Regulatory Risk

A Rule Too Far?

The most recent revision to OSHA’s reporting and recordkeeping rule may turn certain common safety practices into regulatory violations.
By: | December 14, 2016 • 7 min read

OSHA’s revised recording and reporting rule has kicked up a dust storm of objections from employers and professional organizations across multiple sectors.

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The new rule impacts the public disclosure of injury reporting, the timeliness required to report injuries, the ability of employers to determine whether the worker was impaired by drugs or alcohol at the time of injury, and criteria used in safety incentive programs.

The rule, titled “Improve Tracking Workplace Injuries and Illnesses,” revised in May for the first time since 2001, requires that employers electronically submit the data that they are already required to record on their onsite OSHA injury and illness forms.

The change drew heat when OSHA announced its intent to make a portion of the data public on its website.

“Our new rule will ‘nudge’ employers to prevent work injuries to show investors, job seekers, customers and the public they operate safe and well-managed facilities,” Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels said in a statement.

Randy Johnson, senior vice president of labor, immigration and employee benefits, U.S. Chamber of Commerce

Randy Johnson, senior vice president of labor, immigration and employee benefits, U.S. Chamber of Commerce

Critics likened the tactic to public shaming, and expressed concerns about the data painting a skewed picture of employer safety efforts.

Public disclosure of such data “fails to show the complete narrative of a company’s safety record or its efforts to promote a safe work environment,” said Associated Builders and Contractors’ Vice President of Health, Safety, Environment and Workforce Development Greg Sizemore in March.

A statement from the U.S. Chamber of Commerce was far more damning.

“This will only create a new filing requirement that will lead to sensitive employer data being published without context or explanation,” said U.S. Chamber of Commerce Senior Vice President of Labor, Immigration and Employee Benefits Randy Johnson.

“The agency’s excessive reporting requirements will lead to employers being falsely branded as unsafe … . Additionally, OSHA’s obsession with shaming employers has not led to better results in workplace safety and this regulation will not change that trend.”

Johnson added that publicly disclosed injury and illness data would likely be misused by labor unions and would also lead to an increase in frivolous lawsuits. Not mincing words, Johnson called the revised rule “poorly conceived, unworkable and unauthorized.”

Responding to concerns that public disclosure would motivate employers to underreport illnesses and injuries, OSHA included provisions to the final rule intended to counter employer practices that might discourage or prevent employees from reporting illness or injures.

Those provisions, however, turned out to be even more controversial than public disclosure.

Anti-Retaliation Measures

Section 1904.35 of the final rule states that a company’s injury and illness reporting procedures must be “reasonable,” meaning easy to follow, and that any procedure that would deter or discourage reporting is not reasonable.

This provision takes aim squarely at employers with complicated, confusing or “unduly burdensome” procedures for reporting injuries or illnesses. It also wags a finger at rigid prompt reporting policies that penalize workers for not reporting a condition immediately, or within a very tight window such as by the end of shift or within 24 hours.

Overly rigid reporting policies, reasoned OSHA, automatically preclude the reporting of conditions that develop over time, such as musculoskeletal disorders or other problems that might have delayed onset of symptoms. In other situations, a worker might not be able to report within a proscribed period of time because he or she is incapacitated or otherwise briefly unable to report an illness or injury.

A large number of employers have a routine mandatory drug testing policy for all injured workers. Such policies could now come under OSHA scrutiny.

If a policy specifies “immediate” reporting of injuries or illnesses, “you don’t necessarily have to take that word out, but you might want to add a little wiggle room that says ‘immediately or as soon as it’s feasible or possible to do so,’ ” said Pat Miller, a member of Sherman & Howard LLC, during a November webinar hosted by Lockton.

The other two new provisions of section 1904 pertain to retaliation against employees for reporting injuries and illnesses. Of particular alarm for employers is the prohibition against routine post-injury drug testing without a legitimate “objectively reasonable basis” for doing so.

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Part of the agency’s rationale is that common methods of testing can determine whether a person used drugs in the recent past, but cannot distinguish whether a person was actually under the influence at the time of the incident. For that reason, some workers may avoid reporting injuries for fear of testing positive due to drug use that occurred days or weeks prior to the incident.

A large number of employers have a routine mandatory drug testing policy for all injured workers. Such policies could now come under OSHA scrutiny.

“It’s inconceivable to those of us who study how to improve safety performance that OSHA would want to limit drug and alcohol testing as part of the investigation after an accident or near-miss incident,” said ABC’s Sizemore. “Root cause analysis is key to developing procedures that prevent future incidents, so we need to know whether drugs or alcohol were a factor.”

OSHA specified that employers should only mandate post-injury drug tests if it is likely that the injury was caused by drug use. For many companies, that will put the burden on front-line supervisors to decide whether there is probable cause to test a worker for drug use after an injury.

But the rule doesn’t take into account whether those supervisors are qualified to make those determinations, said Bob Trinkleback, SVP and casualty risk control leader at JLT Specialty USA. The Department of Transportation, he said, requires that all supervisors receive drug and alcohol training that addresses reasonable suspicion, but a similar requirement doesn’t exist for general industry.

“I don’t think OSHA has thought through [reasonable suspicion] as well as they should,” said Trinkleback.

Response from employers runs the gamut.

Mark Sullivan, senior casualty risk control consultant, Aon

Mark Sullivan, senior casualty risk control consultant, Aon

“We have some [clients] that are changing policies and some that are taking a wait and see approach … . There are very mixed feelings as to how they’re going to respond to it,” said Mark Sullivan, senior casualty risk control consultant with Aon.

A few employers seem determined to defy OSHA on this point, consequences be damned. On the opposite end of the spectrum, Trinkleback said some of his clients intend to cease post-incident drug testing altogether.

But those wanting to avoid those two extremes still have options, he said.

“You have to have a process,” said Trinkleback. That might mean requiring two trained supervisors to agree that testing is warranted in a particular case. “If they both agree, then those two should get on a call with legal, risk management and safety and talk about the facts and document everything.”

At least then, whether the worker’s test comes back negative or positive, the company can counter any retaliation claim by showing that it followed established protocols. Having a process and following it consistently is the best way to stay on safe ground with OSHA while continuing to utilize post-incident drug testing.

In a memorandum dated Oct. 19, OSHA clarified that the revised rule does not apply to drug testing for reasons unrelated to injuries or illnesses, or testing conducted post-injury in compliance with a state workers’ compensation law, or other state or federal law.

Will Your Raffle Get You Cited?

Another common practice that now may run afoul of OSHA’s rule is the ubiquitous safety incentive program. Not all incentive programs are problematic. However, companies with incentive programs tied solely to OSHA recordable injuries, lost-time injuries, or any type of reportable illness or injury, could find themselves in the hot seat.

The agency has expressed concern that workers might not be reporting injuries for fear of losing a desired incentive reward, or fear of compromising a department or work group’s eligibility to receive a coveted group award. That kind of pressure can be a powerful deterrent.

“OSHA just doesn’t want the peer pressure that says, ‘Oh, you’re the one who reported the OSHA recordable and we lost the trip to Hawaii?’ ” said Trinkleback.

Programs that reward employees or departments for following safety procedures, reporting unsafe working conditions, or completing safety training would all pass muster with OSHA. However, holding a raffle for all employees who have worked six months without an injury would be considered a violation.

“Out of a misguided zeal to improve accuracy of reporting on workplace injuries … OSHA has lost sight of the importance of reducing the number and severity of injuries themselves.” — Randy Johnson, SVP of labor, immigration and employee benefits, U.S. Chamber of Commerce

“[OSHA wants programs] that incentivize people for doing the right things,” said Aon’s Sullivan. “Are they participating in training, are they identifying hazards, correcting those hazards, participating in safety committees, attending required training.”

Tying incentives to those leading indicators will keep companies off of OSHA’s radar. Employers can also look for ways to combine the two, said Trinkleback.

“If you can blend in some leading indicators that are meaningful, that will impact your trailing indicators, you’ve got the best of both worlds,” he said.

Legal Challenge

OSHA said that the anti-retaliation provisions are intended to ensure that all workers receive proper care and compensation for legitimate workplace injuries. The secondary goal is to ensure maximum accuracy in illness and injury reporting “to enable ‘big data’ researchers to apply their skills to making workplaces safer.”

But many feel that OSHA has missed the mark.

“Out of a misguided zeal to improve accuracy of reporting on workplace injuries … OSHA has lost sight of the importance of reducing the number and severity of injuries themselves,” said the Chamber’s Johnson.

Still more have accused OSHA of overstepping its authority, circumventing the standard-making process by using the lengthy preamble to the rule to lay out the parameters of the rule itself.

“Part of the problem,” said Sullivan, “is that this was passed as a rule rather than a standard, and all of the enforcement guidance sits in the preamble to the actual law. That’s very unlike OSHA’s normal approach when they publish a standard … and it’s got employers very concerned.”

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“It’s kind of a backdoor way of getting their interpretations in without actually having to put the language in a final rule,” said Miller, during the Lockton webinar.

In July, the National Association of Manufacturers, Great American Insurance Co. and several other organizations challenged the rule in the U.S. District Court for the Northern District of Texas. Consequently, the effective date of the anti-retaliation provisions was pushed from Aug. 10 to Nov. 1, and then to Dec. 1.

While the legal dance goes on, employers are left with troubling questions about what steps to take. And of course, the 2016 election results could change everthing.

“Congress may eliminate this new rule,” said Trinkleback. “It’s happened before — it happened with the ergonomics standard.”

After labor organizations fought for two decades for an ergonomics standard, OSHA finalized an ergonomics rule in November 2000. President George W. Bush repealed it in March 2001, two months after taking office. &

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Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now and where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]