• Employer Incentive and Disincentive Programs
  • May 11, 2012 | Author: Dudley F. Woody
  • Law Firm: Woods Rogers PLC - Roanoke Office
  • It’s long been a subject of debate among safety consultants - do safety incentive programs reduce injuries, or do they encourage workers not to report when they get hurt so they can win the prize?
    According to a March 12, 2012, Guidance Memorandum entitled Employer Safety Incentive and Disincentive Policies and Practices issued by the agency to its Regional Administrators and Whistleblower Program Managers, employers who reward employees through certain kinds of safety incentive programs for the absence, or limited number, of workplace injuries might be violating OSHA's anti-retaliation and recordkeeping rules.  While the Obama Administration has been highly critical of employer safety bonus and incentive programs, OSHA now argues that these programs could themselves violate both anti-retaliation and recordkeeping laws...

    In the memo, the agency challenges rules that impose discipline for (a) injuries, or (b) safety rule violations if the employer learns of the unsafe behavior as a result of the employee’s report of an injury.  The agency expresses concern with rules that impose discipline for the failure to report an injury within a specified time period without the employer first carefully considering potential justifications for the employee's failure to timely report, such as the employee initially thinking the injury was not serious enough to report.  OSHA contends these types of rules and programs effectively discourage employees from reporting injuries and could violate Section 11(c) of OSHA, which prohibits employers from discriminating against employees "in any manner" for exercising a protected right under the statute, including reporting an injury.  In the case of safety incentive programs, the memo specifically warns that "if the incentive involved is of sufficient magnitude that failure to receive it might have dissuaded reasonable workers from reporting injuries," then the rule or program not only could violate OSHA whistleblower protections but could also lead the employer to fail to record injuries as required by OSHA regulations.

    There are several types of workplace policies and practices that could discourage reporting and could constitute unlawful discrimination and a violation of section 11(c) and other whistleblower protection statutes.  Some of these policies and practices may also violate OSHA's recordkeeping regulations, particularly the requirement to ensure that employees have a way to report work-related injuries and illnesses. 29 C.F.R. 1904.35(b)(1).  OSHA has also observed that the potential for unlawful discrimination under all of these policies may increase when management or supervisory bonuses are linked to lower reported injury rates.  OSHA states it appreciates employers using safety as a key management metric, but they also clearly enunciate that the Agency cannot condone a program that encourages discrimination against workers who report injuries.

    The following list, found in the memorandum, contains some of the most common policies which are potentially discriminatory to OSHA:

    1. OSHA has received reports of employers who have a policy of taking disciplinary action against employees who are injured on the job, regardless of the circumstances surrounding the injury. Reporting an injury is always a protected activity. OSHA views discipline imposed under such a policy against an employee who reports an injury as a direct violation of section 11(c) or the Federal railroad Safety Act (FRSA). In other words, an employer's policy to discipline all employees who are injured, regardless of fault, is not a legitimate nondiscriminatory reason that an employer may advance to justify adverse action against an employee who reports an injury. In addition, such a policy is inconsistent with the employer's obligation to establish a way for employees to report injuries under 29 CFR 1904.35(b), and where it is encountered, a referral for a recordkeeping investigation should be made. Where OSHA encounters such conduct by a railroad carrier, or a contractor or subcontractor of a railroad carrier, a referral to the Federal Railroad Administration (FRA), which may conduct a recordkeeping investigation, may also be appropriate.
    2. Taking disciplinary action against an employee who reports an injury or illness, and the stated reason is that the employee has violated an employer rule about the time or manner for reporting injuries and illnesses.  Such cases deserve careful scrutiny. Because the act of reporting the injury directly results in discipline, there is a clear potential for violating section 11(c) or FRSA. OSHA recognizes that employers have a legitimate interest in establishing procedures for receiving and responding to reports of injuries. To be consistent with the statute, however, such procedures must be reasonable and may not unduly burden the employee's right and ability to report. For example, the rules cannot penalize workers who do not realize immediately that their injuries are serious enough to report, or even that they are injured at all. Nor may enforcement of such rules be used as a pretext for discrimination. In investigating such cases, factors such as the following may be considered: whether the employee's deviation from the procedure was minor or extensive, inadvertent or deliberate, whether the employee had a reasonable basis for acting as he or she did, whether the employer can show a substantial interest in the rule and its enforcement, and whether the discipline imposed appears disproportionate to the asserted interest. Again, where the employer's reporting requirements are unreasonable, unduly burdensome, or enforced with unjustifiably harsh sanctions, they may result in inaccurate injury records, and a referral for a recordkeeping investigation should be made.
    3. Taking disciplinary action against an employee who reports an injury because the injury resulted from violation of a safety rule.  OSHA encourages employers to maintain and enforce legitimate workplace safety rules in order to eliminate or reduce workplace hazards and prevent injuries from occurring.  In some cases, however, an employer may attempt to use a work rule as a pretext for discrimination against a worker who reports an injury. A careful investigation is needed. Several circumstances are relevant. Does the employer monitor for compliance with the work rule in the absence of an injury? Does the employer consistently impose equivalent discipline against employees who violate the work rule in the absence of an injury? The nature of the rule cited by the employer should also be considered. Vague rules, such as a requirement that employees "maintain situational awareness" or "work carefully" may be manipulated and used as a pretext for unlawful discrimination. Therefore, where such general rules are involved, the investigation must include an especially careful examination of whether and how the employer applies the rule in situations that do not involve an employee injury. Enforcing a rule more stringently against injured employees than noninjured employees may suggest that the rule is a pretext for discrimination against an injured employee in violation of section 11(c) or FRSA.
    4. Maintenance of policies that intentionally or unintentionally provide employees with an incentive not to report an injury.  For example, an employer might enter all employees who have not been injured in the previous year in a drawing to win a prize, or a team of employees might be awarded a bonus if no one from the team is injured over some period of time. Such programs might be well-intentioned efforts by employers to encourage their workers to use safe practices. However, there are better ways to encourage safe work practices, such as incentives that promote worker participation in safety-related activities, such as identifying hazards or participating in investigations of injuries, incidents or "near misses". OSHA's VPP Guidance materials refer to a number of positive incentives, including providing tee shirts to workers serving on safety and health committees; offering modest rewards for suggesting ways to strengthen safety and health; or throwing a recognition party at the successful completion of company-wide safety and health training. See Revised Policy Memo #5 - Further Improvements to VPP (June 29, 2011).

    The Guidance Memorandum issued by OSHA is intended to assist field compliance

    officers and whistleblower investigative staff.  We can expect there will be a lawsuit filed over the memorandum.  The lawsuit will address the content of the memorandum and OSHA’s attempt to impose enforcement through “memorandum” and “guidance” rather than rulemaking.  Legislation introduced in the 112th Congress, the Regulatory Accountability Act Of 2011, H.R. 3010, would require OSHA to treat “guidance” documents like rulemaking and follow a formal process including a notice and comment period.  The proposed legislation states that agency guidance as currently created “may not be relied upon by an agency as legal grounds for agency action”.

    Reporting a work-related injury or illness is a core employee right, and retaliating against a worker for reporting an injury or illness is illegal discrimination under section 11(c).  During a recent Department of Labor budget hearing, Labor Secretary Hilda Solis said she would review this memo, but assured House committee members that OSHA does not intend to issue citations for employer safety programs in general.  Regardless of the Labor Secretary’s assurance that OSHA will not penalize employers for maintaining safety policies, the new memo is a reminder that workplace policies and incentive programs must be carefully reviewed and consistently enforced.