The Impact of OSHA Developments on Workers’ Comp: Ch-ch-changes (Turn and Face the Shame)

Warning Employers About a New Enforcement Paradigm

By Karen C. Yotis, Esq., Feature Resident Columnist for the LexisNexis Workers’ Compensation eNewsletter

Something’s afoot at the Occupational Safety & Health Administration, and it’s the kind of sea change that should have employers sniffing the wind in anticipation of a Nor’easter. In the latest edition of out Front ideas with kimberly and mark, attorney and OSHA guru Melissa Bailey and Aon senior risk consultant Mark Sullivan spoke about a general “mood” at OSHA—and the Department of Labor generally—that has government officials going beyond injury and illness to champion the social and economic issues that affect workers. By focusing on a recent OSHA white paper, proposed changes to OSHA reporting guidelines, and OSHA’s troublesome slant on post-accident drug testing and safety incentives, the panelists examined the many ways that the Obama Administration’s OSHA is taking the enforcement uptick experienced during the Clinton years to a whole new level. The out Front panelists shared highlights and details which show how the feds appear to be chipping away at the state-based workers’ compensation system in order to shift on to the employer what is perceived as the cost of failing to protect workers and paving the way for an overall federal illness and injury prevention plan standard. And they’re using enforcement practices akin to Thor’s hammer to promote these policy goals.

A White Paper with Punch

In June of 2015, David Michaels, PhD, MPH, Assistant Secretary of Labor for Occupational Safety and Health released Adding Inequality to Injury: The Costs of Failing to Protect Workers on the Job , which shines a beacon on the failure of the state-based workers’ compensation system to protect the seriously injured from financial ruin. This scathing indictment of the debilitating effect that changes to state workers’ comp programs have had on injured workers states:

“The costs of workplace injury and illness are borne primarily by injured workers, their families, and taxpayer-supported components of the social safety net. Changes in state-based workers’ compensation insurance programs have made it increasingly difficult for injured workers to receive the full benefits (including adequate wage-replacement payments and coverage for medical expenses) to which they are entitled. Employers now provide only a small percentage (about 20%) of the overall financial cost of workplace injuries and illnesses through workers’ compensation. This cost-shift has forced injured workers, their families and taxpayers to subsidize the vast majority of lost income and medical care costs generated by these conditions.”

The white paper echoes the sentiments about increased enforcement and penalties along with the redistribution of the economic and social costs of workplace injuries that OSHA and Dr. Michaels put forth in the press release, video, historical timeline and public forum surrounding the OSHA at 40 initiative.

Viewed by the panelists as a rationale for an overall change in the OSHA process, the white paper was published during the same timeframe in which Pro Publica released its Insult to Injury, America’s Vanishing Worker Protections investigative reporting initiative, and in particular the March 4, 2015 The Demolition of Workers’ Comp, by Pro Publica’s Michael Grabell and NPR’s Howard Berkes, a block-buster piece that took the entire workers’ comp community by storm.

The panelists portrayed the white paper as unprecedented because it takes a policy-based approach that is unrelated to any specific enforcement issue or workplace hazard. In addition, the neutrality which typically underlies an OSHA communiqué was particularly lacking. So while the white paper ostensibly provides support for OSHA’s belief in rampant underreporting and decries benefit cutbacks throughout the nation, the panelists claimed that what it really boils down to is more—and very different—OSHA enforcement.

OSHA also appears to be setting the stage for a future standard. As Bailey explained:

“One of OSHA’s major goals has been to issue an injury illness prevention plan standard that would require employers to canvas the workplace, identify hazards, and take steps to mitigate or eliminate those hazards. I think this paper really could be part of an overall play to pave the way for that kind of standard. Because the message is, workers’ comp is insufficient to make workers whole. It ultimately hurts taxpayers, because these workers are going to public assistance programs because they need that additional compensation, and it is really preventing some workers from entering the middle class, or it is dropping them out of the middle class. What OSHA would say is the best way to deal with that is to require employers to have comprehensive safety and health management plans because that ultimately prevents injuries. That is the way to deal with this problem. So [the white paper] also should be viewed as an effort to promote that effort.”

Regulation by Shaming

The panelists explained the new “cite-first-and-consider-the-actual-evidence-later” approach to regulatory compliance, which has OSHA using press releases as a way to bring employers accused of safety and reporting violations squarely into the public eye. According to the panelists, OSHA compliance officers are even rewarded for issuing especially hard-hitting press announcements. Retractions do not occur. And although the panelists called out public shaming as a shrewd tool for OSHA to use in view of its limited resources, they nevertheless had doubts about whether this tough approach will make a difference in making workers safer (or more financially solvent).

Proposed Electronic Reporting

Employers also need to keep an eagle eye on the proposed rule issued Nov. 8, 2014 [see 29 CFR Parts 1904 and 1952], to improve tracking of workplace injuries and illnesses by amending OSHA’s record keeping regulation to require electronic submission of the data recorded in an employer’s onsite OSHA 300 log. Although the rule’s August 2015 comment period is now extended to October 14, 2015, employers may need as much advance warning as possible to plan for the whirlwind of potential controversy that the panelists felt the proposed rule could possibly generate.

Although it will not require employers to report any new information, the proposed rule nevertheless expands OSHA’s authority to collect data about employees and their workplace illnesses and injuries. This information will then be posted on the OSHA website, which, according to the panelists, not only introduces an entirely new level of public shaming to OSHA’s regulatory approach, but creates a veritable OCEAN of data for a litigator’s fishing expedition.

The panelists claim that OSHA’s rational for the rule (permitting employees—and customers—to check out potential employer’s safety record) is a bunch of hooey, especially when one considers the incredible benefit that details from a 300 log would give to union organizers. Considerably more dangerous to employers are the deep benefits that can be derived from this information by OSHA itself, as its representatives go out into the field with the mindset that all employers are bad actors unless proven otherwise and work to increase the number of willful violations brought against employers with little or no evidentiary support. All of which is leading, according to the panelists’ predictions, to a very convenient path around the exclusive remedy provisions. The panelists—and Mark Walls—also emphasized how evidence that is barely sufficient for an employee’s suit to survive summary judgment nevertheless gets the parties before a jury, generating not only astronomical litigation costs, but potential disaster for the employer that finds itself without insurance coverage for alleged willful conduct. Another troubling detail is the grey area that remains open with respect to whether smaller employers fall within the scope of the proposed rule.

Employers clearly have had much to say during the comment period for the proposed electronic reporting rule, citing the consequences of increased administrative costs, the disadvantage that can arise from releasing information about labor hours to competitors and the potential for an employer’s disqualification under agreements that prohibit contractors from doing business with suppliers that have a record of willful violations. Privacy is also a huge concern, especially in the absence of any logistical details on how OSHA will go about the monumental task of redacting reams of personal information from electronic reports.

From the employers’ point of view, the proposed rule is another way for OSHA to issue more willful violations, expand liability, publish more press releases, herd more employers onto the ominous list via the Severe Violator Enforcement Program and point the finger of shame, shame, shame against employers.

Post-Accident Drug Testing and Safety Incentives—No More Pizza for the VPPs

The panelists also talked about how OSHA’s overriding concerns about underreporting are driving its decidedly contentious attitude towards employers’ post-accident drug testing programs and safety incentive initiatives. For example, if an employer drug tests one employee after a vehicle accident, but does not drug test another employee who caused property damage under different circumstances, OSHA reasons (in spite of the obvious conflict with a number of state laws on post-accident drug testing) that the drug test policy discriminates against injured workers and therefore violates the record-keeping rule. Likewise, safety incentives are thought to contribute to under-reporting based on the notion that an employee will not report an injury so co-workers can all reap the safety benefit. The panelists cautioned that program consistency is a key factor in this area—in spite of the harsh results that could arise. They also warned Voluntary Protection Program participants—these are the super-employers of safety—to obey OSHA’s prohibition against poisoning their employees’ free will with free pizza. The panelists cautioned employers to take note:  OSHA is putting itself right in the middle of employers’ disciplinary business and giving itself the authority to second guess both the carrots and the sticks in a company’s employee relations.

Walk Like a Girl Scout and Be Prepared

While the panelists agreed upon the obvious efficacy of a sound and thorough basic safety management program, they also cautioned that such a program standing on its own might not be enough for an employer that finds itself in OSHA’s regulatory crosshairs amidst the current climate. The best advice the panelists could give was for employers to assume a violation will occur, plan for it in advance and train people to correctly handle and respond to random inspections.

Bailey made a point of warning employers against taking the seemingly easy way out by settling the deceptively minor willful violations when she explained:

“When you actually get that citation I think you need to evaluate it carefully. You get that citation where maybe it is $3,000 and a couple of machine guarding items and OSHA says if you sign the informal settlement agreement, we will cut the penalty in half. It seems easy. You sign the agreement, pay the penalty and put the additional guards on. Then problem will be next time you get machine guarding citations they will be repeat citations or willful citations and that liability starts to snowball. Before you know it you are on the SVEP list. I think it is very important to give thought to strategically settling a case.”

Conspiracy Apocalypse

out Front’s listeners dropped the “C” word during the webinar’s question and answer period. Is it insane to even consider whether there is a secret plan out there to sabotage employers? Walls humored the conspiracy theorists for a moment and asked the panelists to look at the big picture, especially the reporting changes that will create a database with monumental implications for the exclusive remedy backbone of the entire workers’ compensation framework and the white paper that advocates for the shifting of far more than a 33.33 percent share of a workers’ claim upon employers, while adding a decidedly socio-economic element to the components of that claim. This prompted the panelists’ anecdotes about EMTs and emergency room personnel “recruited” to immediately report work-related injury incidents to OSHA, which inevitably results in the type of impromptu OSHA inspection that the panelists warned employers to anticipate. It all prompted Bailey to declare:

“I love that you used the word conspiracy. I do after all these years think about OSHA in those terms sometimes, I will admit. I don’t think it goes too far to think about all these different pieces in this way.”

Worker advocates will no doubt think that the entire conspiracy discussion itself is a bit crazed and unrealistic. But the out Front panelists didn’t mince words and based their employer-centric views on their years of front-line experience. If even half of what they talked about turns out to be true, it’s time for employers to stand tough, dig deep and get ready to rumble.

© Copyright 2015 LexisNexis. All rights reserved.