The Importance of Carwash Safety
Safety is an area of concern for any carwash owner, operator, or manager. Risk is required for all business operations, but the risk of injury can be high for carwashes. We all want to keep our team safe while at work. According to Injury Facts, the National Safety Council estimated the total cost of workplace injuries in 2020 to be $ 163.9 billion. Employers bear the brunt of those costs and can be fined for some of those accidents.
The carwash environment has inherent dangers that must be managed to ensure the entire team's safety. I could put an exhaustive list of all the dangers employees face while working at the carwash, but it would take up this entire article. Sufficed to say carwash employees work with moving machinery, pressurized lines, high-powered electricity, chemicals, environmental safety concerns such as weather, slips and falls, and so on. However, safety procedures, training, and enforcement are not always maintained. In this article, we want to look at the cost of not having a carwash-specific safety program.
Many tools are available to carwash operators to build a comprehensive safety program. However, they may not always have the time or ability to create one. When you don't have a safety program that covers the fundamental safety concerns for the carwash, you leave your business vulnerable to the significant risks associated with the business. Therefore, putting a safety program in place for your carwash is a form of risk mitigation that you cannot afford to ignore. Indeed, even if you implement a program, you must have the means and intention to enforce it for the betterment of your organization. Here we will discuss the top three reasons to have and enforce a safety program at your carwash, besides the obvious human tendencies to want your employees protected from injury.
So what are the top reasons we think you need a safety program besides wanting the best for your employees?
- The Reputation of the Business
- Workers' Compensation Insurance Cost
- The Cost of OSHA Penalties
The Reputation of the Business
If you have a culture that doesn't foster safety and people are continually subjected to dangerous situations, it will make them not want to work for you. Also, if you have regular workplace accidents or other issues related to safety, you will likely be known in your local community as a dangerous place to work. If you have a reputation for not being a safe workplace, it will hinder your business in many ways. This can be defined as an intangible or indirect cost to your business, meaning the actual cost is difficult to determine. However, one of the most important things you can do for employee retention is to keep employees safe.
A company called Alert Media recently released a report called The State of Employee Safety in 2022. In this report, they surveyed over 2000 employees about safety. The report states that "90% of U.S. workers believe that their employers have a duty of care—a moral and legal obligation—to protect them from harm when working or traveling on their behalf." This data leads me to argue that a safety program will help improve employee retention because the employees will understand that you take hazards to their health seriously.
A safe work environment for the carwash employees, contractors, and customers should be a top priority. We need to eliminate any issues that may present a safety risk. By the way, OSHA also expects us to do that as employers. Indeed, fostering a safety mindset is the best way to accomplish a safe work environment. The safety mindset is an attitude and focus that promotes safety for yourself and others. When most employees at a location embrace a safety mindset, this creates a safety culture. This positive safety culture creates a positive safety reputation for your carwash with employees, contractors, and within the community. Let's move on to another top reason to have a safety program.
Workers' Compensation Insurance Costs
Workers' compensation insurance, commonly referred to as workers comp, is used to ensure that employees are taken care of medically and financially if there is a workplace accident or illness. This insurance provides cash benefits and medical care to workers who are injured or suffer an illness as a direct result of their job. But what companies are required to have workers comp?
Workers' compensation insurance is usually required depending on the number of employees and the state in which you operate. However, most states require this insurance if you have at least one to five or more employees. That being said, If you are operating an exterior express, flex, or full-service carwash, you will have more employees than the minimum amount to avoid workers' compensation insurance. Therefore, you will most likely need it, and if you are operating right now, you probably already have it.
Workers' compensation insurance is paid as a premium to an insurance company. Several factors determine this premium, but the main ones you should know about include your payroll costs and the class code for your state. Workers' Comp Essentials states, "Each state has a regulatory agency that collects payroll and claims data from all of the state's workers' compensation insurers. This agency sets a different rate for each class code based on that data and the risk of injury associated with that occupation. For example, an automobile mechanic's rate may be $4.36 per $100 of payroll, while a clerical office employee's rate is 26 cents per $100." Your class code is the cost per $100 of payroll that you need to pay towards your workers' compensation insurance premium. For example, if you have $250,000 in payroll per year and your class code is set at $4 per $100, your premium based on your payroll and class code would be $10,000 per year.
Suppose your current rate is $10,000 per year for workers' comp. That can change based on your claims or loss history. This change can occur due to your experience modification factor (or e-mod). The e-mod adjusts your rate based on your loss history over the last three years compared to other carwashes. So, if you have a year with high claims, you can have a higher e-mod for the next three years. On the other hand, if you don't have claims, you can have a lower e-mod. Workers' Comp Essentials states, "The average e-mod is 1.0, so if yours is lower, it indicates a better-than-average claims history. If it's above 1.0, it indicates your claims history is worse than average." For example, if your e-mod goes up to 1.25, you have a 25% higher rate or payout of claims, and your premium will increase by that percentage.
Building on the example earlier. If your premium cost was $10,000, but your e-mod is now 1.25, you will now be paying $12,500 per year on your premium for the next three years, costing you a total of $7,500. In a 2019 article in Professional Carwashing & Detailing, Dan Tharp of Pearl Insurance stated that every insurance carrier has a fixed level of debits or credits that they can use on your premium of -25% to +25%, depending on the actions and attitudes of the organization. This means if you don't have a safety culture, the insurance companies might add even more to your premiums because they see trends of loss.
Yes, you can have a pretty safe work environment and still have claims. However, suppose you practice a good safety culture and implement and enforce a safety program. In that case, your chances of losing money on your bottom line due to higher workers' comp premiums are lower. Also, in some cases, the insurance company will determine that the issue was not a direct result of the job and deny the claim, which helps your premiums. Either way, know that your safety program can directly affect your bottom line profits to the extent of thousands of dollars per year on just your workers' compensation insurance premiums. But there could also be other costs related to not having a good safety program.
The Costs of OSHA Penalties
The Occupational Safety and Health Administration (OSHA) is the regulatory agency in charge of employee safety in the U.S. They can fine you for not having appropriate safety measures in place or for instances of workplace accidents. You don't want to get on OSHA's radar if you can avoid it. According to OSHA's website, from October 2020 to September 2021, they issued 54 citations for a total of $134,554 to carwashes. So what can we learn from this?
The average cost per citation was around $2491. We can then conclude that if OSHA decides to inspect your carwash and you don't have an appropriate safety program in place, you could be looking at fines totaling around $7500. However, you don't just pay the fines. You then have to prove that you have put safety systems in place to correct the issues, or they will continue to come back and enforce their guidelines. So they force you to develop the proper safety systems. Let's look at the top five reasons carwashes were fined in those inspections for violations of OSHA guidelines.
Top Five Fines by OSHA on Carwashes in 2020-2021
19101200 - Hazardous Communications: Missing SDS sheets, outdated SDS sheets, unmarked chemical bottles or reservoirs, or lack of training on hazardous communications.
19100147 - The Control of Hazardous Energy: Improperly handling the control of hazardous energy, lack of training on the control of hazardous energy, or lacking a comprehensive lockout/tagout program.
19100132 - General Requirements: Not providing personal protective equipment, not providing training on personal protective equipment, or providing faulty personal protective equipment.
19100151 - Medical Services and First Aid: Not providing medical services or first aid supplies, such as first aid kits, eye wash stations, or bloodborne pathogens kits, or not providing safety training on medical service or first aid.
5A0001 - OSH Act General Duty Paragraph: When the company identifies a workplace hazard and fails to put measures in place to protect employees, or a company fails to identify a workplace hazard that could cause serious harm.
We can see that many of these fines can be avoided by having the appropriate carwash safety training and program in place and enforced by management to ensure the safety of employees. You might think, "That won't happen to me. Why would OSHA come here?" I would argue that not having a safety program can put you on OSHA's radar either by employee accident or someone making a complaint. You could also get unlucky and have an OSHA inspector decide to wash their car at your facility one day.
Final Thoughts
We believe that the lack of a proper safety program, or having an insufficient program, could cost your carwash up to tens of thousands of dollars per year in indirect costs from a reputation standpoint, direct costs on your workers' compensation insurance premiums, and direct cost from OSHA penalties if inspected.
A safety mindset will help you avoid these issues by supporting safe work practices, promoting a safety culture, providing necessary safety resources, and correctly training employees. Safety is the responsibility of everyone at the carwash. Each person needs to focus daily on their individual safety and the safety of the team. We want you to build a culture of safety where every employee and leader shares responsibility for maintaining safe working conditions and practices throughout carwash operations.
CarwashOS is a carwash consulting organization that consults for and helps carwash owners and operators put systems in place that assist them to be more successful. CarwashOS developed a complete and comprehensive carwash safety program called SafetyOS. If you are interested in how CarwashOS can help you improve your business, book a free 30-minute consultation. Thanks for reading!
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