claim. “Will they pay me the full 90 [percent payable for off- the-job claimants under the rule] and bill me back?” he wonders.

Further, the risk manager asks, since state workers’ comp laws typically place a ceiling on what an injured worker could be paid, would the 90 percent be calculated on the basis of an employee’s full wages or of the amount within the ceiling?

Ewing says he’s trying to “work…through this quagmire” by Oct. 15, which is the day when compliance with the rule must begin.

To provide a funding plan in case the insurer won’t pay the difference between the two- thirds and the 90 percent, GES is planning to look at the ergonomics-related injuries its workers have suffered during the last three years and make a “rough estimate” about what it would have to pay if it had to add costs under the OSHA rule.

Depending on what industries they operate in, CFOs could be looking at “immense” costs, says Ewing, vice president of external affairs of the Risk and Insurance Management Society, which is joining in on the NAM suit.

He mentions the fast-food industry (where there’s heavy use of the wrists), high-tech (heavy keyboard use) and the meat-packing industry as areas of potentially huge exposure.

Ewing says GES, a trade show and convention company, is trying to find solutions to lower its ergonomics-related injuries. “If we can get a forklift to move something, rather than 15 guys,” the company will do it, he says.

It’s likely that most employers will be grappling in similar ways with the OSHA rules in their own workplaces—and to mostly good effect—rather than waiting for a legislative, administrative, or legal fix.

While the OSHA compensation scheme’s legal and ethical flaws are likely to spell doom for at least that part of the regulation, it’s a doom that’s far off in the future.