By Alexis M. Downs and Eric J. Conn
Although OSHA currently has no regulations specifically addressing Safety Incentive Programs, they have recently come under fire by OSHA because the Agency believes that such programs have a chilling effect on workplace injury reporting. Incentive programs have been a serious focus of OSHA’s Director, David Michaels, since he assumed his position early in the Obama Administration.
Dr. Michaels explained that OSHA “strongly disapprove[s] of programs offering workers parties and prizes for not reporting injuries, or bonuses for managers that drive down injury rates, or that discipline workers for reporting an injury.”
Much of the attention has been tied to a report released in April 2012 by the U.S. Government Accountability Office (“GAO”), based on its September 2010 – April 2012 study of workplace safety incentive programs. (GAO-12-329). Both OSHA and the GAO Study draw a distinction between “rate-based programs,” which reward workers for achieving low rates of reported injuries or illnesses, and “behavior-based programs,” which reward workers for certain behaviors such as recommending safety improvements and completing safety training programs. The agencies concluded that rate-based incentive programs have the unintended consequence of discouraging employees from reporting work-related injuries and illnesses.
Despite trumpeting this conclusion to anyone who will listen, the GAO admits, however, that of the 26 studies it reviewed, only six even attempted to evaluate the effect of safety incentive programs on workplace safety, and only two evaluated the effect on employee reporting of injuries and illnesses. To reach the conclusion that rate-based incentive programs discourage workers from reporting injuries and illnesses, the GAO, like OSHA, rely almost entirely on anecdotal evidence gathered from interviews with industry officials and “experts.” Ultimately, the GAO report recommends that OSHA issue clear guidance to employers about the use of incentive programs.
Until OSHA issues a clear statement about its expectations, employers can only refer to a March 12, 2012 memorandum from OSHA’s national office to its field compliance officers. The memorandum points out that incentive programs may violate OSHA’s anti-retaliation provision and Injury and Illness Recordkeeping requirements if the programs discourage employees from reporting injuries, or unfairly impact those who report injuries. According to OSHA, the following potential problems may result from employer safety incentive programs:
- Policies that include disciplinary action against employees who are injured on the job, regardless of fault. Such policies are not considered a legitimate, non-discriminatory reason for taking an adverse action against an employee who reports an injury, in direct violation of § 11(c).
- Disciplinary action for the manner in which an employee reports an injury or illness. Although employers have a legitimate interest in establishing procedures for reporting injuries, the employer’s reporting requirements must not be unreasonable, unduly burdensome, or unjustifiably harsh. Unreasonably strict policies regarding the timing or other manner of reporting.
- Disciplinary action for violation of safety rules that apply disproportionately to injured employees. Employers should be careful to monitor compliance with safety rules in the absence of an injury, and avoid stating rules in vague terms to ensure equal treatment. In other words, employers should enforce their safety programs consistently, and not only when there has been an injury.
- Incentive rewards or bonuses that discourage reporting. According to OSHA, better policies include promoting participation in safety activities, investigations, and training. Incentive programs that disqualify a group of employees from a reward because of an injury to one member of the group are especially suspect because of the perceived pressure it could create to not report injuries.
Employers should take a close look at their safety incentive programs to avoid association with the perceived chilling effects on employee reporting. Despite the lack of evidence supporting the GAO’s conclusions, OSHA may soon be adopting policies and initiating enforcement actions to prevent the use of rate-based incentive programs. To this point, however, despite how vocal the Agency has been about this issue, there has been little related enforcement.
For example, the Directive for the 2½-year long Recordkeeping National Emphasis Program dedicated a lot of ink to incentive programs, directing compliance officers to look out for them during the hundreds of inspections conducted under the program. We did not see, however, any evidence that citations were issued because of incentive programs, or that citations were elevated from Other Than Serious to Willful because of such programs. Likewise, OSHA expressed the position that employers can be in violation of Section 11(c) of the OSH Act (OSHA’s anti-retaliation provision), if a ‘bad’ incentive program is in place that retaliates against or punishes an employee for reporting a work-related injury or illness. But there has been little visible 
activity in that regard either.
The only area where we have really seen incentive programs become an issue for employers to this point, has been in the context of cooperative programs such as OSHA’s Voluntary Protection Program (VPP). When employers are being evaluated for entry into VPP or during re-approval periods, OSHA has scrutinized incentive programs, and required the applicants to strike the programs before admission or re-approval would be granted. (Revised VPP Policy Memorandum #5, Further Improvements to the Voluntary Protection Programs, April 22, 2011).