The Occupational Safety and Health Administration (OSHA) does not currently have regulations related to safety incentive programs or post-incident drug testing policies. It has nonetheless opined on the validity of certain types of safety incentive programs and post-incident drug testing policies in order to advance key policy initiatives, namely: to improve the accuracy of injury and illness recordkeeping statistics; and to incentivize employers to rely on leading rather than lagging indicators to measure safety performance.   

Lagging and leading indicators are terms in the safety field to measure an employer’s overall safety record. Lagging indicators measure the outcome of undesirable events that have already happened, such as work-related accidents. Leading indicators, on the other hand, are safety metrics that precede undesirable events, such as reporting hazards, so an incident may be avoided. Employers often implement safety incentive programs based on leading and lagging indicators. For example, an employer pay its employees a monetary bonus or may provide non-monetary prize, such as a pizza party, if employees report hazards (i.e., issues identified during a Gemba walk), or if the employees do not sustain any injuries during a reporting period (i.e., a rate-based incentive program).

OSHA is concerned employees will be discouraged from reporting an incident if it will affect their incentive pay.   

During the Obama administration, OSHA took several steps to address safety incentive programs and post-incident drug testing policies:  
On Sept. 28, 2010, OSHA commenced a National Emphasis Program (NEP), Directive on its Injury and Illness Recordkeeping National Emphasis Program, which remained in effect for two years. Under this NEP, OSHA investigated companies with policies that may discourage accurate recordkeeping, including safety incentive policies based exclusively on lagging indicators. 

In June 2011, OSHA issued a policy memorandum under its Voluntary Protection Program (VPP): Revised VPP Policy Memorandum #5: Further Improvements to the Voluntary Protection Programs (VPP Policy Memo). This VPP Policy Memo sets forth specific safety incentive program criteria for OSHA’s VPP participants to address OSHA’s concern that, “(w)hen an incentive discourages worker reporting or, in particularly extreme cases, disciplines workers for reporting injuries or hazards, problems remain concealed, investigations do not take place, nothing is learned or corrected, and workers remain exposed to harm.”  

On March 12, 2012, OSHA issued a memorandum: Employer Safety Incentive and Disincentive Policies and Practices which expressed concern with safety incentive programs that “unintentionally or intentionally provide employees an incentive not to report injuries.” 

On May 12, 2016, OSHA adopted a new regulation: Improve Tracking of Workplace Injuries and Illnesses, in which OSHA created a new provision under its recordkeeping standard, section 1904.35(b)(1)(iv), that expressly bars an employer from retaliating or discriminating against any employee for reporting a work-related injury or illness. While the new regulation did not expressly place any restrictions on safety incentive programs or post-incident drug testing policies, OSHA explained in the preamble to the final rule certain safety incentive programs and post-incident drug testing policies would likely deter reporting. In October 2016, OSHA issued several guidance documents, stating that it would enforce section 1904.35(b)(1)(iv) consistent with the preamble.  

Under the new administration, OSHA is taking a different approach. In October, OSHA issued an interpretation “clarifying” its position. To avoid any uncertainty, OSHA expressly stated section 1904.35(b)(1)(iv) does not prohibit safety incentive programs or post-incident drug testing. OSHA elaborated that safety incentive programs or post-incident drug tests would only violate the standard “if the employer took the action to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health.” In this case, the employer’s motive must be proven.

OSHA explained safety incentive programs that reward workers based on leading indicators is always permissible. OSHA clarified, however, that a program that rewards workers based on lagging indicators is also permissible, so long as the program is not implemented in a manner that discourages reporting. OSHA acknowledged that a rate-based incentive program may have an inadvertent effect of deterring employees from properly reporting an injury because the employees may not want to lose an opportunity to receive a reward. OSHA stated that any inadvertent deterrent effect of a rate-based program would likely be counterbalanced if the employer adopts positive elements, such as:
•    Rewarding employees for identifying unsafe conditions.
•    Training employees to reinforce reporting rights and responsibilities and emphasizes the employer’s non-retaliation policy.
•    Implementing a mechanism for accurately evaluating employees’ willingness to report injuries and illnesses.

OSHA further stated most workplace drug testing is permitted, including:
•    Random drug testing.
•    Testing unrelated to the reporting of a work-related injury.
•    Testing under workers’ compensation laws.
•    Testing under federal law, such as a Department of Transportation rule.
•    Testing to evaluate the root cause of a workplace incident, so long as the employer tests all employees whose conduct could have contributed to the incident,.

While OSHA referred to this new interpretation as a clarification, it is really an about-face of its previously articulated views on safety-incentive programs and post-incident drug testing policies. OSHA expressly stated this new interpretation supersedes any inconsistent interpretative documents OSHA previously issued. In light of this interpretation, employers may feel more comfortable implementing safety incentive programs and post-incident drug testing policies, but should still include the necessary protections to ensure that employees are not deterred from reporting work-related injuries and illnesses.

Click here to see this story as it appears in the December 2018 issue of Modern Casting.