Editor's Note: Part 1 of this series was published on Oct. 1. Because of the Columbus Day/Thanksgiving holiday, there was no newsletter last Monday. To preserve the flow, we've published the story in its entirety. If you already read Part 1 and don't want to read it again, skip down to the section subtitled, "The Government View."

Programs that offer workers incentives and rewards to work safely are a source of considerable controversy. In his recent series, SafetyXChange advisor Wayne Pardy provides an excellent overview of the voluminous literature the topic has inspired. But there's one aspect of incentive programs that hasn't received much attention: their impact on an organization's compliance with OSHA/OHS laws. I'd like to talk about that now by focusing on how regulators in the U.S. and Canada view these programs.

A Tale of Two Countries

Americans and Canadians are governed by similar workplace occupational health and safety regulatory schemes. Federal, state and provincial OSHA/OHS laws and regulations describe the duties of employers (and, in Canada, of workers) to maintain a safe workplace.

The first and most obvious question to ask is what, if anything, these laws say about safety incentives. Are employers required to offer them? Are they allowed to? The short answers to these questions:

The Legality of Incentive Programs

Let's briefly explain the reasons for these answers.

Are They Required? OSHA/OHS statutes and regulations don't specifically address the topic of safety incentives. So offering safety incentives isn't a legal requirement.

Are They Legal? What the OSHA/OHS laws do say is that employers must keep records of and report workplace injuries, illnesses and fatalities. And therein lies the problem. The offering of safety incentives may be inconsistent with the employer's obligation to record and report injuries and illnesses.

The concern is that by offering workers rewards to work safely, employers are actually discouraging them from reporting illnesses and injuries. Because many incentives are based on group performance, they also tend to promote peer pressure to "suck up" minor ailments rather than report them and put the group's reward at peril.

The Government View

The most vocal critics of safety incentives come from industry circles, academia and organized labor. But do governments share the same concern? Let's look at official attitudes from both sides of the border.

Incentives & OSHA

There's a lot of misinformation floating around about where OSHA stands with regard to incentives.

Myth 1: OSHA Has Banned Incentives. This is utter nonsense.

Myth 2: OSHA Has Cited Employers for Offering Incentives. According to accounts in union publications, OSHA has cited employers that offer incentives for violations of the OSHA Recordkeeping Standard. Although I can't categorically say that these reports are false, I couldn't find any actual cases confirming them. If you're aware of such cases, please let me know (glennd@bongarde.com).

Myth 3: OSHA Discourages Employers from Offering Incentives. In fact, OSHA does regard safety incentives with some suspicion. But it doesn't discourage them. The problem is that OSHA hasn't issued an official document that fully expresses its views on the subject. So we have to piece together scraps of evidence from indirect sources to get a fix on what OSHA really thinks about incentives. What we know comes from these sources:

The 1996 Interpretation Letter

An employer asked OSHA if it would be illegal to exclude workers placed by a temporary agency from participating in the company's incentive program. OSHA said no and added:

"Some safety incentive programs actually present concerns to OSHA. Many employers have excellent safety incentive programs, but there are also some negative or dubious incentive programs that actually encourage employees to not report workplace injuries and illnesses."

[OSHA Interpretation Letter, April 30, 1996].

Compliance Officer Directive

More evidence of OSHA's skepticism with regard to incentives comes from Richard Fairfax, the agency's former compliance program director for Washington, DC. In 1999, Fairfax confirmed that OSHA had ordered its compliance officers to scrutinize incentive programs and issue citations if they encourage under-reporting. (As noted above, I couldn't find any cases in which such citations were actually issued.)

Fairfax is also cited as stating, "the fact that some employers use these programs in lieu of formal health and safety program is of very real concern to us."

The NACOSH Study

In 1997, the National Advisory Committee on Occupational Safety and Health (NACOSH), whose members include a significant contingent from organized labor, got the green light to do a formal study on incentive programs. Unfortunately, I was unable to locate a copy of the final study. So what I know about it comes from second hand reports.

NACOSH apparently conducted a comprehensive review of the literature on incentive programs and reached the following conclusions:

Of these findings, the last is the most important. It suggests that while OSHA might regard incentives with suspicion, structuring the program in a way that encourages reporting and other activities designed to promote safety rather than on trailing indicator accident experience is acceptable to OSHA.

Incentives in Canada

In Canada, there's even less official guidance about safety incentives than there is in the U.S.

The most direct expression of incentive policy comes from CCOHS Canada, the agency that oversees the federal OHS program (remember that in Canada, OHS regulation occurs at the provincial level and the federal OHS rules apply only to the about 10 to 15% of employers in inter-provincial enterprises such as telecommunication, airlines and railroads). In an OSH Answers first published in 1998, CCOHS Canada lists safety incentives as one of the measures employers can use to promote health and safety awareness. But it adds the following:

"The safety incentive program is probably the most controversial [of these items]. . . . There are those that maintain that these programs lead to under-reporting of accidents and promoting of the 'walking wounded' syndrome. Programs must not encourage workers to remain at work when doing so is unsafe for them because of their physical condition. Therefore, when an incentive program is launched, strict controls must be maintained to prevent this from happening."

OHS regulators from two provinces, Alberta and BC, have published articles in their official magazines citing with approval an employer's use of safety incentive programs. Each article was a case study of how a company was able to build safety awareness. These articles represent an indirect and highly unofficial approval of the incentives concept.

Conclusion

Safety incentive programs aren't illegal; but they can result in liability under OSHA/OHS laws to the extent they encourage workers not to report injuries. In the U.S., OSHA has indicated that inspectors will check if incentive programs promote under-reporting. But OSHA has also indicated that a program is less likely to raise problems if it's part of a broader health and safety program (as opposed to a substitute for it) and is structured so as to promote activities that contribute to safety, rather than ultimate injury rates.

In Canada, the policy is much less well defined. To the extent regulators are suspicious of these programs, they haven't been vocal about expressing it. And there haven't been any studies, reports or attempts to define the outlines of what kinds of incentive programs are and are not acceptable. Presumably, however, the fuzzy outlines that come out of the NACOSH study in the U.S. would apply in principle to Canadian workplaces.

LAW QUIZ
US or Canada?

U.S. and Canadian occupational health and safety laws are similar but not exactly the same. Here are some basic questions to illustrate some of the differences and similarities between the two countries. We'll list a statement that describes the law. If you think the statement is about Canadian law, list "C"; if you think it's about American law, list "A"; and if you think it's about both countries, list "B".

ANSWERS:

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