For the purposes of this blog, we are going to assume that your company has already subscribed to ISNetworld®. We are also going to assume, like many small businesses, that your company has had a less than perfect safety track record. And, for this problem, we are going to offer an out-of-the-box solution using the principles of business and strategy.
As your company is probably aware, safety performance measures are becoming more and more of an evaluation tool. However, the process is not entirely fair since the way the OSHA incident rate is calculated favors larger businesses. See, OSHA assumes that a business will have 100 employees who work 2000 hours per year yielding a 200,000 hour constant. The number of OSHA recordable incidents will be multiplied by the constant of 200,000 hours and divided by the total number of hours worked by all employees at your company. Thus, if you have 10-20 employees, one or two OSHA recordable incidents will impact your company’s safety performance much greater.
The second major safety metric is the experience modification rating (EMR). If your company’s rating is less than 1.0, you are beating the industry average. If the EMR is greater than 1.0, your company is associated with much more risk.
With poor safety performance, your company is not likely to have a great EMR or OSHA incident rate. When this information is reported to ISNetworld® and ran through the verification process, your company could get dropped as a preferred vendor. So, what’s the solution? Firstly, get your company’s safety performance record on an improvement track or else your company faces significant long-term liabilities and losses.
Secondly, if your company has really awful safety metrics beyond repair, we recommend changing how your company does business. There are many shelf companies out there that can be purchased for under a $1,000 with a few years of legitimate business operations, tax returns, and some even come with their own domain names, interestingly enough.
Buying a shelf company is cheap and can be completed quickly. The next step would be to begin your new business enterprise by acquiring your old company. Either the shelf company and the current company can merge and form a new entity or the shelf company can acquire the other entity altogether. In the end, the result is one and the same.
During a merger or acquisition, the parent or surviving company (e.g. LLC, Corp) will assume operations and control of the old company, but can have the option of re-establishing an EMR and the previous safety metrics would belong to the old entity, not the newly formed corporation. Of course, you will have to run through the motions of getting a new Tax ID, but that only takes about 5 minutes online. If you need help with the merger and acquisition process, hire a corporate attorney who can help you.
The major benefit here is that your previously held contracts are likely to be transferred to the newly established entity and you will be able to continue business operations. Your safety metrics will need to re-evaluated to reflect these changes and you will have to work things out with whatever agency is handling your workers’ compensation.
The downside is that ISNetworld® will likely make you cancel the old account under the old business entity and create a new account, but make sure that your clients on your subscriber account are transferred. You may have some hoops to jump through, but in the end you can essentially reset your safety performance record with OSHA and ISNetworld®.
We cannot stress enough, however, that if you do not change how your company operates its safety program, you will in all likelihood suffer the woes associated with inadequate safety programs.