On May 12, 2016, OSHA issued transformative revisions to its rule on recordkeeping and reporting occupational injuries and illnesses. The provisions of the new rule are scheduled to take effect August 10, 2016, with data submission requirements beginning in 2017. Among other provisions, the new rule requires employers to establish a "reasonable procedure" for reporting injuries and illnesses accurately and promptly. The new rule does not specifically define what a reasonable procedure is, other than to note that a rule is not reasonable "if it would deter or discourage a reasonable employee from accurately reporting an injury or illness." In particular, the new rule potentially affects post-accident drug testing policies and safety incentive or bonus programs. This article will focus on the latter: The new rule effectively codifies OSHA's suspicion that certain types of safety incentives "chill" injury reporting and provides a mechanism for OSHA to issue citations to employers whose safety incentive programs, in OSHA's view, could dissuade an employee from reporting an injury. Although the rule is likely to face legal challenges, employers should begin now to look at how the rule may affect existing safety bonus programs and, if desired or appropriate, think about how to modify them to avoid potential challenges after the rule becomes effective.

The new rule is the product of a years-long journey. In 2010, OSHA determined to investigate employer policies that could discourage injury and illness recording and issued a directive instructing inspectors to look at safety incentive programs that were tied to the number of OSHA recordable injuries and illnesses and disciplinary programs that might deter accurate recordkeeping. Although OSHA's initiative did not reveal widespread underreporting, OSHA nevertheless continued to be skeptical of employers' recordkeeping practices and safety incentive programs. In March 2012, in a memo commonly referred to as the "Fairfax Memo" because it was signed by then Deputy Assistant Secretary for OSHA Richard Fairfax, OSHA announced that it would consider practices that discourage employees from reporting injuries and illnesses to constitute potential retaliation. In particular, OSHA described as common potentially retaliatory practices: discipline issued regardless of fault; discipline based on unreasonable procedures for timely reporting of injuries and illnesses; discipline for violations of safety rules used as a pretext to retaliate against employees for reporting injuries or illnesses; and, importantly, programs that unintentionally or intentionally create incentives not to report injuries and illnesses. Included in this last group were programs that award prizes or bonuses for having no or only minimal recordable injuries. OSHA, instead, encouraged employers to develop "positive" incentives for identifying hazards, participating in accident investigations, serving on safety committees, and the like.

OSHA's stance, as reflected in the Fairfax Memo, suggested that incentive programs should focus on the motivation offered for achieving a safe environment. If the program, however well intentioned, could result in explicit or implicit pressure not to report injuries, OSHA viewed it with suspicion, if not hostility.

OSHA's new recordkeeping revisions essentially reflect the codification of that viewpoint. First, the final rule amends existing paragraph (b)(1) of Sec. 1904.35 to state explicitly that employer procedures for employee reporting of work-related injuries and illnesses must be reasonable and that a procedure that would deter or discourage reporting is not reasonable, consistent with the Fairfax Memo. In addition, OSHA added a new paragraph (b)(1)(iv) to Sec. 1904.35 to reiterate that employers may not discharge or in any manner discriminate against employees for reporting injuries and illnesses. According to OSHA, this new provision is intended to broaden OSHA's existing enforcement mechanisms by enabling OSHA to issue citations to employers for perceived retaliation, even if the employee has not asserted retaliation. Prior to this rule, employees were required to file a complaint alleging retaliation.

The parameters of what constitutes retaliation remain vague. OSHA explains that the final rule is intended to prohibit employers

only from taking adverse action against an employee because the employee reported an injury or illness. Nothing in the final rule prohibits employers from disciplining employees for violating legitimate safety rules, even if the same employee who violated the safety rule was also injured as a result of that violation and reported that injury or illness (provided that employees who violate the same work rule are treated similarly without regard to whether they also reported a work-related illness or injury). What the final rule prohibits is retaliatory adverse action taken against an employee simply because he or she reported a work-related injury or illness. (emphasis in original)

What this means in practice will become clear only after OSHA issues citations for alleged discrimination and those citations are adjudicated. According to OSHA, discrimination that could result in a citation includes obvious examples, such as termination, reduction in pay, or reassignment to a less desirable position. It also includes, however, "any other adverse action that 'could well dissuade' a reasonable employee from reporting a work-related injury or illness."

The rule reiterates OSHA's position that incentive or bonus programs that deny or withhold a benefit based on recordable injuries may be retaliatory because employees may be tempted not to report an injury for fear of losing the benefit. Obviously, such temptation is dependent on the nature (i.e., desirability) of the benefit, and OSHA not surprisingly states that it will consider the "specific rules and details of implementation of any given incentive program. . . to determine whether it could give rise to a violation of paragraph (b)(1)(iv) of the final rule." In contrast, OSHA states that incentive programs that reward employees for following legitimate safety rules or that promote participation in safety related activities, such as identifying hazards or accident investigations, would not violate the provision. In other words, incentives such as providing t-shirts to workers, offering modest rewards for suggesting ways to improve safety and health, throwing a "recognition" party at the successful completion of a company-wide safety and health training, or participating in accident investigations are encouraged.

The difference between disciplining an employee for failing to follow work rules and rewarding an employee for following the rules may be difficult to appreciate. Employers, both at common law and under the OSH Act, have a duty to provide a reasonably safe workplace to employees and to comply with applicable OSHA standards. Under the OSH Act, employees are required to comply with the same safety standards and regulations as are imposed on employers. Historically, OSHA has directed employers to discipline and discharge employees who failed to follow those standards or the employer's workplace safety rules. The new standard should not change this approach. However, it will result in closer scrutiny of work rules and of the consistent application of those rules. As is the case with other types of discrimination, OSHA's rule incorporates two types of discrimination, disparate treatment and disparate impact. Disparate treatment cases hinge on the ability to prove the employer was motivated to treat an individual differently because of some legally protected characteristic of the individual, such as race. Circumstantial evidence is often required to prove intentional discrimination, so comparable treatment of similarly situated individuals becomes important. In contrast, disparate impact discrimination does not require proof of intent to discriminate and instead exists if an employer's facially nondiscriminatory policy disproportionately affects a particular group in practice. Such cases may be difficult for OSHA to prove, and often require sophisticated statistical analysis. These are the kinds of cases likely to result from OSHA's attack on a safety incentive as potentially discriminatory.

So what does this mean?

First of all, the rule will not likely affect obvious injury and illness cases. Where there is a workplace accident resulting in a serious injury or that is observed, the issue of recordability will be obvious. Consequently, the concern over the application of the rule will likely be limited to comparatively minor injuries and illnesses, injuries and illnesses that do not prevent the employee from working and that may escape notice. Unfortunately, these are the very sort of injuries and illnesses that evoke concerns about potential fraud, for example, a desire to obtain workers' compensation benefits that provide wage replacement as opposed to group health insurance benefits that do not provide wage replacement.

Second, employers should review their incentive plans thoughtfully. Incentive programs offering a benefit sufficient to motivate employees but tied to recordable injuries are likely be viewed with extreme suspicion and may result in the issuance of a citation. Without addressing in detail the practical difficulties (and there are many) OSHA will have in proving discrimination or retaliation, employers may wish to reform their programs to lessen their vulnerability to challenge and citation. Employers should develop programs with safety-related metrics other than recordable injuries, which may not be truly reflective of safety in a facility anyway. For example, it may be advisable to use factors such as lost work days or workers' compensation injuries. Admittedly, such a measure may not capture truly minor events, but by the same measure, truly minor events are not likely to have a dominant effect on the safety program as a whole.

Third, employers should review close cases to ensure that an employee is not being penalized for reporting an injury. In this connection, OSHA has plainly signaled that vague work rules, such as "work carefully" or "maintain situational awareness," may not be considered legitimate workplace safety rules and may be challenged, if they are used disproportionately to discipline workers who have reported injuries and illnesses.

To be sure, OSHA says that it does not intend to categorically ban all safety incentive or bonus programs. Nevertheless, its suggestions for positive rewards clearly reflect a preference for fostering a safety culture within the organization rather than relying on incentive plans. Such efforts would include a greater emphasis on safety as a component of any supervisor's job responsibility and measurement. For example, holding a supervisor accountable for serious injuries or failure to enforce work rules has proved effective for many employers in bringing supervisors inside the safety tent.

A lot remains unclear about OSHA's rule. Although a few citations have been issued in the four years since the issuance of the Fairfax Memo, the landscape has not shifted dramatically. It remains to be seen whether OSHA will try to effect such a shift through its new rule, and whether it can demonstrate there is a real need to do so. Still, now is the time for employers not wishing to invite potential disputes with OSHA to review and, if appropriate, update their safety incentive programs.