On October 11, 2018, in an about-face on prior guidance, the Occupational Safety and Health Administration (OSHA) issued a significant Standard Interpretation Memorandum regarding safety-incentive programs and post-incident drug/alcohol testing.  In the new Memorandum, OSHA shifts course and clarifies that such programs and testing are permitted if properly drafted and enforced.

Background

In May 2016, OSHA published a new Electronic Injury and Illness Reporting Rule (“the 2016 Rule”).  In addition to creating an electronic injury reporting standard, the guidance accompanying the 2016 Rule made several significant changes to OSHA’s anti-retaliation regulations, and increased employer obligations to ensure that employees who report work-related injuries and illnesses are not subject to retaliation. 

In the preamble to the 2016 Rule, OSHA discussed how the Rule would apply to actions taken under safety-incentive programs and post-incident drug/alcohol testing policies.  OSHA’s stated concern was that safety-incentive programs and post-incident drug/alcohol testing policies could deter employees from reporting injuries or illnesses.  Indeed, OSHA stated that any safety-incentive program that could be construed to incentivize employees not to report an injury or illness would violate the Rule.  OSHA also indicated that safety-incentive programs that reward non-injured employees with safety bonuses or other rewards based on injury- or incident-free periods could be unlawful, to the extent  these sorts of incentives could deter employees from reporting injuries or illnesses. 

OSHA further warned that employers could not use post-accident or incident drug/alcohol testing, or the threat of such testing, as a form or retaliation against employees who report injuries or illness from accidents.  In further commentary and guidance on the 2016 Rule, OSHA opined that post-accident testing would survive agency scrutiny only if there was a “reasonable possibility” that substance impairment caused a work-related accident and the test was administered in a manner that would allow the employer to identify whether the individual was impaired at the time of the accident.

OSHA’s preamble and guidance has created considerable confusion among employers regarding the permissible scope of safety-incentive programs and post-incident drug/alcohol testing under the 2016 Rule.

OSHA’s New Standard Interpretation—Safety-Incentive Programs

In its October 11, 2018 Standard Interpretation Memorandum, OSHA clarified that the 2016 Rule does not prohibit safety-incentive programs.  In an important shift, OSHA now acknowledges that safety-incentive programs “can be an important tool to promote workplace safety and health.”  

OSHA also describes types of incentive programs it believes are permissible under the Rule.  Safety-incentive programs that “reward[] workers for reporting near-misses or hazards, and encourages involvement in a safety and health management system,” are “always permissible” under the 2016 Rule to the extent that such programs provide positive reinforcement for reporting illnesses and injuries.

The new Standard Interpretation also discusses rate-based safety-incentive programs (“rate-based programs”), which focus on reducing the number of reported injuries and illnesses by offering prizes or bonuses based on injury- or incident-free periods, or evaluating managers based on their work unit’s number of injuries.  OSHA now indicates that these rate-based programs are permissible “as long as they are not implemented in a manner that discourages reporting [of injury or illness].”  The agency warns that “if an employer takes a negative action against an employee” under a rate-based program, such as withholding a prize or bonus, the program remains permissible only if the employer has “implemented adequate precautions to ensure employees feel free to continue reporting injury or illness.”  Precautions are deemed sufficient if the rate-based program includes elements such as:

• an incentive program that rewards employees for identifying unsafe conditions in the workplace;

• a training program for all employees to reinforce reporting rights and responsibilities and emphasizes the employer’s non-retaliation policy; and

• a mechanism  for accurately evaluating employees’ willingness to report injuries and illnesses.

OSHA’s New Standard Interpretation—Post-Incident Drug/Alcohol Testing

In a development favorable to employers, OSHA has moved away from its initial 2016 claim that post-incident testing was permitted only when the employer believed there was a “reasonable possibility” that illegal drug (or alcohol) use “could have contributed” to the incident.  Now, a request for a post-accident test would violate OSHA injury-reporting retaliation prohibitions only “if the employer took action to penalize the employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health.”  The new interpretation eliminates any suggestion that post-incident testing be based on “suspicion” that employee drug or alcohol use contributed to an accident. 

Pronouncing “most instances of workplace drug testing” are allowed under the injury reporting rule, OSHA specifically deemed all of the following drug testing to be permissible:   

• Random drug testing.

• Drug testing unrelated to the reporting of a work-related injury or illness.

• Drug testing under a state workers’ compensation law.

• Drug testing under other federal law, such as a U.S. Department of Transportation rule.

• Drug testing to evaluate the root cause of a workplace incident that harmed or could have harmed employees.  If the employer chooses to use drug testing to investigate the incident, the employer should test all employees whose conduct could have contributed to the incident, not just employees who reported injuries.

Thus, employers will want to make sure they state somewhere in their post-incident testing policy that the Company “reserves the right to test all employees whose conduct may have contributed” to the incident. 

Prior Interpretations Superseded; Enforcement Under New Standard Required

Two other statements in OSHA’s new Memorandum also are very helpful for employers, both with respect to incentive programs and post-incident drug/alcohol testing:

To the extent any other OSHA interpretive documents could be construed as inconsistent with the interpretive position articulated here, this memorandum supersedes them.

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Regional Administrators shall enforce 29 C.F.R. § 1904.35(b)(1)(iv) in a manner consistent with this memorandum and shall consult DEP before issuing any citations under this provision related to workplace safety incentive programs or post-incident drug testing.

Agency commentary and guidance that severely limited both incentive programs and post-accident testing policies will therefore no longer be enforced under the injury reporting rule; rather, employers need only adhere to the more flexible approaches identified in the new Standard Interpretation Memorandum.

Reviewing and Updating Policies

Safety-incentive programs that provide positive rewards to employees who report workplace injuries or illnesses are always lawful.  Rate-based safety incentive programs that provide negative consequences for occurrences and/or reports of workplace injuries or illness are lawful only if the programs include adequate protective measures that ensure employees will not be discouraged from reporting illnesses and injuries, including (1) positive rewards for identifying unsafe conditions in the workplace, (2) training that reinforces reporting rights and responsibility and a company’s anti-retaliation policy; and (3) an accurate way to evaluate employee willingness to report injuries and illnesses.

Additionally, most forms of workplace drug/alcohol testing will survive OSHA scrutiny in retaliation-based injury reporting audits and complaint proceedings.  Post-accident testing programs in particular—which OSHA acknowledges promote safety—need only specify that all employees whose acts may have contributed to a workplace accident will be subject to testing.  An employer that conducts such tests should include any employees who may have caused or contributed to an accident, and not only  those who report injuries.  Broader testing without a “contributed to” standard continues to be allowed when no workplace injury occurs, such as situations in which an accident leads to property damage, but is subject to state law and any regulated testing requirements.

Bottom Line

OSHA’s new Standard Interpretation Memorandum recognizes the value of safety incentive programs and post-incident drug and alcohol testing applied in a non-retaliatory manner.  This guidance supersedes all prior, inconsistent interpretative guidance regarding the 2016 Rule. Employers should review their safety-incentive programs and post-incident drug testing procedures for compliance with OSHA’s new policy.