Rating Safety Programs

Safety Policy Thermo Fisher Scientific

Title:: Rating Safety Programs Ref: Risk Management 1.1 Rev: 2 CORP Review: M Rollins; R Somerville / Risk Initial: 01/05/2006 Revised: 11/10/2006 DIV Review: DIV Revised: ##/##/200# Page 1 of 17

1.0 Purpose 1.1 It is the policy of Thermo Fisher Scientific Divisions and locations to accurately evaluate their safety programs.

2.0 Background 2.1 Safety scoring metrics sometimes employ a negative reinforcement related to accidents to grade safety as part of a periodic review.

2.2 This often results in an observable underreporting of work-related injuries as they are shifted from Worker’s Compensation/Employer’s Liability insurance to the employee’s Healthcare insurance.

2.3 The initial reduction in injuries leads to an eventual rebound effect where injuries initially drop for one year or so then rebound to almost the previous levels.

2.4 Some safety scoring metrics employ a simple numerical rate calculation that counts all workplace injuries regardless of the true root cause.

3.0 Objective 3.1 This policy provides a framework to support variable safety scoring metrics as chosen by the Divisions - in harmony with the “One Thermo Fisher Scientific” philosophy - while still allowing for differences in local country regulations as well as individual program emphasis.

3.2 This safety rating policy allows Divisions to use whatever safety scoring method they choose, while at the same time this document ensures the scoring accurately reflects the true status and overall efficacy of the safety program.

3.3 Additional safety scoring metrics may be used by the Divisions in assessing their safety program’s score. Examples of additional safety scoring metrics include attendance at mandatory safety meetings, internal scorecards (such as PPI Safety/Health keys), involvement of a safety committee and results of surveys and audits. Safety Policy Thermo Fisher Scientific

4.0 Summary of Safety Philosophy 4.1 Thermo Fisher Scientific's Safety Philosophy recognizes the following, regarding the occurrence, causation, severity and preventability of work-related injuries: - most injuries are preventable, - almost every injury is mitigatable with proper hazard assessment, and - just about all injuries should be non-repeatable with proper investigation.

4.2 Thermo Fisher Scientific’s safety program identifies three causes for work-related injuries, in decreasing order of contribution to the causes of work-related accidents in an effective safety program: - Acts of Chance (roof collapses, floods, lightning strikes) - Acts of Condition (equipment failure, lack of knowledge, 3rd party involvement) - Acts of Company Employee (direct cause/effect relationship to injured person)

4.3 Thermo Fisher Scientific’s safety program will focus on all these causes, but will not blame nor otherwise penalize an injured employee.

4.4 Only injuries in the Acts of Company Employee category will be counted towards the safety goal program.

5.0 Which Injuries to Count? 5.1 Many safety programs focus too much on all injuries or the equivalent of the US OSHA “recordable injury" type (summary in Appendix D, full document on ThermoFisher.NET). However, some of these injuries – although occurring in the workplace – do not allow proper assessment of any safety program.

5.2 For this reason the following injuries should not count towards the safety goals: - Injuries later determined to not be work related, including illnesses mistakenly attributed to workplace conditions or cases of outright fraud. - Pre-exiting conditions where an employee has an acknowledged issue – such as a previous back injury – who then suffers a reoccurrence of the injury. - Prescription medications given prophylactically when the injury does not require them. An example is prescription eye drops to ward off infection when a foreign body washed out of the eye, and no infection is present or indicated. - Dermatitis, assuming proper gloves or other protective equipment was used properly. Dermatitis is in many cases related to individual factors such as skin sensitivity, exposures outside the facility, and even medications a person is taking. Safety Policy Thermo Fisher Scientific

- Diagnosis of a hearing loss from historic exposures, assuming a proper noise control program is currently in place. Hearing loss is usually the result of exposures from 5, 10 or more years in the past. - Lung diseases from historic exposures, assuming proper ventilation/respirator use and industrial hygiene sampling documenting low exposures. For example, if a person were diagnosed with silicosis from exposures in the facility 23 years ago, this would not be counted against a safety program goal.

6.0 Factors to Consider in Goal-Setting 6.1 There are several factors to consider in setting a safety program goal, and these are described below. It is suggested that all of these be considered in the aggregate for safety program goals: - Incidence Rates as defined in the PPI Keys - Incidence Rates as defined by the BLS for a specific industry - DART or Number of Lost Workdays incidence rate - Worker’s Compensation Experience MOD (US) / Loss Ratio (non-US) - Injury average cost in dollars/claim or dollars/man-hours - Location’s safety rating from Risk Management

6.2 The rationale for including all of these is that they factor in all aspects of injuries related to severity and cost, as well as overall safety score.

7.0 Safety/Health PPI Keys Incidence Rates 7.1 The Safety/Health PPI Keys represent a good overview where evaluations can be efficiently accomplished by teams or individuals.

7.2 The Incidence Rates are based on key business metrics (KBM) which are described in detail in Appendix B. These are summarized as follows: Level 1 = <1.00 x 3.0 = <3.0 (score extrapolated) Level 2 = <0.85 x 3.0 = <2.5 Level 3 = <0.65 x 3.0 = <2.0 Level 4 = <0.50 x 3.0 = <1.5 Level 5 = <0.30 x 3.0 = <1.0 Safety Policy Thermo Fisher Scientific

8.0 Bureau of Labor Statistics 8.1 A more specific way to partially evaluate a safety program’s overall effectiveness is to use the data from the US Bureau of Labor statistics - http://www.bls.gov/ - which includes injury and accident statistics. The data is listed according to a business’ NAICS code (North American Industry Classification System) - http://www.bls.gov/bls/naics.htm - which is a replacement for the older SIC (Standard Industrial Classification) system.

8.2 The NAICS listing is broken down by industries - http://www.census.gov/epcd/naics02/naicod02.htm - and should have a category for each business within Thermo Fisher Scientific.

8.3 The limitation here is that the injury data and industry classifications are based on the US OSHA (Occupational Safety & Health Administration) definition of a recordable injury, and the NAICS are listings for North America only. However, the criteria for determining an “OSHA-Recordable” injury is well defined and available on the Thermo Fisher Scientific Intranet, and the NAICS codes do appear to have a counterpart to all businesses within Thermo Fisher Scientific.

8.4 as shown in Appendix C, a key goal should be to evaluate the incident rate as a fraction of the BLS Incident rate for same or similar industrial NAICS code: Level 1 = <1.00 x BLS Incident Rate Level 2 = <0.85 x BLS Incident Rate Level 3 = <0.65 x BLS Incident Rate Level 4 = <0.50 x BLS Incident Rate Level 5 = <0.30 x BLS Incident Rate

8.5 This compares favorably with some Divisions Safety & Health program that use the “Operational Excellence Keys” above, although an exact match between the various Levels 1-5 goals is not directly possible due to how the goals were originally developed. Based on the goals chosen the original value rate of 3 has been extrapolated. Level 1 = <1.00 x 3.0 = <3.0 (extrapolated) Level 2 = <0.85 x 3.0 = <2.5 (2.55 actual value) Level 3 = <0.65 x 3.0 = <2.0 (1.95 actual value) Level 4 = <0.50 x 3.0 = <1.5 (1.50 actual value) Level 5 = <0.30 x 3.0 = <1.0 (0.90 actual value) Safety Policy Thermo Fisher Scientific

9.0 Incidence Rates 9.1 Incidence Rates are often cited as a goal in safety program

9.2 However, it is sometimes unclear as to whether these incidence rates refer to: - Total Cases Incidence Rate; - Lost Workday Cases Incidence Rate; - DART (Days Away, Restricted, Transferred) Incidence Rate; or - Number of Lost Workdays Incidence Rate.

9.3 Of the rates above, it is preferable to use either one or both of DART and Number of Lost Workdays Incidence Rates. As we have acknowledged, one cannot prevent all injuries, and from time to time under proper program stewardship minor injuries will occur. However, “minor injury” implies the injury is not severe and the employee loses no time from work, and is able to do their regular job.

9.4 It is also important to note that when a facility has a very low incidence rate and/or a very small population, it only takes one serious injury to make calculate rate increase dramatically. For this reason total cases and lost workday cases do not necessarily tell the whole picture.

9.5 These are all described in Appendix A, and are also on ThermoFisher.NET.

10.0 Workers’ Compensation Experience MOD 10.1 The US Workers’ Compensation Experience MOD Rate is an important number, as it directly sets the insurance premium a company pays.

10.2 Very simply stated, the Experience MOD is a representation of how well you are controlling injury costs, compared to others in your industry. A MOD of unity or 1.0 means your costs are average for your industry; anything below unity represents how much lower your injury cost are, and by inference the effectiveness of your safety program.

10.3 Thermo Electron’s current MOD is 0.74 for all of the US, meaning we are 26% better than our peers. The MOD score is also an asymptotic curve, it is very difficult to get below 0.5 as a rate. Note that some states with their own Workers Compensation program (such as Ohio) do not factor into this MOD; these states do have their own MOD rate. Other states such as Pennsylvania are required by the NCCI (National Council on Compensation Insurance) to calculate their MOD individually. Current MOD Safety Policy Thermo Fisher Scientific

rates are listed in Appendix C. This will be updated soon with a combined MOD for the new entity Thermo Fisher Scientific.

10.4 Note that for non-US locations there is no MOD rate; however Risk management can provide Loss Ratios through our foreign brokers that will provide essentially equivalent data.

10.5 MOD rates are also calculated on a 3-year average, so that a dramatic change in accidents up or down for a short period of time does not increase MOD rate by a large factor. For this reason a goal of reducing the MOD 0.1 or 0.2 should be the goal for a safety program to achieve.

11.0 Cost of a Work-Related Injury 11.1 The average cost of a work-related injury also tells a story, in that as described earlier with a good safety program with thorough hazard evaluation, injuries should be mitigatable.

11.2 For example, from a “cost of safety” standpoint, consider these two locations: - Location A had 12 incidents meeting the definition of a US OSHA-recordable injury last year; however these injuries were very minor and resulted in no lost time, no light duty and cost the company averaged about $200 per claim. - Location B had a single serious eye injury that resulted in 40 workdays lost and cost $253,000 in Workers’ Compensation claims.

11.3 It is the injuries of the type in Location B that are more indicative of shortcomings in a safety program. Granted 12 minor incidents must be investigated, but it is the large individual serious or catastrophic losses that must always be prevented.

11.4 One nice benefit of using this benchmark is it provides a way to help mitigate injury-related costs. One of the most important goals after any injury is to get the employee back to work as soon as possible, even light-duty or partial workdays are better than nothing. Using this as a program goal will encourage an injured employee – with medical authority approval – to return to work as soon as they feel up to it.

11.5 A location can take their last two years’ total work-related injuries and claims dollars and come up with a dollars/claim ratio or claim dollars/man-hours worked ratio. The safety goal would be a limit of the increase, and a corresponding benefit related to average claims’ cost decrease. Risk Management can provides these claim totals. Safety Policy Thermo Fisher Scientific

12.0 Risk Management Safety Score 12.1 The location’s safety score from Risk Management can also be used as part of the grading system for a safety program. The scoring is a two-tiered rating summarizing the overall safety score of a location as well as the overall safety risk at that location.

12.2 The safety score is broken down to – in decreasing order – “Excellent”, “Good”, “Fair” and “Poor” (descriptions found in Appendix E). There is also a rating of the overall safety risk for a location: “High”, “Moderate”, Low”. Note that this risk is an intra- Thermo Fisher Scientific rating, and our current businesses with a “high” risk rating are nowhere near the hazard of a place like a steel mill or shipyard.

12.3 The following gradings are considered to be acceptable to Risk Management; as part of a Divisions safety scoring matrix. The higher score (e.g. “Excellent” vs “Good” for a “High” risk location) in a given safety risk can be given more weight. Safety Score Safety Risk Excellent High Good High Excellent Moderate Good Moderate Excellent Low Good Low Fair Low

12.4 The score is located on ThermoFisher.NET under Departments->Legal->Risk Management. Note that in some cases very small, low risk locations have been visited infrequently. Safety Policy Thermo Fisher Scientific

Appendix A

Incidence Rate Calculations

Total Cases Incidence Rate = (Number of Recordable Injury and Illness Cases / [Total Hours Worked) X 200,000]

Number of Lost Workday Cases Incidence Rate = (Number of Lost Workday Cases/ Total Hours Worked) X 200,000

Days Away, Restricted, Transferred (DART) Cases Incidence Rate = ((Number of Lost Workday Cases + No. of Restricted, Transferred Workday Cases) / Total Hours) X 200,000

Number of Lost Workdays Incidence Rate = ((Number of Lost Workdays + Number of Restricted Workdays) / Total Hours Worked) X 200,000 Safety Policy Thermo Fisher Scientific

Appendix B

PPI Safety/Health Keys

From current PPI Safety/Health Keys; note as detailed in Section 8.0 a Division can use the NAICS injury rates for the specific industry.

LEVEL 1 KBM20 Safety Performance incident rate for the last six months not listed (3.0 can be used).

LEVEL 2 KBM20 Safety Performance incident rate for the last six months is less then 2.5.

LEVEL 5 KBM20 Safety Performance incident rate for the last six months is less then 1.0. Safety Policy Thermo Fisher Scientific

Appendix C

Bureau of Labor Statistics Data

US Bureau of Labor statistics - http://www.bls.gov/ - includes injury and accident statistics.

The data is listed according to a business’ NAICS code (North American Industry Classification System) - http://www.bls.gov/bls/naics.htm

The NAICS listing is broken down by industries - http://www.census.gov/epcd/naics02/naicod02.htm - and should have a category for each business within Thermo Electron.

For example, suppose one wanted to evaluate a Laboratory Equipment Division facility’s Incident Rate? From http://www.census.gov/epcd/naics02/naicod02.htm we would look up and see that the best match for LED analytical instrument manufacturing would be:

339111 Laboratory apparatus and furniture manufacturing This U.S. industry comprises establishments primarily engaged in manufacturing laboratory apparatus and laboratory and hospital furniture (except dental). Examples of products made by these establishments are hospital beds, operating room tables, laboratory balances and scales, furnaces, ovens, centrifuges, cabinets, cases, benches, tables, and stools.

The actual statistics can be found in the Injuries, Illnesses, and Fatalities (IIF) program - http://www.bls.gov/iif/home.htm - that provides data on illnesses and injuries and data on work-related fatalities. One caveat here is that the data usually lags about 1 year, so if you are looking at a facility’s Incident Rate for calendar 2005 you would have to compare it to date from calendar 2004. Safety Policy Thermo Fisher Scientific

Using the NAICS number above for LED manufacturing - 339111 Laboratory apparatus and furniture manufacturing – you can look up the following related to OSHA recordable accident case Incident rates (data from 2004, truncated to only show “Recordable Incident rate).

TABLE 1. Incidence rates(1) of nonfatal occupational injuries and illnesses by industry and case types, 2004

The BLS notes include information on how the Incident Rate is calculated:

1 The incidence rates represent the number of injuries and illnesses per 100 full-time workers and were calculated as: (N/EH) x 200,000, where

N = number of injuries and illnesses EH = total hours worked by all employees during the calendar year 200,000 = base for 100 equivalent full-time workers (working 40 hours per week, 50 weeks per year)

2 Totals include data for industries not shown separately. 3 North American Industry Classification System -- United States, 2002 4 Employment is expressed as an annual average and is derived primarily from the BLS- Quarterly Census of Employment and Wages (QCEW) program. 5 Days-away-from-work cases include those that result in days away from work with or without job transfer or restriction. 6 Excludes farms with fewer than 11 employees.

A key goal should be to evaluate the incident rate as a fraction of the BLS Incident rate for same or similar industrial NAIC code. Level 1 = <1.00 x BLS Incident Rate Level 2 = <0.85 x BLS Incident Rate Level 3 = <0.65 x BLS Incident Rate Level 4 = <0.50 x BLS Incident Rate Level 5 = <0.30 x BLS Incident Rate Safety Policy Thermo Fisher Scientific

This compares favorably with some Divisions Safety & Health program that use the “Operational Excellence Keys”, although an exact match between the various Levels 1- 5 goals is not directly possible due to how the goals were originally developed. Based on the goals chosen the original value rate of 3 has been extrapolated. Level 1 = <1.00 x 3.0 = <3.0 (extrapolated) Level 2 = <0.85 x 3.0 = <2.5 (2.55 actual value) Level 3 = <0.65 x 3.0 = <2.0 (1.95 actual value) Level 4 = <0.50 x 3.0 = <1.5 (1.50 actual value) Level 5 = <0.30 x 3.0 = <1.0 (0.90 actual value)

So from the example above – for a business of NAICS number 339111 which encompasses much of LED – the average incident rate is 4.5 for all employees that make up the total hours worked for the year. Level 1 = <1.00 x 4.5 = <4.5 Level 2 = <0.85 x 4.5 = <3.8 Level 3 = <0.65 x 4.5 = <2.9 Level 4 = <0.50 x 4.5 = <2.3 Level 5 = <0.30 x 4.5 = <1.4 Safety Policy Thermo Fisher Scientific

Appendix D

Thermo Electron US Workers Compensation Experience MOD Rates 2005/2006; will be updated soon with combined MOD for Thermo Fisher Scientific.

CA 0.52 PA 0.909 MI 0.84 NJ 0.805 DE 0.945 Interstate 0.74 Safety Policy Thermo Fisher Scientific

Appendix D

US OSHA Recordability Definitions

Recordable Incidents - Injuries An injury is a damage to the body resulting from an event in the work environment, such as a cut, fracture, or amputation. Sprain and strain injuries to muscles joints and connective tissues are classified as injuries when they result from a slip, trip, fall or other similar accidents. Conditions from one-time chemical exposures are injuries.

Injuries that occur while traveling on business are recordable, with the exception of those occurring in a hotel room - this is considered by US OSHA to be a "home away from home" and any injuries that occur in the hotel room are not recordable.

These types of incidents are considered to be recordable:

1) Medical treatment due to a workplace injury or illness, which is anything else other than the "first aid" described later. This includes prescription medication at any dose, or an over-the-counter medication taken at a prescription dose. The following are dosages of over-the-counter (OTC) medication that are considered to be US OSHA-recordable if they are given in response to a work-related injury. - Ibuprofen (Advil™) > 467 mg - Diphenhydramine (Benadryl™) > 50 mg - Naproxen sodium (Aleve™) > 220 mg - Ketoprofen (Orudus KT™) > 25mg 2) If an injury causes an employee to lose consciousness, no matter how brief or how minor the injury, the incident is recordable. This does not apply to a loss of consciousness unrelated to an injury, such a diabetic fainting from low blood sugar. 3) If an employee is unable to perform the duties of a normal work week - or work a full shift - the injury is recordable due to Restricted Work/Motion. 4) Any work-related fatality is recordable.

There are also additional criteria from US OSHA, all of these are recordable: • Injury from sharps contaminated with blood or potentially infectious material; • Case requiring medical removal under the requirements of an OSHA health standard; • Tuberculosis infection after exposure to a known case of active TB in the workplace; • A work-related punctured eardrum, cancer diagnosis, or chronic irreversible disease. Safety Policy Thermo Fisher Scientific

Appendix D US OSHA Recordability Definitions (continued)

Recordable Incidents - Illnesses These types of illnesses may be considered "recordable" if they are work-related. An illness can be defined as an abnormal condition caused by exposure to environmental factors, which may be caused by inhalation, absorption, ingestion or direct contact. This includes all of the following: • skin diseases or disorders are illnesses involving the skin, caused by work exposure to chemicals, plants or other substances. • respiratory conditions are illnesses associated with breathing hazardous biological agents, chemicals, dust, gases, vapors, or fumes at work. • poisoning includes disorders evidenced by abnormal concentrations of toxic substances in blood, other tissues, other bodily fluids, or the breath that are caused by the ingestion or absorption of toxic substances into the body. • occupational hearing loss is where an employee's audiogram reveals a work-related Standard Threshold Shift (STS) in hearing in one or both ears, and employee's total hearing level is 25 db or more above audiometric zero. If a physician determines the hearing loss is not work-related, do not record the case on the OSHA 300 log. • all other illnesses that do not fit into the categories above, such as repetitive motion injuries or cumulative trauma disorders (CTDs). Safety Policy Thermo Fisher Scientific

Not Recordable – First Aid These are all considered to be "first aid" and are not OSHA recordable: • Using a non-prescription medication at non-prescription strength; • Tetanus immunizations • Cleaning, flushing or soaking wounds on the surface of the skin; • Wound coverings such as bandages, band-aids, gauze pads, etc.; • Butterfly bandages, liquid bandages or steri-strips; any usage; • Hot or cold therapy; • Any non-rigid means of support, such as elastic bandages, wraps, (including back belts); • Immobilization device while transporting accident victim (splints, neck collars, back board); • Drilling of a fingernail or toenail to relieve pressure, or draining fluid from a blister; • Using eye patches; • Removing foreign bodies from the eye using only irrigation or a cotton swab; • Removing foreign material from other areas by irrigation, tweezers, or simple means; • Using finger guards; • Massages (physical therapy or chiropractic treatment are considered medical treatment); • Drinking fluids for relief of heat stress; • Reddening of skin (erythema) as opposed to diagnosed 1st degree burn; • Visits to a physician or other licensed health care professional solely for observation; • Diagnostic procedures (ex. X-rays) including prescription medications solely for diagnostic purposes (e.g., eye drops to dilate pupils). Safety Policy Thermo Fisher Scientific

Appendix E

Safety Rating and Safety Risk Rating Criteria

Safety Rating Excellent; all program elements in place; only a few minor deficiencies. Good; almost all program elements, may be some minor deficiencies. Fair; minor to moderate program element gaps; one or two deficiencies. Poor; major gaps in programs or significant deficiencies.

The Safety Rating Criteria rankings above are based on an average aggregate score of safety-related program implementations and effectiveness. The scores range from a maximum of Excellent down to a low of Poor. The scores have a range for each rating: the scores and description are listed below; these ratings are applied to separate programs (such as hazardous substance control and first aid programs). An aggregate score is computed from the numerical average, discounting programs that are not applicable (n/a).

Safety Risk Rating High; significant risks related to processes and/or materials. Moderate; medium risks related to processes and/or materials. Low; very little risk related to processes and/or materials.

The Safety Risk Rating above takes into account the hazards endemic to the operations, procedures and chemicals or materials used at a facility, including hazardous substances, physical exposures, manual handling exposures and ergonomics. It can also be used to characterize a situation where an overwhelming hazard puts a facility at an increased risk.