Over the last couple of years, employee
incentive programs have been under attack from the Department of Labor.
However, the Occupational Safety and Health Administration (OSHA) and the Mine
Safety and Health Administration (MSHA) have undertaken their efforts against
incentive programs in different ways.
In the preamble to the 2016 proposed
amendments to the employee involvement statute, OSHA discussed how it could
issue citations to employers based on workplace safety incentive programs
should the program be found to discourage reporting of injuries. MSHA has been
battling the issue through litigation with appeals still currently pending as
explained more fully below.
Now, OSHA plans to issue a Notice of Proposed Rulemaking to memorialize OSHA’s most recent position on these issues through changes to the employee involvement statute related to safety incentive programs. A proposed regulation is projected for September 2020.
What both agencies are showing is an
inclination to weed out incentive programs based solely on injury or illness
rates. If your incentive program is tied to the number of reported injuries, it
should be reviewed regardless of which agency regulates your workforce.
OSHA’S most recent position
In October 2018, OSHA issued a memorandum
that purported to clarify its position that the employee involvement statute
does not prohibit workplace safety incentive programs.
OSHA stated that actions taken under a
safety incentive program would only violate OSHA regulations if the employer
took the action to penalize an employee for reporting a workplace injury or
illness rather than for the legit legitimate purpose of promoting workplace
safety and health.
OSHA further stated that rate-based incentive programs are permissible under the employee involvement statute as long as they are not implemented in a manner that discourages reporting.
Employers were encouraged to implement
“adequate precautions” to ensure that employees feel free to report an injury
or illness despite possibly losing out on an incentive due to an injury.
OSHA does not state what “adequate
precautions” could be under the rule. However, simply stating that employees
are encouraged to report and will not face retaliation may not be enough to
ensure employees feel free to report according to the memo. OSHA does provide
that employers can avoid the inadvertent deterrent effect of a rate based
incentive program by taking positive steps to create a workplace culture that
emphasizes safety and not just injury and illness rates.
While OSHA appeared out in front of the
incentive program issue with their May 2016 amendments, MSHA has been
attempting to enforce a similar policy through litigation.
MSHA’S most recent position
Through litigation, MSHA is pushing the
agenda that bonus or incentive programs may violate a miner’s rights under the
Mine Act if found to discourage reporting or the exercise of walk-around
rights.
In Secretary on behalf of
Greathouse v. Monongalia County Coal, et al, the mine
implemented safety and production bonus plans at six of its mines. The plans
offered miners monetary bonuses if their assigned section produced a certain
amount of coal during their shift.
The bonus amounts ranged from $50-$250
per shift depending on how much coal was produced. Certain circumstances
disqualified minors from receiving a bonus not withstanding sufficient coal
production. These circumstances included not being physically present in the
section the entire shift, if a lost time accident occurred to the crew, or if a
certain type of citation was issued to that section.
Miners testified that the bonus potential
made it less likely that miners were willing to serve as walk-around
representatives as they would not be eligible for the full bonus amount. Other
miners reported instances of individuals not reporting injuries as they did not
want to disqualify themselves and their coworkers from receiving a bonus. As a
result, this bonus plan scheme was found to be in violation of the Mine Act by
interfering with the right to report injuries and participate with MSHA during
an inspection. The case is currently on appeal to the D.C. Circuit.
Take-away
For the past few years, both agencies have signaled an intent to move employee incentive programs away from reported injuries and illness and towards more leading indicators, such as near miss reporting and safety participation activities. OSHA’s memorandums and notice of proposed rulemaking provides employers with more notice than MSHA’s route of litigation, but both should warrant a review of employee incentive programs.