Confusion About Safety Incentive Plans – Legal or Illegal?

Questions about Safety Incentive Plans have resurfaced in a number of discussions and blogs because of OSHA’s steadily increasing rhetoric against safety incentive programs that rely on injury data and/or whose incentives OSHA deems to be of sufficient magnitude to perhaps influence an employee to not report an injury.

I have linked an April 9, 2012 Article I wrote in EHS Magazine after the March 12, 2012 Fairfax Memo setting out OSHA’s concerns about incentive programs, and about disciplining employees for unsafe behavior or failure to timely report an injury.

After 9 months, months, here are some updated observations:

• OSHA does not have a standard or law expressly prohibiting incentive programs based on employee injury experience (GAO Report – Better OSHA Guidance Needed On Safety Incentive Programs).
• OSHA would like to bar such programs, but so far has had to rely on more oblique “hammers.”
• As examples, incentive programs relying on recordables may block VPP approval.
• Such plans may be cited in a Whistleblower Claim as further evidence that the employer is taking adverse action against employees who report injuries.  See examples of such OSHA retaliation on OSHA’s website.
• However, OSHA has not yet obtained a Whistleblower ruling that says that such a program is a violation simply because the Plan supposedly discourages or retaliates against employees for reporting recordable injuries.
• Thus, there is no “OSHA-approved” Plan or formula.
OSHA’s view is that employers routinely (a) expressly fabricates a discharge for safety violations to punish employees for reporting a recordable injury; (b) discipline employees for unsafe behavior only when an employee is injured; or (c) unintentionally discourages employee reporting by denying an incentive to an entire group because one employee gets hurt.

Once you understand these general principles, you can see generally what OSHA dislikes in an Incentive Program.

OSHA’s concern raises a much larger issue for employers, and one on which OSHA, employers, employees, and unions can agree . . . that rewarding a lack of recordable injuries is an ineffectual way to drive a safety program. We will discuss this need to incentivize “leading” not “lagging” (injuries) indicators later this month. Many of you know that we recently surveyed data from over 100 contractors ranging in size from modest to multi-billion dollars in revenue. In the coming weeks, I will share the types of “leading” indicators those employers believe foster engaged employees and a safe workplace.

Meanwhile, you, the employer, should incentivize behaviors that avoid injuries. Recordables should be “a” factor. CEO’s, customers and others love numbers, and are unlikely to trust an incentive system that does not at least include recordables. Therefore, both to comply with the spirit of OSHA guidance and to more effectively drive safety…

• Include factors in addition to reported injuries;
• The more factors, the better, so that reported injuries are not the primary determinant of incentives.
• Use these programs to reinforce safety actions you can track by employees, supervisors, plants and job sites.
Rich Fairfax’s Memo also focuses on other behaviors that suggest retaliation under 11(c) or other whistleblower laws and beware of these factual situations:
• Only disciplining employees for unsafe behavior after injuries;
– Which means that employers must document safety-related discipline where no injury occurred.
• OSHA absolutely hates and will closely scrutinize any discipline for failure to timely report an injury; and
• No matter what your policies state, OSHA will look to see if discipline appears to disproportionately affect employees reporting injuries.

About mavity2012

I am a Senior Partner operating out of the Atlanta office of Fisher & Phillips LLP, one of the Nation’s oldest and largest management employment and labor firms. My practice is national and keeps me on the road or in one of our 28 offices about 50 percent of the time. I created and co-chair the Firm's Workplace Safety and Catastrophe Management Practice Group. I have almost 29 years of experience as a labor lawyer, but rely even more heavily on the experience I gained in working in my family's various businesses, and through dealing with practical client issues. Employers tell me that they seldom meet an attorney who delivers on his promise to provide practical guidance and to be a business partner. As a result, some executives probably use different terms than “practical” to describe my fellow travelers in the profession. I don't enjoy the luxury of being impractical because I spend much of my time on shop floors and construction sites dealing with safety, union and related issues which are driven by real world processes and the need to protect and get the most out of one's most important business assets ... its employees. That's one of the reasons that I view safety compliance as a way to also manage problem employees, reduce litigation and develop the type of work environment that makes unions unnecessary. Starting out dealing with union-management challenges and a stint in the NLRB have better equipped me to see the interrelationship of legal and workplace factors. I am proud also of my experience at Fisher & Phillips, where providing “practical advice” is second only to legal excellence among the Firm’s values. Our website lists me as having provided counsel for over 225 occasions of union activity, guided unionized companies, and as having managed approximately 450 OSHA fatality cases in construction and general industry, ranging from dust explosions to building collapses, in virtually every state. I have coordinated complex inspections involving multi-employer sites, corporate-wide compliance, and issues involving criminal referral. As a full labor lawyer, I oversee audits of corporate labor, HR, and safety compliance. I have responded to virtually every type of day-to-day workplace inquiry, and have handled cases before the EEOC, OFCCP, NLRB, and numerous other state and federal agencies. At F & P, all of us seek to spot issues and then rely upon attorneys in the Firm who concentrate on those areas. No tunnel vision. I teach or speak around 50 times per year to business associations, bar and professional groups, and to individual businesses. I serve on safety committees at three states’ AGC Chapters, teach at the AGC ASMTC
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