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  • Writer's pictureJohn Larrimer

Should Employers Have Incentive Programs for Workplace Safety?

Last week, the Occupational Health and Safety Administration was criticized by Great American Insurance Co. for discouraging companies from implementing incentive programs for workplace safety. More specifically, OSHA said in a 2012 memorandum that incentive programs, such as additional compensation, performance evaluations and rewards, essentially discourage workers from reporting any on-the-job injuries to their employers.

However, Great American Insurance and its Strategic Comp division submitted a formal testimony to the National Advisory Committee for OSHA. The company argued its incentive programs adopted by clients do not condone unlawful retaliation in response to reported injuries, nor do the incentive programs affect the number of work injuries and illnesses reported. Rather, Great American Insurance representatives say the programs are essential to positively influence safety cultures and actually prevent workplace accidents and fatalities.

Are Incentive Programs Effective in Reducing the Number of Workplace Accidents?

According to Strategic Comp, which has approximately 700,000 employers that are policy holders, the number of catastrophic injury claims were 59 percent below the National Council on Compensation Insurance predictions. However, the amount of injury claims that were reported on or before the two-week deadline was 94 percent, which is 12 percent more than the industry average. This shows incentive programs are not discouraging workers from reporting their injuries.

According to a representative from Strategic Comp, there may be isolated cases of deliberate underreporting with companies. However, the right thing for OSHA to do would be to exercise enforcement with those companies, rather than establish an arbitrary rule or decree. OSHA’s 2012 memorandum, though not an official standard, gives incentive programs a negative connotation. As a result, employers are less likely to implement these incentive programs for fear of biased enforcement actions from OSHA.

The Data Shows Incentive Programs May Work

While it is true isolated incidents occur where employers discourage their workers from reporting injuries or discriminate against them when they do, the data provided by Strategic Comp shows that incentive programs may actually have a positive effect on workplace safety. That said, OSHA should look into its own study or consider the data before issuing any informal decrees that may affect how companies structure their workers’ comp insurance policies.

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