OSHA's guidance on incentive plans draws mixed reaction

April 8th, 2016 by Dakota Software Staff Industry News

The Occupational Safety and Health Administration recently issued new guidance on the use of workplace safety incentive programs as part of a larger series of updates to its Safety and Health Program Management Guidelines. The information shared by OSHA related to safety compliance and incentive programs won't directly affect businesses in terms of inspections and associated penalties and fines, as it's viewed by the federal regulator as suggestions and not concrete rules. OSHA's decision to take a position against these programs is a clear indication of the agency's stance, however, and could foreshadow additional actions in the future.

OSHA's position against the use of workplace safety incentives has been in place since 2012, according to industry news source Business Insurance. Richard Fairfax, then the deputy assistant secretary of labor, issued a memo that discussed perceived issues with various workplace practices and programs, including some centered around employee safety. The basic argument behind OSHA's reasoning is incentive programs reward employees based on the the number of work-related injuries and illnesses reported over a given period of time. This structure can encourage those workers to avoid reporting their ailments, even those caused by forces outside their control, because they would miss out on the payoff received when a safety goal is reached.

OHSA's SHPMG and what companies can do
Law firm Vorys, Sater, Seymour and Pease, LLP, addressed OSHA's position on safety incentive program rules in an article before the updated SHPMG were released. The firm discussed the possibility of binding OSHA rules related to these programs as a potential factor in the future, although it noted that outcome was by no means a certainty.

The article also noted these employer-developed initiatives can lead to two separate and serious issues in the eyes of the administration. If businesses only offer rewards to employees who avoided injury or make awards based on the safety record of groups like teams, shifts or departments, such approaches can discourage the reporting of a single injury. The other issue involves OSHA-required recordkeeping. If incentives exist for managers separately from regular workers, the potential for underreporting - and violating OSHA's recordkeeping requirements - can arise and potentially influence decision-making at higher levels.

The current atmosphere related to these programs is one lacking much in the way of concrete rules and limits. Incentive plans themselves can't be cited, but programs that OSHA deems problematic in terms of interfering with reporting can be noted by its inspectors. This leaves a gray area in place for many businesses and can cause long-term confusion. Business Insurance pointed out the stance taken by OSHA encouraged some businesses to halt their incentive-based employee health and safety initiatives in recent years to follow the regulator's guidance. This approach is effective in combating potential future fines and penalties, but it also removes the benefits realized through those initiatives.

W.E. Scott, director of the nonprofit National Safety Council, told Business Insurance that companies should consider altering and improving their incentive-based safety programs instead of completely abandoning them. He suggested focusing on different metrics and measurements of employee and management actions that sidestep areas OSHA may view as discouraging reporting efforts. Some examples include measuring and rewarding the reporting of near-miss incidents and proactive maintenance actions that occur without the direction of EHS specialists and other managers. Business Insurance also cited an example program developed by Northeastern University in Boston, which used worksite safety audits as a way to guide managerial action and provide scoring methods for potential rewards.