Insurers to OSHA: Stop bad-mouthing incentive programs

Many companies attempt to control the cost of safety breaches with monetary incentives for employees. Now, a national insurance giant is blasting OSHA for suggesting employers nix incentive programs because they encourage workers to hide injuries and may target employers for OSHA inspections.  

In its recently updated Safety and Health Program Management guidelines, OSHA reiterates its position that safety incentive programs for workers or managers that tie performance evaluations, compensation or rewards to low injury and illness rates can discourage injury and illness reporting.

“OSHA has completely ignored the benefits of these programs for years,” said lawyer Lawrence Halprin, counsel for the Great American Insurance Company in Cincinnati. Halprin testified at the National Advisory Committee for Occupational Safety and Health (NACOSH) on behalf of the company.

Halprin said catastrophic injury claims reported by his company’s clients – those greater than $475,000 – were 59% below the National Council on Compensation Insurance actuarial estimations.

“The data that’s available indicates there is no pervasive underreporting in the United States that is in any way intentional,” he said.

“The right approach is using the enforcement tools that are at hand – not go and establish some sort of rule or discouraging policy that results in the inability to use these kinds of programs,” he said.

Incentive programs have long been a Catch-22 for the safety industry. They’re designed to reward safe behavior on the job, but OSHA has beaten the drum since 2012, saying the programs keep workers from reporting injuries.

Because the updated safety and health program management guidance basically refer to incentive programs as “bad,” Halprin said employers will be discouraged from using them for fear of being targeted for recordkeeping violations.

Halprin called on OSHA to strike the language discouraging incentive programs from the updated guidelines.

NACOSH does not adopt Halprin’s view on incentive programs.

“My experience has been with a number of these programs is that we see a spike in the non-occupational side because people are hesitant to report their injuries as occupational,” said Joseph Van Houten, senior director of safety at Johnson & Johnson in New Jersey and a NACOSH employer representative.

“They want to be treated, so they go to their personal physicians for injuries,” Houten said.

Incentive programs: What not to do

Beware of the following red flags when it comes to incentive programs:

1.  Zero injuries as a reward. The bait – cash bonuses, prize drawings, paid time off –  is a real temptation that in certain cases could discourage workers from reporting injuries.
2. Late-reporting penalties: Some workers don’t realize they’ve been injured at first and symptoms sometimes don’t show up for days or even weeks. Prepare for some stiff whistleblower action if you take this tack.
3. Punishing injured workers. The idea is to discipline workers for safety infractions – not for getting hurt. You’re asking for a heap of trouble if you exile workers to the penalty box after they’ve been injured because they break the rules.