Why Manufacturers Need Audits Now to Reduce COVID-19 Business Risks and Liability Costs


June 5, 2020

Ask any manufacturer what life has been like over the past few months, and most will tell you every day feels like a week. That’s because COVID-19 business risks are bigger than anything most manufacturing executives have ever experienced—with pressure increasing from every direction.

One simple way companies can mitigate their risks is by performing short COVID-19 audits on the plant floor, creating a paper trail that can help keep employees safe while demonstrating compliance and reducing liability risks.

Here we look at the growing threats to manufacturers, two key elements manufacturing executives must manage to survive the crisis and why audits are a critical tool for reducing COVID-19 business risks.

Growing Risk, Liability and Costs

There’s no question that the pandemic has put most manufacturers into crisis mode due to growing risks, liabilities and costs such as:

  • Downtime costs: It can easily cost a manufacturer $2,000 per shift when just one operator fails to come to work. The cost of workers isolated at home for weeks—or people not showing up just because they’re scared of getting sick—adds up quickly. Plant shutdowns have already inflicted multi-million-dollar-losses on many organizations, and any spikes in absenteeism will only add to those costs.
  • Workers’ compensation: California’s Executive Order N-62-20 states that any employee testing positive for COVID-19 within 14 days of working is presumed to have contracted the virus at work. That makes them eligible for workers’ compensation benefits, unless employers can prove they didn’t get sick in the workplace.
  • Legal liability: Companies that can’t prove they’re following OSHA recommendations could leave themselves open to costly lawsuits. Liability costs associated with lawsuits could eclipse downtime costs and extend far beyond the end of the pandemic.

On top of this, manufacturers who are suppliers face additional pressure to maintain production levels from customers whose businesses depend on them.

Two Challenges Manufacturing Execs Must Manage

Manufacturing executives must get a handle on two critical challenges when it comes to COVID-19 business risks: managing fear, and managing health.

Fear in the workforce means employees don’t show up to work, reducing productivity and driving up costs. Unsafe working conditions are directly linked to absenteeism, meaning it’s vitally important for employees to see how seriously leadership takes the health threat.

Getting people to follow new health protocols is the second big challenge. You may have new protocols in place, but if a lawsuit happens in the future, how will you prove your team followed those protocols?

For instance, if you’re taking temperatures, how do you prove it was done every shift? When it comes to cleaning and disinfecting, do you have a record that someone actually checked it was done at the required frequency? How do you build a record of verification that employees are maintaining appropriate spacing on the plant floor and in common areas?

Audits: A Simple Solution for Reducing COVID-19 Business Risks

As manufacturers scramble to manage the crisis, documentation is crucial to reducing risk. Audits are a key piece of that documentation, helping protect employee health while improving legal liability protection in the event of future lawsuits.

Conducting short audits each shift allows companies to:

  • Verify adherence to new protocols
  • Document verification for legal purposes
  • Identify and fix gaps in compliance

Mobile COVID-19 audit software makes the process simpler by allowing team members to complete checklists on a mobile device, documenting verification activities and providing real-time information on hidden problems. This last piece is critical from a liability perspective, as companies will have little defense if it can be shown that the company ignored safety issues.

Legislators have discussed legal protections for companies in the next round of federal relief, but the issue is far from settled. That means companies must document everything, including new health procedures and verification of compliance with them.

Nobody can predict what litigation will arise in the future, making audits essential to documenting and defending your company’s actions. Verifying that enhanced sanitation and distancing procedures are followed is also part of taking care of your people, so you can manage fear and manage health while protecting the business itself.