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Assault on Pizza Parties, Drug Tests and Executive Compensation

Part 3: Agency Attitude to Programs

This is Part 3 of a multi-part series on the topic. Click the hyperlinks to read Part 1: Overview and History or Part 2: New Obligations, Enforcement Mechanism.

Safety Incentive Programs

OSHA has expressed particular concern with the supposed chilling effect and retaliatory nature of employee incentive programs used by many employers across industries. 

While recognizing that incentive programs can be helpful in driving a positive safety culture, OSHA explains: “if the programs are not structured carefully, they have the potential to discourage reporting of work-related injuries and illnesses without improving workplace safety.” 

© iStock.com / s-c-s

While OSHA will be critical of safety incentive programs that are deemed unreasonable, those that promote worker participation in safety-related activities, such as identifying hazards or safety training, are permissible.

Based on OSHA’s statements, it is pretty clear that incentive programs will be found by OSHA to be unreasonable if they:

• Exclude workers from prizes or awards if they report an injury;
• Provide rewards or parties to workers or crews for remaining injury free; or
• Deny certain benefits or bonuses to employees based on reported injuries or tied to the recordable injury rate.

By contrast, incentive programs that make rewards contingent upon employees following legitimate safety rules, rather than a low metric of reported injuries or illnesses, are permissible.

Similarly, programs that promote worker participation in safety-related activities, such as identifying hazards or safety training, or participating on a safety committee or an incident investigation team, are permissible.

Post-Accident Drug Testing

Without explicitly referencing drug testing programs in the regulatory text, the Preamble to the Final Rule makes clear that post-accident drug testing programs, while not categorically prohibited, are highly suspect and will come under severe scrutiny. Blanket post-incident drug testing is prohibited unless required by some other law or the employer’s workers’ compensation insurer. 

OSHA states that “any adverse action that could well dissuade a reasonable employee from reporting a work-related injury or illness” is prohibited, and explains that drug testing programs may well do that if the “invasion of privacy” of a drug test will convince a worker not to report an injury.

© iStock.com / Kirby Hamilton

Post-accident drug testing programs are considered highly suspect and will come under severe scrutiny; blanket post-incident drug testing is prohibited unless required by some other law or the employer’s workers’ compensation insurer.

Perhaps in an effort to not “throw the baby out with the bathwater,” OSHA seems to at least insulate a narrow band of drug-testing programs. 

First, OSHA specifically acknowledges that if an employer conducts drug testing, it must comply with the requirements of a state or federal law—e.g., the Department of Transportation’s mandatory post-accident testing. 

Likewise, OSHA acknowledges that employers must drug test employees after every accident—regardless of the circumstances—if testing is required by the employer’s workers’ compensation insurer. That “required by” the insurer allowance includes situations where the insurer provides a premium or rate reduction if an employer has a drug and alcohol testing program in place. 

The OSH Act’s Sec. 4(b)(4) prohibition on superseding or affecting workers’ compensation laws may have something to do with this “concession” by OSHA. 

Finally, this rule does nothing to affect pre-employment drug testing and random drug testing. In fact, many employers are ramping up the frequency of random drug testing to offset the impact of this rule on post-injury drug testing.

To be clear, not all post-incident drug testing will be prohibited by the rule either. 

Post-incident drug testing would still be permitted in situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by the drug use. For example, requiring a post-accident drug test for a forklift operator who is injured in a forklift crash, especially if there is evidence of reckless operation of the truck. 

© iStock.com / Pavel Mitov

The rule reportedly does not affect pre-employment drug testing and random drug testing. In fact, many employers are said to be ramping up the frequency of random drug testing to offset the impact of this rule on post-injury drug testing.

Conversely, OSHA will likely find post-injury drug testing unreasonable for an employee who works outside after reporting an allergic reaction to a bee sting, or testing after a musculoskeletal disorder from repetitive strain.

Thus, to be compliant, there should be a reasonable possibility that drug use by the reporting employee was a contributing factor to the reported injury or illness in order for an employer to require drug testing. 

OSHA has also signaled that there need not be reasonable suspicion of alcohol or drug use in the specific incident, just that drugs or alcohol are a reasonable cause for the type of incident.

The trickier part of this drug testing limitation is the nature of the test itself. The Preamble talks about only allowing testing that can accurately identify impairment caused by the drug use. That makes sense for alcohol testing, but most drug testing does not really work that way. Further clarification from OSHA will be necessary here—or better yet, from the judge in Texas hearing the challenge to these limitations, or the OSH Review Commission in a citation contest.

Executive Compensation

Although not explicitly raised in the final Recording and Reporting Occupational Injuries and Illnesses rule or the Preamble, OSHA has long conflated safety incentive programs with supervisor and executive compensation, where bonuses and other compensation packages for supervisors, managers and executives are linked to injury rates (i.e., rewards for the absence of injuries). 

Executive, management and supervisory compensation has historically been noted as a topic of concern for OSHA, from the 2008 Report issued by the House of Representative Committee on Education and Labor to the 2012 Fairfax Memo.

© iStock.com / Dutko

Executive, management and supervisory compensation has historically been a topic of concern for OSHA, particularly where bonuses and other packages are linked to injury rates, such as issuing rewards for the absence of injuries.

Democrats in the House and OSHA observed that where management or supervisory bonuses are linked to lower reported injury rates, there is a great potential for unlawful retaliation against employees who report injuries. 

Most recently, OSHA reflected on executive, management and supervisor compensation in the 2014 VPP Policy Memorandum. There, OSHA threatened to strip VPP status from employers who continue to issues bonuses to managers and supervisors based on the number of reported worksite injuries and illnesses. 

The memo provides guidance on how some bonus programs could operate properly, but the new recordkeeping rule raises many questions about the validity of these bonus programs.

Under the current rubric, bonuses for supervisors and site management that are based on injury and illness rates are more heavily scrutinized. Bonuses for division management and front office executives are generally permissible.

Whether OSHA will reevaluate its stance on executive, management and supervisor compensation remains to be seen, but any compensation package that could possibly be viewed as discouraging employees from reporting injuries and illnesses—or that is likely to create an atmosphere that chills reporting—will be closely scrutinized.

Editor’s Note

This is Part 3 of a multi-part series on the topic.

Part 4 will look at the industry challenge to the rule, as well as what employers should do in the meantime.

ABOUT THE THE BLOGGER Eric J. Conn Eric J. Conn is a founding partner of Conn Maciel Carey and Chair of the firm’s national OSHA • Workplace Safety Group. His practice focuses exclusively on issues involving occupational safety and health law. OSHA Watch offers general information but should not be construed as legal advice. Employers are always advised to seek appropriate counsel for individual issues. Contact Eric. SEE ALL CONTENT FROM THIS CONTRIBUTOR