OSHA's Stance on Safety Incentive Programs

Do they work, or do they just discourage employees from reporting injuries?

OSHA recently published an article disparaging company safety incentive programs. This is not a new stance -- it has always been their position. However, the regulatory agency's new Memorandum issued on March 12, 2012, Employer Safety Incentive and Disincentive Policies and Practices, directs field compliance officers and "whistleblower" investigative staff to beef up their enforcement of 29 C.F.R 1904.35(b)(1), which addresses work-related reporting of injuries and illnesses, and Section 11(c) which contains the whistleblower statues.1 This memorandum is targeted at employers who have implemented safety incentive programs that discourage workers from reporting injuries and have a policy that requires disciplinary action against employees who are injured on the job, violate injury reporting guidelines, or violate a safety rule.

Excerpts from the memorandum state: "There are several types of workplace polices and practice that could discourage reporting and could constitute unlawful discrimination and a violation of federal statues.... OSHA has received reports of employers who have a policy of taking disciplinary action against employees who are injured on the job, regardless of the circumstance surrounding the injury. Reporting an injury is always a protected activity."

The key to remember is that OSHA is not truly against safety incentive programs. It is against programs that discourage workers from reporting accidents or injuries. In the memo, Deputy Assistant Secretary Richard E. Fairfax states, "While OSHA appreciates employers using safety as a key management metric, we cannot condone a program that encourages discrimination against workers who report injuries." OSHA believes that if employees do not feel free to report injuries or illness, then it puts a company's entire workforce at risk. Most insurance carriers tout the same position. The phenomenon of non-reporting of injuries due to policy or pressure actually has a moniker in the insurance industry -- it's called the "bloody pocket syndrome." (So named after an example of when an employee cuts a finger and puts his or her hand in his pocket, instead of reporting the injury, in fear of blowing his chance or his team's chance at some incentive or prize.)

However, since the emphasis of the OSHA directive is expanded to include protection for employees who violate injury reporting timeliness rules, it remains to be seen if this emphasis has unintended consequences, such as increased claim cost from late reporting.

All of this talk about effective safety incentive programs begs the question, how would your incentive program fare if evaluated by OSHA? Much to everyone's dismay, there is no cookie-cutter program or solution. Each incentive program should be built to complement the company's existing safety plan, goals, and objectives. Ideally, safety-based incentive programs should be designed to emphasize positive reinforcement and leading indicators, such as safe behaviors, and not lagging indicators, such as recordable incidents or lost-time injury reduction goals.

As you reflect back on your company’s program, consider the following questions:

  • Is your safety incentive program one component of a well-thought-out and effectively administered risk management program?
  • Does your incentive program include the measurement of leading indicators and/or safety activities, such as safe behavior observations, safety meeting attendance, etc.?
  • Is your incentive program consistently well supported by top management because it increases safety awareness and has a positive impact on the safety culture?
  • Does your company involve employees when developing the program?
  • Does your company regularly provide feedback to employees on performance and the progress being made toward company goals?
  • When asked, could employees from all levels of the organization explain the purpose and goals of the program?
  • Do your employees understand that the program has a genuine purpose and life span, as opposed to expecting or feeling entitled to the incentives?
  • Is the incentive program regularly evaluated for effectiveness?
  • If your company eliminated its incentive program it would not have a dramatic impact on the report of injuries in the workplace?

If you answered no to any of the questions above, you may want to further evaluate your program to determine whether you may be able to improve upon it in any way.

The bottom line is that safety incentive programs do work and are still an effective tool in the workplace, when they are executed in the right way, with the right goals and outcomes. Safety incentives are only one part of an overall safety-minded culture whose goal should be to mitigate unsafe acts and encourage safe worker behaviors.

Managers must understand the importance of recognition versus reward and that gifts and prizes are never substitutes for developing a genuine and meaningful operational system with the basic building blocks of employee health and safety at its core. Companies should not take a simplistic and cookie-cutter approach to developing an incentive system if it is expected to be effective. Simply dangling gifts cards, free lunches, and favorite sports team hard hats are no longer acceptable forms of motivation to encourage accident-free days. By getting employees involved in the process of creating a safe work environment, one which is supported by top management, companies will be more likely to develop a program that truly encourages and promotes workplace safety while not violating OSHA statutes.

A list of the most common potentially discriminatory policies can be found at http://www.osha.gov. If you have doubts about whether your incentive program complies with federal reporting and whistleblower regulations, you can contact OSHA at 202-693-2199.

This article originally appeared in the September 2012 issue of Occupational Health & Safety.

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