BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

OSHA puts incentive plans under scrutiny

Employers vexed by agency's stance

OSHA puts incentive plans under scrutiny

A federal agency's strong stance against using incentives in workplace safety programs has baffled advocates, although some say employee incentives can be crafted to avoid violating safety rules while increasing their effectiveness.

The Occupational Safety and Health Administration's stance dates back to the March 2012 release of what's known as the “Fairfax memo.” Drafted by former Deputy Assistant Secretary of Labor Richard Fairfax, the memo outlined “problematic” policies and practices such as incentive programs that could discourage employees from reporting workplace injuries and illnesses in violation of federal health and safety and whistleblower laws.

OSHA reiterated that stance late last year in a draft update to its safety and health program management guidelines. Among comments on the proposal made since November, Cincinnati-based workers comp insurer Great American Insurance Co. rebuked OSHA for its resistance to employee incentive programs.

“OSHA has completely ignored the benefits of these programs for years,” said Lawrence Halprin, a partner at Keller & Heckman L.L.P. in Washington and counsel for Great American.

OSHA has not adopted a standard or regulation that bans employee incentive programs outright, but some companies have responded to the guidance by halting these programs.

“Those employers who are aware of the Fairfax memo and this relatively new enforcement posture by OSHA, who are not relatively sophisticated, have simply decided against having safety incentive programs of any kind or even have scrapped the ones they had,” said Eric Hobbs, a partner at Michael Best & Friedrich L.L.P. in Milwaukee.

“There are a lot of workplaces out there I'd suggest that by reason of the memo and the new posture are worse places for employee safety than they were before. On the good side, I think employers who are pro-safety and who do want employees to report injuries have been awakened to the fact that some of their programs as drafted really were discouraging reporting,” he said.

Mr. Hobbs said he has had clients cited for having incentive programs that OSHA decided discourage reporting.

“None of them has wound up going to trial,” he said. “All of them have settled. They're not going to spend an immense amount of money to challenge OSHA's position. They're going to change their incentive program.”

While Howard Mavity, an Atlanta-based partner at Fisher & Phillips L.L.P., firmly believes OSHA “misses the boat” on employee incentive programs, he recommends against basing such programs on lagging indicators such as injury and illness rates, because they are ineffectual and could run afoul of OSHA.

Instead, employees and supervisors should be evaluated based on leading indicators such as reporting near misses and fixing hazards without being told to do so, said W.E. Scott, director of consulting services at the National Safety Council in Itasca, Illinois.

Several studies on employee incentive programs have underpinned OSHA's position, although management advocates often dispute the findings and argue that OSHA is projecting the actions of a few bad employers on the entire business community.

A 2012 Government Accountability Office study estimated that 25% of U.S. manufacturers had safety incentive programs and most had other workplace safety policies that could affect injury and illness reporting. It found that 22% of manufacturers had rate-based safety incentive programs, which reward workers with few or no reported injuries or illnesses during a set period, while 14% had behavior-based programs to report near misses or recommend safety improvements.

“The idea that the record is just based on anecdotal information is completely false,” said Nancy Lessin, senior staff for strategic initiatives at the United Steelworkers' Tony Mazzocchi Center for Health, Safety and Environmental Education in Pittsburgh.

However, Mr. Halprin argued that the contention that incentive programs discourage injury and illness reporting is false, citing estimates that the accuracy rate for employers using OSHA's reporting forms is 90% to 95%.

“Those studies have shown no pervasive intentional underreporting or discouraging of anyone reporting,” Mr. Halprin said. “They've simply shown mostly overreporting and underreporting due to an overly complex rule.”

Seeking an alternative, Boston-based Northeastern University researchers devised a construction reporting program designed to promote, recognize and reward safe working conditions that relied on worksite safety audits, according to their May 2015 report.

Foremen received weekly reports — including positive and negative examples — over a six-month period analyzing recognition of hazards such as lack of fall protection or guardrails.

The approach triggered safety improvements in as little as 30 days, researchers said, and a passing score resulted in a catered lunch for employees and a raffled free parking space for a month for one individual employee.

“You always have to be careful when creating an incentive what you are incentivizing,” said Jack Dennerlein, a professor at Northeastern University's Bouvé College of Health Sciences, Department of Physical Therapy, Movement, and Rehabilitation Sciences in Boston.