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How OSHA Rules Apply to Startups

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    NEWSLETTERS

    Do you know what OSHA is? Yup, it's a Thai restaurant in San Francisco -- and a great one at that -- but it's also the Occupational Safety and Health Administration.

    OSHA is the federal agency that regulates workplace safety and health.

    If you've ever worked an office job, you've likely seen the dusty poster with all the OSHA rules next to the even dustier fire extinguisher in the break room. So, it might follow that OSHA rules only apply to big companies and other places that employee a ton of people, and not your tiny startup with five people, right?

    Think again.

    I gave Woody Hill, who was the associate industrial hygienist at the California Division of OSHA for 11 years a call to discuss this and find out how else you should be protecting yourself. (Woody is also currently the VP of loss control with Employers, a "worker's compensation insurance carrier focused on serving small businesses," and in that role he works with small businesses to better understand and improve their workplace safety.)

    Do OSHA rules apply to startups?

    Woody Hill: Absolutely. One of the problems with small business in general is when you get a business license, you don't get a packet or a booklet that says "these are all the rules that apply to you in Illinois." That the expectation is that the same rules that apply to a company -- with the exception of record-keeping -- where there's an employer-employee established relationship. In other words, it doesn't affect individual employees. It doesn't necessarily affect two principles of the company. They have to be the in the employer-employee relationship. The only exception to a small employer -- and this is the only one relative to number of employees -- is 10 or fewer employees are relinquished from record-keeping requirements around losses or injuries. And that's managed through the Bureau of Labor Statistics. It's reporting based on size and based on your standard industrial classification code. So, they're exempt from the record-keeping element but all other rules apply.

    Let's say I'm an entrepreneur and I'm running a software company and today I get a knock on the door. It's an OSHA inspector. I've been in business six months and I've got 50 young adults working for me. Well, clearly, I came on the radar because of a complaint or because it's a targeted industry. Software engineering is not a targeted industry so it's likely an employee made a complaint. They vary by state rules. You've got the federal branch of Fed OSHA and then there are a number of states that have been given the authority to have their own OSHA plan state rules. Those state rules in addition to the federal rules -- the requirement is that those state rules have to be as stringent as the federal rules. So, the OSHA inspector knocks on this entrepreneur's door and they have 50 employees. They've never heard of OSHA. They don't even know whether to let the OSHA inspector in. Not doing so could create more problems for them down the road. There's not necessarily. They can't be retaliatory, but it's individually specific to the person who's doing the inspection. Nobody likes to be turned away and told they can't inspect if they're a regulator.

    So, from that sense, that person who's being inspected, if they don't know the rules, it's very likely they could do one of two things. They could deny access, which, depending on the industry -- if it was a high-hazard industry, that inspector could go get a warrant to inspect that facility from top to bottom not just based on the nature of the complaint, which is the rule. If that inspector was there to look at ergonomics only, it's likely when they go to get the warrant it'll be a wall-to-wall inspection rather than just focusing on the ergonomic complaint.

    How can they be aware of the rules then?

    Woody Hill: To have their carrier -- like Employers or any other insurance company tell them what services are available to them. How to maintain compliance. As a carrier, my objective is not to meet OSHA rules because you can get really deep into the OSHA standards. My objective for my staff or for any other carrier is to help that employer identify where the losses are occurring and they can control that. Well, anybody who has employees has to have worker's compensation insurance. That's one avenue for them to receive support. When they're choosing their carrier, that should be something that's for the selection criteria. If I don't belong to a professional association, I have to rely on getting my information from the experts or from those who differentiate themselves as the experts. So, they should be getting information from the carrier, and if they're savvy enough, perhaps they could've gotten it by looking online at the OSHA website. Federal OSHA does have an excellent program supporting small business. The problem is that small business generally don't know about it until they're impacted by a complaint or some sort of notice from OSHA that they're violating the rules. And the rules are a little bit different from the carrier side to the OSHA side. They're all meant and designed to prevent injury, but as you can imagine, honestly, some of the rules are archaic and don't make any sense at all.

    But they all apply, right?

    Woody Hill: They apply and they apply on day one. The minute you have an employer-employee established position in any company, you have to have comp -- with the exception of taxes if they're in an exempt state. And you have to have controls in place to provide a safer workplace.

    You mentioned some of the rules are pretty archaic. What winds up stinging people most?

    Woody Hill: They may be aware of OSHA but they forget about the record-keeping rules. In all my years with OSHA, the worst experiences I ever had was getting a complaint for a small business where they were unaware of this situation because they didn't recognize the hazard. Follow my thought process here. As a business owner, yeah, I'm a software guy. What do I know about electrical safety? What do I know about lock-out tag-out? I hired a group of white-collar engineers to write code for me and some others to do data server network updates. How do I know what electrical exposure is?

    The problem is that even if you have a small business or even if you're very good at what you do, you may not be very good at recognizing hazards and you may not know the rules about complying with them. As an employee, if I tell you there's an unsafe condition in our workplace you have an obligation to correct it. Failure to do so puts you in jeopardy of a complaint inspection or worse. If an employer was made aware of it and chose not to correct the hazard, it goes to the Corporate Criminal Liability Act. Now the penalty goes from a very generous $7,500 citation to a $55,000 fine with the potential of going to jail. That's the downside. As an inspector, one of the things I came across with small business owners -- it was heartbreaking because even with relief of penalty, you're now in level of setting fines of $10 to $15,000 on a company that's barely making margins to make payroll.

    So what am I telling you? There's not enough education or awareness out there about what the requirements are for new business owners. New business owners don't necessarily know what to look for when they're identifying hazards.

    How do we fix that?

    Woody Hill: You reach out to the people you're paying for insurance for. You have to find out what they're affording you. If you don't have a good carrier or if you don't know these things, well, through associations, through blogging like you provide, those are all tools that small businesses should really be addressing. Just like you would do anything when you're preparing a business plan for a new venture, think about regulatory compliance. Fewer people are doing more things in a company. Especially in small business. So it's even more important for me at that point to make sure -- you talk about how to work safely and what controls seem to be in place because you put unnecessary haste into the mix and that's when you end up getting lots of lawsuits.

     

    David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a comedy-writing instructor for Second City. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.