On October 11, 2018, OSHA announced that it is reversing the safety incentive programs guidelines issued during the Obama administration. What does this mean for employers? It means that employers can offer incentives to employees, such as pizza parties, cash bonuses, or other prizes, as incentives for days without reported injuries or accidents in the workplace. This also means that employers may conduct post-accident drug testing, at least if it is conducted consistently on any employee whose conduct may have contributed to the accident, and not merely the employee who was injured in an accident. According to OSHA, it believes that many employers who implement safety incentive programs and/or conduct post-incident drug testing do so to promote workplace safety and health. In addition, evidence that the employer consistently enforces legitimate work rules (whether or not an injury or illness is reported) would demonstrate that the employer is serious about creating a culture of safety, not just the appearance of reducing rates.
OSHA states that incentive programs can be an important tool to promote workplace safety and health. One type of incentive program rewards workers for reporting near-misses or hazards, and encourages involvement in a safety and health management system. Positive action taken under this type of program is always permissible under 29 C.F.R. § 1904.35(b)(1)(iv). Another type of incentive program is rate-based and focuses on reducing the number of reported injuries and illnesses. This type of program typically rewards employees with a prize or bonus at the end of an injury-free month or evaluates managers based on their work unit’s lack of injuries. Rate-based incentive programs are also permissible under § 1904.35(b)(1)(iv) as long as they are not implemented in a manner that discourages reporting. Thus, if an employer takes a negative action against an employee under a rate-based incentive program, such as withholding a prize or bonus because of a reported injury, OSHA would not cite the employer under § 1904.35(b)(1)(iv) as long as the employer has implemented adequate precautions to ensure that employees feel free to report an injury or illness.
A statement that employees are encouraged to report and will not face retaliation for reporting may not, by itself, be adequate to ensure that employees actually feel free to report, particularly when the consequence for reporting will be a lost opportunity to receive a substantial reward. An employer could avoid any inadvertent deterrent effects of a rate-based incentive program by taking positive steps to create a workplace culture that emphasizes safety, not just rates. For example, any inadvertent deterrent effect of a rate-based incentive program on employee reporting would likely be counterbalanced if the employer also implements elements such as:
- an incentive program that rewards employees for identifying unsafe conditions in the workplace;
- a training program for all employees to reinforce reporting rights and responsibilities and emphasizes the employer’s non-retaliation policy;
- a mechanism for accurately evaluating employees’ willingness to report injuries and illnesses.
Safety incentive programs have been criticized by some as creating a disincentive for employees and supervisors to report workplace accidents, injuries, near misses or other incidents. No one wants to be that guy who reports the incident that keeps his whole department from getting a prize or party. Another concern is that failure to report incidents, even minor incidents and near misses, defeats the whole purpose of a proactive safety program, which is to generate as much information as possible on trends so that steps can be taken to curb future problems. Thus, the Obama administration frowned on such programs and discouraged them.
Now that the restrictions on safety incentive programs are relaxed, companies should use care in implementing such programs so that they do not discourage employees from reporting legitimate safety issues. Before implementing any kind of safety incentive program, a company should have a comprehensive safety program in place that creates a culture of safety. A safety incentive program is just one small piece of that comprehensive program.
The new guidance does not solve all concerns, as its use of "reasonable" as the benchmark is somewhat vague, and a future administration can change the guidance quite easily as the regulation itself is still in place. In any event, employers currently can be much more confident in implementing workplace safety incentive programs and post-accident drug testing.