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Potential Impact of OSHA’s New Illness & Injury Recordkeeping Rule for Manufacturers

As of August 10, 2016, companies with more than 250 employees as well as firms with more than 20 employees but fewer that 250 that fall into a high-hazard industry, such as the manufacturing industry, are now subject to the Occupational Safety and Health Administration’s (OSHA) new recordkeeping rule for workplace illnesses and injuries. Under the new rule, employers that fall into these two categories will be required to electronically submit the data they already collect to OSHA, which in turn will publish the information on its website. The data submission obligations will be phased in over two years, according to OSHA. Employers with 250 or more employees must submit the required 300A Annual Summary by July 1, 2017, and employers with 20 to 249 employees in “high-hazard” industries must submit their 2016 and 2017 300A Summaries by July 1, 2017 and 2018, respectively.

Employers operating in state plans, such as California, are subject to the new rule, too, as the OSHA-approved state programs must adopt “substantially identical” requirements within six months.

In its press release, OSHA’s Assistant Secretary of Labor for Occupational Safety and Health, Dr. David Michaels, stated that the new reporting requirements will “nudge employers to prevent worker injuries and illnesses to demonstrate to investors, job seekers, customers and the public that they operate safe and well-managed facilities. Access to injury data will also help OSHA better target our compliance assistance and enforcement resources at establishments where workers are at greatest risk, and enable ‘big data’ researchers to apply their skills to making workplaces safer.”

Before this new rule, which was announced in May, most employers with more than 10 employees were required to keep records of occupational injuries and illnesses at their operations. Employers had to record each employee injury and illness on an OSHA Form 300, also known as a “Log of Work-Related Injuries and Illnesses.” This new amendment adds requirements for electronic submission to OSHA of the injury and illness information employers already are required to keep.

There are many concerns over this new rule, not the least of which is that the public will now have access to the information online, including competitors, prospective employees, shareholders, union organizers and disgruntled former employees, who can use this data to negatively impact a company’s reputation. The Risk & Insurance Management Society Inc. (RIMS), for example, stated in a recent press release, “OSHA’s new rule requiring the publishing of employee injuries can increase litigation against an organization and can also be used against an organization by industry competitors.”

RIMS also raised concerns that inaccurate safety ratings, reporting redundancies and cyber exposures would result from the new rule on electronic recordkeeping of workplace injuries. Additionally, Carolyn Snow, president of RIMS, stated that the proposed OSHA rule would have an adverse effect on organizations’ risk management practices. “While the intent of the rule, to ensure workplace safety for employees, is critical, the information being required from organizations would be incomplete. It would promote organizations to stop tracking minor incidents and, essentially, lead to the misrepresentation of many employers’ safety records.”

OSHA’s New Rule Effect on Post-Injury Drug Testing and Safety Incentive Policies

Other concerns over the new rule involve OSHA’s stance against blanket mandates of post-incident drug testing. OSHA’s new rule does not ban drug testing of employees, but it does prohibit employers from using drug testing or the threat of it as a form of adverse action against employees who report injuries or illnesses. It is unclear what will happen to employers who enforce post-incident drug testing policies that OSHA deems unreasonable, although several experts say they expect the agency will attempt to cite employers.

OSHA does, however, recognize that employers who conduct post-accident testing mandated by federal regulations (e.g., interstate transportation) or per state Workers’ Compensation laws, many of which include “drug-free workplace” incentive programs, are not affected by the new rule.

What does this mean for employers? According to an article in the National Law Forum, this part of the new rule seeks to discourage employer safety incentive and disincentive policies and practices, which may have employers rethinking any policies they have in place designed to enhance workplace safety so they don’t find themselves in hot water with OSHA. The National Law Forum article recommends employers avoid using an incentive program to “take adverse action, including denying a benefit, because an employee reports a work-related injury or illness, such as disqualifying the employee for a monetary bonus or any other action that would discourage or deter a reasonable employee from reporting the work-related injury or illness.” In contrast, the article makes clear that OSHA instructs that if “an incentive program makes a reward contingent upon, for example, whether employees correctly follow legitimate safety rules rather than whether they reported any injuries or illnesses, the program would not violate this provision.” The rule, therefore, looks favorably on positive reinforcement, such as paying a bonus for serving on a safety committee or submitting a safety suggestion adopted by the company, while at the same time it prohibits the imposition of consequences for engaging in protected activities such as reporting an illness or injury.

To address this rather muddled stance by OSHA, the National Law Forum recommends employers taking the following measures:

  • Consider modifying your drug and alcohol testing policies to allow for discretion in obvious cases in which drug use or testing are clearly unrelated to an employee’s injuries and revisit the reasonableness of your drug testing procedures with your employment attorney. Be mindful, however, that with discretion comes the potential for inconsistent application of the policies and follow-on disparate treatment claims.
  • Examine your safety incentive and disincentive policies and practices carefully, asking whether the policies and/or practices could be perceived as deterring or discouraging employees from reporting an injury or illness. Certain management bonus plans may similarly be viewed as incentivizing managers to discriminate against employees who report illnesses and injuries if the effect of doing so negatively impacts the manager’s bonus eligibility (i.e., where the bonus is tied to the OSHA recordable rates). If the potential for either conclusion exists, consider discontinuing or revising those policies and/or practices.
  • Begin preparations to shift from paper-based recordkeeping methods to an electronic system compatible with OSHA’s data submission portal.
  • Train the individuals responsible for injury and illness recordkeeping and reporting so they fully understand the new rule.

Precision Manufacturing Insurance Services (PMIS) specializes in providing total insurance solutions for manufacturers throughout California and will continue to keep you updated on this new OSHA ruling as well as others that may affect your firm. For information about our insurance products and services, contact us at 855.910.5788.

Sources: OSHA, RIMS, Business Insurance, National Law Forum

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