From the November, 2013 newsletter of the Institute for Safety and Health Management(ISHM)

The Institute for Safety and Health Management(ISHM) administers the Certified Safety Health Manager (CSHM) certification for safety and health professionals.

Web ExclusiveI have heard that OSHA may ban safety incentive programs. My company has used an employee incentive program that provides a bonus for meeting quality, productivity, and safety performance targets. The program has been very successful, has reduced injuries and is popular with employees. Do we have to take safety out that program? It would seem that having an employee incentive program without safety sends the wrong message.

Answer: OSHA currently has no regulations in place that address safety incentive programs, and there is no truth to the rumor that OSHA may implement a regulation banning safety incentive programs. Notably, OSHA has acknowledged the positive role that safety incentive programs that focus on "leading" indicators have on workplace safety.  OSHA, however, is assessing whether to place restrictions on certain safety incentive programs that focus exclusively on "lagging" indicators, as OSHA believes that an emphasis on lagging indicators reduces overall safety.

"Lagging" and "leading" indicators are terms of art in the safety field.  Generally speaking, "indicators" measure an employer's overall safety performance.  Lagging indicators are safety metrics that measure the outcome of undesirable events that have already happened, such as a work-related accident.  Leading indicators, on the other hand, are safety metrics that are associated with and precede undesirable events, such as identifying areas of weakness or concern prior to the event.

Not surprisingly, many employers have implemented safety incentive programs that focus exclusively on lagging indicators, because it is easier to identify lagging indicators and administer those programs.  For the same reason, fewer employers have implemented safety incentive programs based exclusively on leading indicators, as it is much more difficult to identify leading indicators and administer those programs.

OSHA has weighed in on this issue on several occasions. 

First, on September 28, 2010, OSHA issued a National Emphasis Program (NEP), "Directive on its Injury and Illness Recordkeeping National Emphasis Program."  Under this NEP, OSHA investigated companies that had policies in place that discourage accurate recordkeeping, including safety incentive policies based exclusively on lagging indicators.  OSHA believes that employees will be discouraged from reporting an incident if it will affect their incentive pay. 

Second, in June 2011, OSHA issued Revised VPP Policy Memorandum #5: Further Improvements to the Voluntary Protection Programs ("VPP Policy Memo").  This VPP Policy Memo sets forth specific safety incentive program criteria for OSHA's VPP participants to address OSHA's fear that, "[w]hen an incentive program discourages worker reporting or, in particularly extreme cases, disciplines workers for reporting injuries or hazards, problems remain concealed, investigations do not take place, nothing is learned or corrected, and workers remain exposed to harm."  

Accordingly, VPP participants are now prohibited from utilizing rate-based programs that directly reward workers for achieving low injury and illness rates.  To remedy this, the VPP Policy Memo encourages the use of "positive incentive programs" (i.e., leading indicators) that encourage or reward workers for reporting injuries, illnesses, near-misses, or hazards or recognizes rewards, and thereby encourage worker involvement in the safety and health management system. 

And third, on March 12, 2012, OSHA issued a memorandum, Employer Safety Incentive and Disincentive Policies and Practices, in which OSHA states that in view of an inherent conflict with Section 11(c) of the OSHA Act, which prohibits an employer from discriminating against an employee because the employee reports an injury or illness, OSHA expresses its concerns with safety incentive programs that "unintentionally or intentionally provide employees an incentive not to report injuries." 

To date, OSHA has not issued a formal regulation addressing safety incentive programs, but it is foreseeable that OSHA will restrict safety incentive programs that focus exclusively or primarily on lagging indicators.  OSHA may issue a rulemaking as early as 2014 as part of the Injury and Illness Prevention Programs (I2P2), or OSHA may address it in a completely different context.  Regardless of the form, employers are on notice that OSHA does not favor any safety incentive program that may discourage workers from reporting injuries and illnesses