OSHA’s Anti-Retaliation Recordkeeping Rule: Assault on Pizza Parties, Drug Tests and Exec Compensation

By Eric J. Conn and Dan C. Deacon of Conn Maciel Carey PLLC

OSHA’s recent Injury and Illness Recordkeeping reform has created quite a stir for employers.  As we discussed in an earlier article about the new Recordkeeping rule, OSHA now requires employers to electronically submit to OSHA their injury and illness recordkeeping data.  OSHA will, in turn, publish the data online for all the world to dissect.  It turns out, however, RK Rule FRthe electronic recordkeeping data submission elements of the new rule may not be the most problematic for employers.

The new Recordkeeping rule also increases employers’ obligations to implement “reasonable reporting” procedures for employees to report to their employers the work related injuries they incur, and expands OSHA’s enforcement authority by introducing a vague new set of anti-retaliation provisions.  To date, employers have seen little guidance about what OSHA means by reasonable reporting procedures or what types of policies may violate the new anti-retaliation provisions.

Particularly controversial is the impact of OSHA’s new rule on employers’ policies for post-injury drug testing, safety incentive programs, and executive compensation and bonuses.  Although none of those words appear in the amended Recordkeeping regulation, OSHA addressed each in the Preamble to the Final Rule.

These topics have been on OSHA’s radar for nearly a decade, dating back to a 2008 Report issued by the House of Representative Committee on Education and Labor entitled “Hidden Tragedy: Underreporting of Workplace Injuries and Illnesses.”  From that time, OSHA has been making efforts to address a perceived culture of underreporting injuries and retaliation against employees who do report workplace injuries and illnesses. OSHA has used every tool at its disposal to chip away at employer policies and practices that purportedly discriminate against employees who report injuries, or that attempt to deter employees from reporting injuries in the first place.

Even before this rulemaking, OSHA has taken action against policies that OSHA believes discourage reporting or recording of work related injuries.  For example, in 2012, OSHA issued a policy memorandum to all of its field offices (commonly referred to as the “Fairfax Memo”) in which OSHA delineated various categories of safety incentive policies and programs that OSHA considered impermissible, either per se, Fairfax Memoor because of their purported injury reporting deterrent under the circumstances of the employer’s workplace.  The memo set forth for the first time OSHA’s distaste for programs that reward the absence of injuries; e.g., a pizza party for a crew going six months without a lost time injury, or entry into safety bingo for employees who do not have a recordable injury, etc. Using this memorandum, OSHA has pursued 11(c) retaliation actions against employers who disciplined employees after incurring injuries.

OSHA first acted on this hostility to safety incentive programs in the context of the VPP cooperative program.  In a 2014 VPP Policy Memorandum, which also addressed issues surrounding executive, management and supervisory compensation and bonuses based on injury and illness rates, OSHA threatened to strip VPP status from any VPP employer who maintained these dangerous safety incentives, like hosting safety pizza parties or providing bonuses for managers who have particularly safe stretches of work.  Both memoranda left many questions unanswered.

With employers still daring to host pizza parties for employees all around the country, OSHA was not about to rest; hence the new Recordkeeping rule.  However, the Recordkeeping rule does little to address the uncertainty about OSHA’s expectations.  We have made several inquiries to OSHA regarding specific employer policies and programs, but no clarity has been forthcoming. OSHA has expressed thanks for the questions, and has reiterated that it is considering specific scenarios and will be issuing further guidance at some point in the future.

Despite a recent industry legal challenge of the Rule, the looming November 1, 2016 enforcement deadline for the anti-retaliation provisions of the Rule (postponed by OSHA from the initial August 10th date) means employers must act quickly to evaluate their existing reporting policies, drug testing policies, safety incentive programs, and compensation schemes to ensure they are in compliance. This is especially true given OSHA’s response to Industry’s legal challenge to the anti-retaliation provisions of the rule, in which OSHA argues that the anti-retaliation provisions stem from an OSH Act mandate to ensure accurate reporting of workplace injuries, and that such policy determinations are solely within OSHA’s discretion.

New Employer Obligations

The new “workers’ rights” anti-retaliation provisions of the Recordkeeping Rule add language to 29 C.F.R. §§ 1904.35 (employee involvement) and 1904.36 (prohibition against discrimination for reporting an injury).  As opposed to the remaining parts of the Rule on electronic records submission, which will be implemented in different stages over the next three years, the anti-retaliation provisions will take effect November 1st, unless the federal district court hearing the challenge to these provisions grants a preliminary injunction or throws out the rule altogether.

Specifically, the Rule makes three changes to §§ 1904.35 and 1904.36:

  1. Requires employers to “inform” employees of their right to report work-related injuries and illnesses free from retaliation;
  2. Clarifies the existing implicit requirement that employers’ procedures for reporting work-related injuries and illnesses must be reasonable and must not deter or discourage employees from reporting; and
  3. Reiterates the existing prohibition to employers from retaliating against employees for reporting work-related injuries or illnesses.

OSHA believes these changes strengthen the Recordkeeping Rule by expanding the existing requirement that employers inform employees how to report work-related injuries and illnesses. OSHA PosterNow, employers must specifically inform employees not only how to report, but that they have a right to report work-related injuries and illnesses free from retaliation.

The duty to inform is not a duty to train.  Accordingly, in-person verbal communications are not necessary.  The simplest way for employers to comply with the new duty to inform employees of these injury reporting rights is by posting the newest (April 2015) version of the “OSHA: It’s the Law” Worker Rights Poster. The new poster adds a few words to older versions that express the right to report free from retaliation. While employers are not required to replace older versions of the poster, posting the April 2015 version automatically satisfies this new duty.

The new Rule also requires employers to implement reporting procedures that are reasonable and that do not deter reporting. The Rule does not define reasonableness, nor did OSHA explain in the Preamble to the Final Rule what would be considered a reasonable reporting procedure . The Preamble does, however, provide a few examples of what it does not consider reasonable, including policies that require immediate reporting of an injury, or a policy that creates an undue burden on employees to complete a report.  As for timing to make a report, OSHA makes clear that an employer’s reporting policy must account for injuries and illnesses that build up over time, have latency periods, or do not initially appear serious enough to be reportable.

In essence, OSHA is demanding reporting policies that allow employees a reasonable amount of time to report after an employee realizes he or she has suffered a work-related injury, and further, it should not require employees to spend a lot of time or otherwise jump through too many hoops, filling out numerous forms or notifying numerous company representatives to make a satisfactory report.  Although not providing a specific acceptable reporting deadline, OSHA has pursued an 11(c) retaliation action against an employer who disciplined an employee for violating its 24-hour reporting deadline, even in a circumstance where the employee’s failure to report resulted in a minor injury turning into an amputation.  Ultimately, OSHA will likely maintain broad discretion in deciding which reporting polices are or are not reasonable under the circumstances of the workplace.

OSHA’s New Enforcement Tool (Whistleblower Actions Without Whistleblowers)

The Final Rule adds paragraph (b)(1)(iv) to 1904.35 to incorporate explicitly into the regulation the prohibition against retaliation for reporting work-related injuries or illnesses – a requirement that is already imposed on employers by Sec. 11(c) of the OSH Act. The Preamble interprets 1904.35(b)(1)(iv) broadly to prohibit “any adverse action that could well dissuade a reasonable employee from reporting a work-related injury or illness,” which includes the above-enumerated unreasonable reporting policies.

This provision provides OSHA a new enforcement mechanism to cite employers for retaliatory conduct that was not available under Section 11(c). Under the new framework, regardless of whether any employee actually alleges that he or she was the victim of retaliation, employers may receive a regulatory citation for implementing a reporting policy that has a perceived retaliatory effect against employees for reporting workplace injuries.  Such policies can include discipline for “late” injury reporting, discipline for violating a vague work rule (e.g. “work carefully” or “maintain situational awareness”), blanket post-incident drug testing, and certain types of safety incentive programs.  OSHA can look at any such situation and decide that – even without a whistleblower complaint or evidence of a single injury that was not reported – workers are deterred from reporting workplace injuries or illnesses, or are being discriminated against.

Essentially, an employer’s policy on its face can serve as the basis for a retaliation-based citation and civil penalty from OSHA.

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, Safety Incentive ProgramOSHA explains that “if the programs are not structured carefully, they have the potential to discourage reporting of work-related injuries and illnesses without improving workplace safety.”  Based on OSHA’s statements, it is pretty clear that incentive programs will be found by OSHA to be unreasonable if they:

  1. Exclude workers from prizes or awards if they report an injury;
  2. Provide rewards or parties to workers or crews for remaining injury free; or
  3. 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, and blanket post-incident drug testing are 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.

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 to 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 most 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 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.  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 to the Final Rule 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 rule or the Preamble, OSHA has long conflated safety incentive programs with supervisor and executive compensation, where bonuses and other House Reportcompensation 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.

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 bonus 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.

Industry Challenge

Following the enactment of this controversial rule, eight industry groups and companies – among them, Associated Builders and Contractors, National Association of Manufacturers and American Fuel and Petrochemical Manufacturers – filed suit in the U.S. District Court for the Northern District of Texas on July 8, 2016,Legal Challenge challenging these anti-retaliation portions of the Rule. The legal challenge is based on the fact that:

“The New Rule is arbitrary, capricious, and an abuse of discretion, because OSHA enacted the regulation under an improper bias and from a prejudgment of the essential issues related to Employer Safety Incentive Programs and Routine Mandatory Post-Incident Testing Programs, thereby ignoring all available evidence contradicting its assertion that the Safety Programs lead to materially inaccurate reporting or underreporting of workplace injuries or illnesses.”

The bases for the suit are two-fold:

  1. OSHA did not show that the anti-relation provisions, including provisions aimed at restricting post-accident drug tests, would actually reduce injury rates; and
  2. OSHA did not follow requirements of the Administrative Procedures Act (“APA”) in the rulemaking. The APA-based claim relates to OSHA’s failure to conduct a regulatory impact analysis demonstrating that the purported increase in recordkeeping accuracy and employee reporting outweighs the overall workplace safety benefits provided by safety incentive and drug testing programs.

In addition to the underlying challenge, the Industry representatives also immediately moved for a preliminary injunction to prohibit OSHA from enforcing the anti-retaliation provisions of the Rule until the court could rule on the merits of the challenge.  Interestingly, only one day after the memorandum and emergency motion seeking the preliminary injunction were filed, OSHA issued an enforcement memorandum delaying enforcement of the retaliation provisions of the new Recordkeeping Rule to November 1, 2016 – nearly three months later than the Rule’s effective date of August 10, 2016 for this portion of the Rule.

Lest industry read too much into the extension or the timing of when it was granted, OSHA is not conceding that the legal challenge is likely to prevail, instead stating that the delay is to allow OSHA time to “conduct additional outreach and provide educational materials and guidance for employers.”  Note, however, that OSHA did not delay the effective dates of the other major component of the Rule requiring many companies to electronically submit injury logs.

Just last week, on August 19th, OSHA filed its Opposition to the Plaintiff’s Motion for a Preliminary Injunction urging the judge to not delay enforcement of the anti-retaliation provisions, including OSHA’s policies on safety incentive programs and post-accident drug testing, stating:

“Plaintiffs have established no harm at all, much less irreparable harm[.]  OSHA, by contrast, has determined that the anti-retaliation provision is necessary for the viability of its broader Recordkeeping Rule[.]”

OSHA strongly believes that its interpretation of the new Rule is reasonable and permissible under the Chevron doctrine of agency deference.  Further, and somewhat ironically, OSHA asserts that it is premature to delay enforcement because OSHA has not issued any guidance on what factual scenarios will ultimately lead to a citation, so the issues are not ripe for review at this time.  In other words, even though OSHA has published a final rule, supposedly meeting the notice and comment intent of the APA, there is no way an employer can be harmed yet, because there is no way employers no what the rule allows and prohibits!  That alone should be reason to kill the rule.

Only time will tell what the outcome will be, but employers should understand how this new Rule will affect their programs, and begin to prepare to make changes if a preliminary or permanent injunction is not forthcoming before November 1st or otherwise.

What should employers do now?

Here are some actions employers should consider taking in the near term:

  • Provide refresher training on recordkeeping requirements to the individuals responsible for maintaining  the injury and illness recordkeeping program, including fielding injury reports from employees, and completing  300 logs, 301 incident reports, and 300A annual surveys;
  • Engage counsel to conduct attorney-client privileged audits of injury and illness recordkeeping forms and injury reporting policies;
  • Post the latest version of the OSHA Rights Poster or otherwise inform employees about their right to report injuries without retaliation, as well as how to report;
  • Work with counsel to evaluate and update (i) injury reporting policies to ensure they are are not so burdensome that they may discourage reporting (e.g., drug testing only when there are injuries, very short windows of time to report, etc.); and (ii) safety incentive and management compensation programs to ensure they do not chill the right to report injuries; and
  • For heaven’s sake, hide the empty pizza boxes if OSHA shows up at your workplace!

For more background on the new Recordkeeping Rule (both the electronic record submission and the anti-retaliation elements), please see our previous blog article describing the Rule, another article addressing frequently asked questions about the Rule, and a complimentary webinar by attorneys from Conn Maciel Carey’s national OSHA practice.

2 thoughts on “OSHA’s Anti-Retaliation Recordkeeping Rule: Assault on Pizza Parties, Drug Tests and Exec Compensation

  1. Question: You state: “Likewise, OSHA acknowledges that employers most drug test employees after every accident, regardless of the circumstances, if testing is required by the employer’s workers’ compensation insurer.”

    Where in the final rule is that located? The exception for following state and federal drug testing laws is easy to find but I couldn’t locate a reference for the insurance requirement exception.

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    • The concept in the rule is that blanket drug testing would be allowed if it is required by state law or where state law provides for a reduction in insurance premiums if an employer implements a “drug free workplace policy” and complies with the statute’s provisions. Many drug free workplace statutes that offer premium reductions require blanket post-incident drug testing.

      The Preamble to OSHA’s Final Rule states:

      A few commenters also raised the concern that the final rule will conflict with drug testing requirements contained in workers’ compensation laws. This concern is unwarranted. If an employer conducts drug testing to comply with the requirements of a state or federal law or regulation, the employer’s motive would not be retaliatory and the final rule would not prohibit such testing. This is doubly true because Section 4(b)(4) of the Act prohibits OSHA from superseding or affecting workers’ compensation laws. 29 U.S.C. 653(b)(4).

      81 Fed. Reg. 29623, 29673 (May 12, 2016).

      This clearly permits employers to conduct post-incident drug tests in order to comply with workers’ compensation laws. Likewise, as I mentioned, many states also have voluntary Drug Free Workplace statutes that offer employers a reduction in their insurance premiums if they choose to adopt such policies. Although employers are not required to implement such policies, if they choose to do so to reduce their insurance premiums, they must comply with the regulations of those statutes – many of which require post-incident drug testing. It would appear that if an employer conducts post-accident drug tests consistent with the requirements of a state’s DFWP statute, OSHA will not find a violation of §1904.35(b)(1)(iv).

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