How Incident Rates are Calculated
Gary Gokey, CSP, ARM
Safety Advisor, Safety Management Group
Every company regularly makes payments for different types of insurance, but how those rates are set is a mystery to many of even the savviest managers. Many receive a statement, notice an increase, and just assume that some actuary has used an incomprehensible formula to create a number with no basis in reality.
Actually, several of the safety-related rates used by insurance companies and regulators such as OSHA are fairly straightforward. Having insight into how these rates are calculated can help managers address the underlying factors. Just as important, they’ll be better able to measure their performance against other companies in their industries.
Incident rates give agencies such as OSHA a standardized way to measure a company’s performance both historically and in comparison to other companies within its industry. Using standardized rates makes comparisons easier and more accurate. OSHA usually doesn’t use the rates as part of enforcement efforts. Instead, the data helps the agency measure trends in workplace safety and identify areas of potential concern. Companies can use it to compare their own safety history with national averages for their industry and peer groups, and insurance companies will use it as one more way to evaluate a company’s safety performance.
OSHA Recordable Incident Rate
This is the most well-known rate, and the one that provides the most common comparison. It shows you how many employees per 100 employees have been injured or suffered an illness that had to be recorded under OSHA rules within the specified time period.
It’s easy to compute. All you have to do is multiply the number of recordable cases (from your OSHA 300 log) by 200,000, and then divide that number by your company’s total labor hours.
Why 200,000? The BLS wanted to develop a standardized way to measure rates, so that companies of different sizes could be compared fairly. They chose 200,000, because it represents the number of hours that 100 employees working 40 hours a week for 50 weeks would accumulate.
So, if you have 40 full-time employees who work 40 hours a week, that’s 1,600 labor hours per week. If we assume that each gets two weeks of vacation, we get total annual labor hours of 80,000 (1,600 times 50 weeks). Suppose you had three recordable incidents during the year. If you multiply 3 times the 200,000 figure, you get 600,000. Divide that by 80,000, and you’ll get a recordable incident rate of 7.5. That means for every 100 full-time employees at your company, 7.5 will have had a recordable injury or illness.
The DART rate
Another rate that you should know is the DART rate, which stands for “days away, restricted, or transferred.” It looks at the amount of time an injured employee is away from his or her regular job. Suppose an injured employee is allowed to return to work, but can’t perform normal lifting for 5 days. That would be considered as a single incident for your DART rate.
To compute the DART rate, multiply the number of DART incidents times 200,000, and divide again by your company’s total labor hours. Using the example above, if only two of the recordable incidents fell under the DART classification, you’d multiply 2 times 200,000 (getting 400,000), and divide that by 80,000, arriving at a DART rate of 5.0.
Other rates you can compute
The Lost Time Case Rate considers only incidents in which workday were lost. Here again, you multiply your number of lost time cases by 200,000, and divide the result by the total number of hours worked by your employees. And, once again, the result tells you how many employees lost time per 100 employees on your payroll.
The Severity Rate looks at incidents in terms of the actual number of days that were lost on average. To calculate the Severity Rate, you simply divide the number of lost workdays by the number of recordable incidents. If your employees lost a total of 24 workdays, and there had been a total of four incidents, you’d be able to tell that the average incident cost you 6 workdays.
Don’t over-report injuries
Sometimes, companies that want to be careful about staying in compliance will include incidents on their OSHA 300 logs that really don’t need to be there. A common example is incidents that involved only first aid, which are not recordable incidents, even if the first aid is received at a clinic. If you include that type of incident, it will exaggerate your recordable rates.
How often should you compute rates?
Incident rates are what are known as “lagging indicators,” because they describe past history. They tend to be most useful when you compare them over several periods, so you can identify trends. Most medium-sized or larger companies would benefit from computing these rates each month, and tracking the trends from month to month. If you start to notice that your rates are climbing, you need to investigate to determine what’s happening. If they’re declining, it’s a sign that your workers are following safe practices and that your safety plan is working.
Safety Management Group’s website includes a handy online calculator that makes it easy to compute your OSHA Recordable Incident Rate. Click here for our calculator.
Gary Gokey (email) is a Safety Advisor for Safety Management Group, an Indianapolis-based professional service organization that provides nationwide workplace safety consulting, training, staffing, program planning, and implementation. Information is available at www.safetymanagementgroup.com or by calling 800.435.8850.