Year-end Alerts to Employers — Part 1: OSHA Reporting Rules Effective December 1, 2016

This is the first installment of a series of year-end alerts for employers. This alert focuses on OSHA reporting rule changes.

Part 2: Paycheck Transparency Rules Effective January 1, 2017

Part 3: Paid Sick Leave for Federal Contractors Effective January 1, 2017

Part 4: Confidentiality Rules Under Fire – Be Warned!

A rash of lawsuits filed this fall challenged a number of new federal requirements imposed by the outgoing Obama Administration. Some of these court challenges have been successful, e.g., recent injunctions prohibiting enforcement of the new overtime regulations, and the new “persuader” rules. This Alert is the first of four year-end reminders to employers of other federal requirements that have recently become effective or will be effective as of January 1, 2017. Some of these federal requirements may be changed by the Trump Administration, but for the time being, employers need to assume that these federal rules apply.

Court Ruling on OSHA Rules. On November 28, 2016, a Texas federal court denied a request by trade groups to enjoin the new OSHA reporting requirements that limit the use of incident-based employer safety incentive programs and/or routine mandatory post-accident drug testing programs. [1] These OSHA rules became effective December 1, 2016.

The Challenge. The lawsuit challenged three new OSHA rules announced on May 11, 2016 (29 CFR § 1904.35(e)(1)):

(1)        reporting procedures for workplace injuries by employees must be “reasonable;”

(2)        employees must be informed of their right to report work-related injuries free from retaliation; and

(3)        retaliation and discrimination against those who report workplace injuries or safety issues is prohibited.

While employers already had an obligation not to retaliate and discriminate against employees for reporting work-related injuries, the trade groups focused on examples listed in the Preamble to the new regulations that raised serious concerns. For example:

It is a violation . . . for an employer to take adverse action against an employee for reporting a work-related injury or illness, whether or not such adverse action was part of an incentive program. Therefore, it is a violation [of OSHA] for an employer to use an incentive program to take adverse action, including denying a benefit, because an employee reports a work-related injury or illness. This could include disqualifying an employee from monetary bonus or other action as this action could discourage or deter a reasonable employee from reporting the work-related injury or illness.

The trade group’s concern was that this language could be used to prohibit employers from continuing to use incentive bonus systems where bonuses are tied to no workplace injuries.

The trade groups also pointed to the following Preamble language and argued OSHA will take the position that mandatory drug testing is prohibited after a work-related accident.

Drug testing policies should limit post-incident testing to situations in which an employee’s drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use. For example, you would likely not be reasonable to drug test an employee who reports a bee sting, or repetitive strain injury or an injury caused by a lack of a machine guarding or malfunction. A drug-testing policy [that mandates testing in that situation] is likely only to deter reporting without contributing to the employer’s understanding of why the injury occurred . . . . Employers need not specifically suspect drug use before testing, but 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 the employer to require drug testing. . . . Drug testing that is designed in any way that may be perceived as punitive or embarrassing to the employee is likely to deter injury reporting.

The trade groups argued that declaring these types of actions to be retaliatory will jeopardize the widespread use of incentive-based safety incentives as well as mandatory post-accident drug testing programs which are relied on by many employers to promote and help ensure workplace safety.

The Court found that the trade groups failed to prove that the use of mandatory post-accident drug testing programs dramatically reduce workplace injuries or that those injuries would increase if employers were required to eliminate or modify those programs. More importantly, the Court indicated that it agreed with OSHA that while the Preamble does reference criticisms of these safety programs, the Rule itself did not include a per se ban on post-accident drug testing or incident-based safety-sensitive programs. Instead, the Rules make it clear that such determination will require a case-by-case analysis of the specific programs used.

Action Items

• Large employers and many others with more than 25 employees will need to be prepared to submit workplace injury and illness reports electronically – beginning July 1, 2017.
• Employers need to review their reporting policies for workplace injuries to ensure they will be viewed as “reasonable” under OSHA’s new rules.
• OSHA says employees must be given a “reasonable” time frame to report injuries or illnesses, especially those injuries or illnesses that develop over time. Policies that require “immediate” reporting of workplace accidents are likely to be found “unreasonable.”
• Employers must inform employees of the new reporting procedures and advise them of the protections from retaliation or discrimination provided when making a report.
• Company policies that mandate that employees must be drug tested after every workplace accident will likely be considered “unreasonable.” Drug-testing policies need to be reviewed and revised with these new Rules in mind.
• Company safety-incentive programs that reward employees for achieving low injury rates need to be reviewed to ensure that program does not have the effect of excluding (in a disciplinary way) a worker who reports a work-related injury.

Employers who have questions regarding their safety-incentive programs and drug-testing programs should contact members of Gentry Locke’s Employment Law Team.

[1] The case is Texo ABC/AGC IN, Inc., et al. v. Perez, et al. Case No. 3:16-cv-01998 (N.D. Texas, November 28, 2016).