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Workplace Safety

Injury Risk Can Remain Even with Automation

Automation may help companies prevent common injuries, but it’s not time to ease diligence on safety.
By: | April 11, 2018 • 3 min read
Topics: Safety | Workers' Comp

Automation increasingly seems to be taking over in workplaces around the world. A 2017 report from PwC suggests that as many as 40 percent of U.S. workers could be replaced by robots by 2030. Many employers see automation as a solution for preventing various common workplace injuries.

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But replacing people with machines is not a fail-safe or a one-size-fits-all solution, nor does it necessarily alleviate the risk of injuries.

While robots have been proven to be effective in certain areas, such as lifting heavy objects or engaging in extremely repetitive work, Scott Smith, director, ergonomics global risk consulting, Aon, said a thorough cost-benefit analysis needs to be conducted first.

“You need to take a look at the analytics,” he said. Companies often fail to conduct a detailed analysis with all stakeholders — including risk management, operations, health and safety, human resources if a union is involved, etc. — and evaluate all data from both a risk and loss perspective before considering a change, Smith added.

In some situations, automation could be a boon. For instance, a semi-automated system in a warehouse that allows an individual to use a robot to load boxes into trucks may not only potentially increase the speed at which the job is completed but may also significantly reduce workers’ comp claims for back and shoulder injuries.

Scott Smith, director of ergonomics global risk consulting, Aon

But Smith said he’s seen companies embrace the idea of automation too eagerly, believing they will transfer their workers’ comp risks to a machine. Smith relayed a situation where a plant replaced a person who loaded aluminum heads onto an assembly line with a $400,000 robot. However, an individual was still required to load the robot.

Smith said the homework needs to be done. Look at the number and expense of particular workers’ comp injuries technology is intended to save. Review how the economy and unemployment could affect future staffing. Find out if the automation would provide financial incentive.

Another consideration is how the technology will interact with individuals. David Langham, deputy chief judge, the Florida Office of Judges of Compensation Claims, said anyone who doesn’t see the potential for robots potentially causing damage to humans is “a little bit naïve.”

“What I’ve seen in the industry is machines built to be safe and humans who make poor decisions around those machines, resulting in injury,” he said. “There’s no such thing as the absolute right technological solution. Every solution you engage has the potential to create another problem.”

“There’s no such thing as the absolute right technological solution. Every solution you engage has the potential to create another problem.” — David Langham, deputy chief judge, the Florida Office of Judges of Compensation Claims

Smith said he has seen pinch and crush injuries occur when workers mix with robots. Pinch injuries can often occur during maintenance, because during the design and installation, the ergonomics of the design rarely take into account maintenance, he said, and those responsible for repairing the machine typically need to work in very cramped, awkward spaces.

Crush injuries are more likely to occur for robots with a bigger footprint that may need 360 degrees of freedom for movement, Smith noted, and often a physical barrier or a light curtain will be needed to prevent injury.

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Langham noted that another potential safety issue with automation is when repairs are outsourced to another company or an independent contractor who is unfamiliar with the company’s equipment and set-up. Another issue is when companies cut back on time spent in safety meetings and awareness because of the addition of robots.

“I think there are going to be a lot of companies that are going to think robots decrease demand for those meetings, and I think that will very probably lead to injuries,” he said. “Employees need to be reminded.” &

Angela Childers is a Chicago-based writer specializing in health care and business management. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Workers' Comp

Do You Have Employees or Gig Workers?

The number of gig economy workers is growing in the U.S. But their classification as contractors leaves many without workers’ comp, unemployment protection or other benefits.
By: and | July 30, 2018 • 5 min read

A growing number of Americans earn their living in the gig economy without employer-provided benefits and protections such as workers’ compensation.

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With the proliferation of on-demand services powered by digital platforms, questions surrounding who does and does not actually work in the gig economy continue to vex stakeholders. Courts and legislators are being asked to decide what constitutes an employee and what constitutes an independent contractor, or gig worker.

The issues are how the worker is paid and who controls the work process, said Bobby Bollinger, a North Carolina attorney specializing in workers’ compensation law with a client roster in the trucking industry.

The common law test, he said, the same one the IRS uses, considers “whose tools and whose materials are used. Whether the employer is telling the worker how to do the job on a minute-to-minute basis. Whether the worker is paid by the hour or by the job. Whether he’s free to work for someone else.”

Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors.

Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.

The issues lie with how a worker is paid and who controls the work process. — Bobby Bollinger, a North Carolina attorney

However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.

Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.

Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.

A Legislative Movement

Misclassification of workers as independent contractors introduces risks to both employers and workers, said Matt Zender, vice president, workers’ compensation product manager, AmTrust.

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered.”

Misclassifying workers opens a “Pandora’s box” for employers, said Richard R. Meneghello, partner, Fisher Phillips.

Issues include tax liabilities, claims for minimum wage and overtime violations, workers’ comp benefits, civil labor law rights and wrongful termination suits.

The motive for companies seeking the contractor definition is clear: They don’t have to pay for benefits, said Meneghello. “But from a legal perspective, it’s not so easy to turn the workforce into contractors.”

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered in the eyes of the state.” — Matt Zender, vice president, workers’ compensation product manager, AmTrust

It’s about to get easier, however. In 2016, Handy — which is being sued in five states for misclassification of workers — drafted a N.Y. bill to establish a program where gig-economy companies would pay 2.5 percent of workers’ income into individual health savings accounts, yet would classify them as independent contractors.

Unions and worker advocacy groups argue the program would rob workers of rights and protections. So Handy moved on to eight other states where it would be more likely to win.

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So far, the Handy bills have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky, Utah and Indiana. A similar bill was also introduced in Alabama.

The bills’ language says all workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control schedules, prohibit them from working elsewhere and meets other criteria. Two bills exclude transportation network companies such as Uber.

These laws could have far-reaching consequences. Traditional service companies will struggle to compete with start-ups paying minimal labor costs.

Opponents warn that the Handy bills are so broad that a service company need only launch an app for customers to contract services, and they’d be free to re-classify their employees as independent contractors — leaving workers without social security, health insurance or the protections of unemployment insurance or workers’ comp.

That could destabilize social safety nets as well as shrink available workers’ comp premiums.

A New Classification

Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage, Brown said.

Matt Zender, vice president, workers’ compensation product manager, AmTrust

Workers’ compensation for gig workers can be hard to find. Some state-sponsored funds provide self-employed contractors’ coverage.  Policies can be expensive though in some high-risk occupations, such as roofing, said Bollinger.

The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.

What a portable benefits program would look like is unclear, he said, but some combination of employers, independent contractors and intermediaries (such as a digital platform business or staffing agency) would contribute to the program based on a percentage of each transaction.

There is movement toward portable benefits legislation. The Aspen Institute proposed portable benefits where companies contribute to workers’ benefits based on how much an employee works for them. Uber and SEI together proposed a portable benefits bill to the Washington State Legislature.

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Senator Mark Warner (D. VA) introduced the Portable Benefits for Independent Workers Pilot Program Act for the study of portable benefits, and Congresswoman Suzan DelBene (D. WA) introduced a House companion bill.

Meneghello is skeptical of portable benefits as a long-term solution. “They’re a good first step,” he said, “but they paper over the problem. We need a new category of workers.”

A portable benefits model would open opportunities for the growing Insurtech market. Brad Smith, CEO, Intuit, estimates the gig economy to be about 34 percent of the workforce in 2018, growing to 43 percent by 2020.

The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected] Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]