New initiatives bolster whistleblower program and challenge commonly used safety incentive programs; employers should reevaluate their programs and be prepared for extensive investigations.
The Occupational Safety and Health Administration (OSHA) recently launched a series of initiatives to strengthen the Department of Labor's (DOL's) Whistleblower Protection Program. These initiatives impact virtually all employers, especially those in the transportation and energy industries and the many others who are subject to Section 11(c) of the Occupational Safety and Health Act (OSH Act). Highlighting all of these developments, OSHA's senior career official, Deputy Assistant Secretary Richard Fairfax, released a policy memorandum on March 12, 2012 (the Fairfax Memo), that will dramatically change the way in which employers can implement employee discipline and safety incentive programs. The Fairfax Memo confirms what many concerned employers already suspected—OSHA has taken aggressive steps toward revamping its whistleblower program and throwing its weight behind whistleblower complainants. In a May 11, 2010, speech, the then newly appointed Assistant Secretary of Labor Dr. David Michaels lamented that, in the previous year, OSHA investigators had found that only 3% of all whistleblower claims had merit. He attributed this low rate to "institutional, administrative, and legislative barriers" that he viewed as "standing between whistleblowers and justice." Dr. Michaels promised to raise this rate, which he termed an "injustice for the affected workers." As leaders at OSHA focus their attention on whistleblower protection, employers must respond in turn. This LawFlash provides an overview of key OSHA whistleblower initiatives and makes several suggestions for employers who want to prepare for these significant changes to OSHA whistleblower enforcement.
OSHA's Restructured and Revamped Whistleblower Program
For the last several years, leaders at OSHA have called for more resources to support the whistleblower program, as well as changes to increase merit findings and further support employees' rights to assert whistleblower claims. In his May 2010 speech, Assistant Secretary of Labor Dr. Michaels pointed out that "[i]t has been said that OSHA's 'whistleblower protection program does not appear to be on the radar of the agency's leadership.' I respectfully disagree. This may have been true in the past, but currently, the leadership of the Department of Labor profoundly understands . . . the cornerstone position that whistleblower protections have in the foundation of a strong worker protection program." This call to action was spurred, in part, by 2009 and 2010 Government Accountability Office (GAO) audits finding OSHA's whistleblower program to be ineffective and overwhelmed by systemic problems with its internal controls, transparency, accountability, and training. In April 2010, OSHA commissioned a "top to bottom" review of the entire program to address issues raised by the GAO, identify new problems, and prepare recommendations. Based on the GAO audits and the internal review, OSHA announced several significant changes to its Whistleblower Protection Program in August 2011. In so doing, Dr. Michaels emphasized that the "ability of workers to speak out and exercise their legal rights without fear of retaliation is crucial to many of the legal protections and safeguards that all Americans value," and that the "new measures will significantly strengthen OSHA's enforcement of the 21 whistleblower laws that Congress charged OSHA with administering."
Actions Taken to Bolster OSHA's Whistleblower Program
OSHA's August 2011 announcement focused on changes in four major areas designed to bolster its whistleblower program: (1) restructuring, (2) training, (3) program policy, and (4) internal systems. Since then, OSHA has made good on its promise of change, implementing substantial initiatives in each category and updating its whistleblower regulations.
OSHA's Office of the Whistleblower Protection Program was moved out from under the umbrella of OSHA's Directorate of Enforcement Programs. As of March 1, 2012, the office now reports directly to the Office of the Assistant Secretary. In announcing the move, the DOL noted that the realignment "represents a significantly elevated priority status for whistleblower enforcement." The whistleblower program now will have direct access to the head of the agency and increased resources.
The DOL's 2012 budget established a separate line item for OSHA's whistleblower program to "better track and hold accountable its activities and accomplishments."
OSHA added a significant number of new personnel, including 25 new investigators and 75 support staff, in FY 2011. OSHA has also requested funding for 45 additional investigators in FY 2012 to help "improve the administration and stature of the program."
OSHA increased its emphasis on investigator training and, as part of this increased emphasis, conducted its first-ever national whistleblower training for federal and state plan investigators and DOL solicitors in September 2011. To illustrate the significance attached to this training, and in recognition of Morgan Lewis's experience in this area, attorneys from the firm were asked to help conduct the training. OSHA also invited experienced whistleblower plaintiff attorneys to participate.
OSHA released a rewritten Whistleblower Investigations Manual on September 20, 2011. The manual memorializes procedural changes that make it easier for employees to file and prosecute whistleblower complaints. Among other things, the manual clarifies that OSHA will accept oral complaints, which is expected to help employees meet the short 30-day deadline for filing complaints under Section 11(c) and the whistleblower protection provisions contained in numerous environmental and transportation statutes. Importantly, the manual now specifically requires investigators to "make every attempt to interview the complainant in all cases." The manual also provides more guidance for investigators on how to identify unlawful retaliation.
OSHA strengthened its audit program by expanding its information database and adding self-audit requirements "to ensure that complaints are properly handled on a timely basis" and "to better track the progress of outstanding investigations" and appeals.
OSHA revised regulations implementing several of the whistleblower protection provisions that it administers. See 29 C.F.R. Part 24. Under its revised regulations, documentary materials provided by employers to OSHA in response to whistleblower complaints now also will be given to complainants.
In sum, these changes will inevitably result in an increased number of investigations and potentially a higher percentage of substantiated claims. To date, we have observed an increase in the number of witness interviews during OSHA investigations. Investigators are also increasingly requiring employers to provide broad categories of documentation and, per the OSHA Whistleblower Investigations Manual, go on to provide this documentation directly to complainants. As a result of OSHA's expansive document requests and increased number of witness interviews, employers are now faced with a host of issues that are ordinarily associated with the discovery stage of the administrative process, not the investigative stage. In short, investigations have become more time-consuming and expensive for employers.
The Fairfax Memo
Publication of the Fairfax Memo signaled OSHA's resolve to scrutinize employers' safety incentive and discipline policies and practices. Specifically, the memo aggressively attacks traditional safety incentive programs that, at present, are widely used by a variety of employers. Such programs tie performance reviews, wages, bonuses, or other rewards to achieving goals of reducing workplace injuries. A traditional incentive program might, for example, award a group of employees a cash bonus for injury-free or accident-free work over a period of time. The Fairfax Memo notes that such traditional programs, perhaps unintentionally, provide employees with an incentive not to report on-the-job injuries.
According to the Fairfax Memo, employees subject to traditional incentive programs may fear that they or their entire work group will be disqualified from receiving an incentive if they report an injury or safety issue. Thus, a program that rewards lower reported injuries or safety violations may constitute unlawful retaliation under the OSH Act or FRSA because it punishes employees for engaging in the act of reporting—a protected activity. For this reason, Dr. Michaels has stated that "we strongly disapprove of . . . programs that award managers large bonuses for driving down their injury rates." According to the Fairfax Memo, these traditional programs also may violate the injury record-keeping provisions of the OSH Act, particularly the requirement "to ensure that employees have a way to report work-related injuries" under 29 C.F.R. § 1904.35(b)(1).
In addition to the concerns noted with traditional safety incentive programs, the Fairfax Memo cites employer work rules and disciplinary practices as potentially discriminatory policies. For example, the Fairfax Memo states that employer work rules such as "work carefully" and "maintain situational awareness" are vague and may violate whistleblower statutes if they are enforced more stringently against injured employees than non-injured employees. OSHA will scrutinize such work rules to ensure that they are not used as pretexts for discrimination against a worker who reports an injury. Depending on how the Fairfax Memo ultimately is enforced, a wide variety of employer work rules could be challenged by OSHA through the whistleblower investigative process.
Moreover, the Fairfax Memo takes a strong stance against per se safety rules that punish all injured employees regardless of fault or circumstances. The memo instead encourages employers to adopt objective measures to evaluate employees and respond to reported safety violations. The Fairfax Memo also warns against policies that punish employees for violating rules concerning the time frame during which injuries must be reported or the manner in which they must be reported, explaining that this practice likely violates OSH Act Section 11(c), OSH Act record-keeping regulations, or the FRSA.
The Fairfax Memo is another example of the DOL taking a more expansive view of whether a particular management action amounts to an adverse employment action that can form the basis of a retaliation claim. Historically, such actions had to have a material impact on the terms and conditions of an individual's employment. The U.S. Supreme Court in its 2006 Burlington Northern decision, however, expanded the definition of "adverse employment action" to an action that "might have dissuaded reasonable workers from" reporting a protected concern. See Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 68 (2006). The Fairfax Memo explicitly instructs OSHA compliance officers and investigative personnel to consider the Burlington Northern standard in evaluating safety incentive programs. When the Administrative Review Board (ARB), the supreme adjudicatory body at the DOL, first adopted this definition, it indicated that the new standard would not result in a "departure from past practice[s]" and would be of "no consequence." Melton v. Yellow Transp., Inc., ALJ No. 2005-STA-002, ARB No. 06-052 (Sept. 30, 2008). More recent ARB decisions prove this is not the case.
In a recent decision under SOX, which contains a whistleblower protection provision that protects employees from retaliation for raising concerns about corporate fraud, the ARB stated that the Burlington Northern standard provides a useful "starting point," suggesting that it might even go beyond the standard. Menendez v. Halliburton, Inc., ARB Nos. 09-002, 09-003, ALJ No. 2007-SOX-005 (ARB Sept. 13, 2011). The Fairfax Memo demonstrates that OSHA is picking up where the ARB left off and identifying a new potential adverse action, namely the implementation of a safety incentive program that could dissuade a reasonable worker from reporting an injury.
To reduce the risks from whistleblower enforcement or other OSHA investigations triggered by these complaints, employers should consider evaluating safety incentive programs, particularly traditional incentive programs, as well as work and disciplinary rules in light of the Fairfax Memo. For example, employers should consider developing incentive programs based on nontraditional incentive metrics, such as promoting worker participation in safety-related activities, hazard identifications, training, and accident or near-miss investigations. Typically, nontraditional programs encourage employee participation in these safety programs to promote a culture of safety and health with the goal of preventing safety-related issues down the road. Employers should be aware, however, that nontraditional metrics are sometimes difficult to objectively measure and track.
Implications for Employers
The various changes designed to bolster OSHA's whistleblower program, together with the Fairfax Memo, represent a significant departure from past practice—employers should expect OSHA to aggressively review employers' internal decisions in areas such as employee discipline, work rules, and safety incentive programs. Even more important, employers should be prepared for an increase in the number of whistleblower investigations conducted by OSHA and for longer and more invasive investigations that will include more document requests and witness interviews. Whether these investigations result in a greater number of merit findings to uphold these complaints remains to be seen. Nevertheless, employers have been put on notice that an increase in meritorious findings is one of the main objectives behind revamping OSHA's Whistleblower Protection Program.
. OSHA is responsible for enforcing whistleblower provisions contained in 21 separate statutes. All employers may be subject to OSH Act Section 11(c), which protects employees who believe that they have been the subject of an adverse employment action in retaliation for engaging in activities related to workplace safety or health. 29 U.S.C. § 660(c). In addition, employers in the transportation industry are subject to the following OSHA-enforced statutes: Surface Transportation Assistance Act (STAA), 49 U.S.C. § 31105; Federal Railroad Safety Act (FRSA), 49 U.S.C. § 20109; National Transit Systems Security Act (NTSSA), 6 U.S.C. § 1142; Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21), 49 U.S.C. § 42121; Seaman's Protection Act (SPA), 46 U.S.C. § 2114; and International Safe Container Act (ISCA), 46 U.S.C. § 80507. Moreover, employers in the energy industry are subject to the following OSHA-enforced statutes: Energy Reorganization Act (ERA), 42 U.S.C. § 5851; Clean Air Act (CAA), 42 U.S.C. § 7622; Safe Drinking Water Act (SDWA), 42 U.S.C. § 300j-9(i); Federal Water Pollution Control Act (FWPCA), 33 U.S.C. § 1367; Solid Waste Disposal Act (SWDA), 42 U.S.C. § 6971; Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9610; Asbestos Hazard Emergency Response Act (AHERA), 15 U.S.C. § 2651; and Toxic Substances Control Act (TSCA), 15 U.S.C. § 2622. Finally, employers subject to the Sarbanes-Oxley Act (SOX)—including certain publicly traded companies or companies with certain Securities and Exchange Commission (SEC) reporting requirements and their contractors, subcontractors, and agents—are also subject to SOX's OSHA-enforced whistleblower provision. See 18 U.S.C. § 1514A.