Work Comp Wednesdays – The North Carolina 1.50 Ex Mod Rule: How to Navigate the Safety and Health Programs and Committees Act
Welcome to Work Comp Wednesdays! Insurance People is the industry-leader in North Carolina workers’ compensation insurance. Each week, our team takes a frequently asked question and expands on the issue for our clients, prospective clients, and community members to better understand the confusing nature of Work Comp.
Background:
The Ex Mod (Experience Modification Rating) in Workers’ Compensation insurance has the ability to cripple an organization that has issues actively mitigating their workplace injuries. Few people understand the true consequences of a ‘run-away’ claim or a mismanaged workers’ compensation program. From past Work Comp Wednesday’s, we know that the Ex Mod is a numerical representation of an organization’s loss history and is an important factor in determining how much you will ultimately pay for your Workers’ Compensation insurance. Aside from being a debit/credit rating factor, the Ex Mod can play a completely different role in how it affects an organization’s safety and health culture.
1.50 Ex Mod Rule: Safety and Health Programs and Committees Act
According to the North Carolina Department of Labor Occupational Safety and Health Division’s Field Operations Manual, “The Safety and Health Programs and Committees Act (SHPCA) requires that certain employers must establish safety and health programs and committees.” Those subject to the law (NCGS 95-250), include employers with:
- Ex Mod of 1.50 or greater (as applied by the NCRB/NCCI), and
- who employ 11 or more employees (employed for some portion of a working day in each of 20 or more calendar weeks in the current or preceding calendar year).
The North Carolina law requires the Department of Labor to notify every employer who is required to comply. Notification packets are sent by mail to the required employers along with time-sensitive action and abatement items that need to be addressed to prevent penalties. All responses are maintained by the Consultative Services Bureau (CSB). Required employers will be inspected by NC DOL’s Occupational Safety and Health Division.
NC DOL OSH Inspection:
Employers that fall within the subjectivities of the SHPCA will be inspected by a NCDOL OSH Compliance Safety and Health Officer (CSHO). During the inspection, the CSHO will walk around the workplace to determine if the proper written safety and health program and committee documentation was implemented. According to the Field Operations Manual, “The observed conditions and employee interviews can help to ascertain whether or not the program and committee, represent a ‘paper program’ rather than a functioning program.” An employer will be deemed deficient if the inspection results in a significant number of safety and health violations. Not only will the violations be counted towards SHPCA deficiency, but they can also be counted and fined again as programmed OSHA inspection violations.
Penalties:
According to the Field Operations Manual, the commissioner may levy a civil penalty of up to $25,000, depending on the number of employees, as follows:
- < 10 employees – $2,000
- 11 – 50 employees – $5,000
- 51 – 100 employees – $10,000
- > 101 employees – $25,0000
The three specific penalty factors that will be assessed for violations of the SHPCA include:
- The nature of the violation
- Fist or subsequent violation
- Steps taken by the employer to abate the violation upon discovery.
Safety and Health Program Penalties:
The first violation penalty for an employer with NO safety and health program will be 25% of the maximum penalty. Program deficiencies will also be fined the following:
- 1 – 5 Deficiencies – 0% of Max Penalty
- 6 – 10 Deficiencies – 5% of Max Penalty
- 11 – 15 Deficiencies – 10% of Max Penalty
- 16 – 20 Deficiencies – 15% of Max Penalty
- < 21 Deficiencies – 20% of Max Penalty
Safety and Health Committee Penalties:
The first violation penalty for an employer with NO safety and health committee will be 25% of the maximum penalty. Committee deficiencies will also be fined the following:
- 1 – 5 Deficiencies – 0% of Max Penalty
- 6 – 10 Deficiencies – 5% of Max Penalty
- 11 – 15 Deficiencies – 10% of Max Penalty
- 16 – 20 Deficiencies – 15% of Max Penalty
- < 21 Deficiencies – 20% of Max Penalty
Abatement and Remedy:
Each violation will be required to be abated by a certain date. Each penalty will be reduced by 50% if the deficient item(s) is abated by the required date. Failure to abate the specific deficiencies will be assessed an additional civil fine of 7x the initial penalty amount, but not to exceed the maximum.
Certification Form:
Failure to return the Certification Form/Postcard (sent in the notification packet) within 60 days will be assessed an additional fine of 5% of the maximum penalty.
Safety and Health Program and Committee:
Creating a Safety and Health Program and Committee can be a daunting task without any guidance or advise from a professional. Insurance People understands the criteria CSHOs use for evaluating Safety and Health programs/committees and can help position your organization to be stronger than it is today. Even if your organization does not have an Ex Mod above 1.50, it is highly recommended that you have an established Safety and Health Program and Committee to be proactive in creating zero-incidence workplace.
More information about the SHPCA and the Field Operations Manual can be found here.
If you are interested in creating a Safety and Health Program or a Safety and Health Committee, please reach out to an Insurance People Risk Advisor for a complete risk management review!
For Workers’ Compensation and OSHA Compliance questions, please reach out to Mitch Kaufmann, ACRA, CBIA, MWCA (mitch@inspeople.com).