Incentive Federation Welcomes New OSHA Clarification

An Oct. 11 memo clarifies OSHA's position that 29 CFR 1904.35(b)(1)(iv) does not prohibit workplace safety incentive programs or post-incident drug testing.

An Oct. 11 memorandum to OSHA regional administrators and state designees from Kim Stille, acting director of enforcement programs at OSHA, clarifies that the agency's position is that 29 CFR 1904.35(b)(1)(iv) does not prohibit workplace safety incentive programs or post-incident drug testing. This is significant because OSHA had taken a negative view of safety incentives under the leadership of OSHA Assistant Secretary Dr. David Michaels, who was the agency's leader during the Obama administration.

In a final rule published on May 12, 2016, OSHA amended 29 CFR 1904.35 to add a provision prohibiting employers from retaliating against employees for reporting work-related injuries or illnesses. In the preamble to the final rule and in interpretive documents, OSHA discussed how the rule could apply to action taken under workplace safety incentive programs and post-incident drug testing policies.

The Incentive Federation Inc.'s October 2018 Bulletin calls the memo "surprising and important" and quotes from a blog post about the memo by Brian Galonek, CPIM, president of All Star Incentive Marketing, who is on the federation's board of directors. Galonek explains that the prior OSHA position on safety incentive programs resulted from "hearing stories of abuses created from poorly designed programs and their reaction/overreaction to doing something about it. To be clear," he continues, "the companies that created such programs weren't trying to be malicious or subversive in creating them, they too were just looking for a safer workforce. That said, those poorly designed programs did earn the distrust they received. They often featured overly large awards (pickup trucks and trips to Hawaii) that were given in a sweepstakes type drawing to one winner. With a design like that it was no wonder that accident/injury hiding would take place."

"The bottom line is properly built safety incentive programs are created with the best intentions, do work, and benefit everyone involved," Galonek writes.

The OSHA memo supports that belief, saying that the agency "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. Action taken under a safety incentive program or post-incident drug testing policy would only violate 29 C.F.R. § 1904.35(b)(1)(iv) 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.

"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 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," the memo says. "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."

It says most instances of workplace drug testing are permissible under 1904.35(b)(1)(iv), listing these as examples of permissible drug testing:

  • Random drug testing
  • Drug testing unrelated to the reporting of a work-related injury or illness
  • Drug testing under a state workers' compensation law
  • Drug testing under other federal law, such as a U.S. Department of Transportation rule
  • Drug testing to evaluate the root cause of a workplace incident that harmed or could have harmed employees. (Here, the memo says if an employer chooses to use drug testing to investigate the incident, the employer should test all employees whose conduct could have contributed to the incident, not just employees who reported injuries.
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