On August 1, 2016, OSHA’s civil penalties increased by nearly 80 percent to a new high of $124,709 per violation (for willful and repeat violations) and to more than $12,000 for serious and other-than-serious citation items. The higher fines will apply to citations relating back to inspections that predate August 1st for which citations had not yet been issued. OSHA has a 6-month statute of limitations in which to issue citations and their penalties, so soon all citations will carry the new fines. Each year thereafter, OSHA now has authority to increase its penalties annually, indexed to inflation, so more changes lie ahead.
What isn’t yet clear is the real-world impact of the revised penalties, especially because OSHA is often quick to play “let’s make a deal” during its informal conferences. There are specific reductions for quick abatement, for small business size, for having a strong written safety and health program, etc., and other penalty reductions are achievable if the employer adds a sweetener, such as agreeing to third-party audits, adoption of a safety and health management program, changes in incentive programs, providing enhanced training, such as the OSHA 30-hour course for supervisors or the 10-hour course for all rank and file workers.
Among the possible reductions, even if a citation is upheld as valid: a 10-80 percent reduction for an employer with fewer than 250 employees, 10 percent off if the employer has been inspected in the past 5 years and received no willful or repeated violations, and 15 percent reduction for fixing the hazard within 24 hours of the inspection (after the condition is pointed out by the inspector but prior to the citation being issued). OSHA particularly stresses the “quick fix” option because, once the employer formally contests the citation, abatement requirements are stayed pending the outcome of litigation.
So, the practical results of the major penalty enhancement can be blunted by proactive approaches to citation conferences. Blunted too much, according to the Center for Progressive Reform (CPR), which released its new report, “OSHA’s Discount on Danger,” this summer, shortly before the penalty increases took effect (which marked the first OSHA fine hike since 1990). CPR strongly criticized Congress for not modernizing the Occupational Safety & Health Act of 1970, failing to close loopholes in the law, and placing budgetary constraints on OSHA enforcement, which had challenged the agency’s ability to address emerging hazards in a timely manner and to enforce existing standards.
The CPR report studied private sector OSHA enforcement cases that were finalized during the Obama administration through June 8, 2016. It looked at penalties imposed for all violations cited in fatality investigations, penalties imposed for willful violations in hazard complaint cases, and also specifically looked at all penalties imposed in poultry processing facilities for any time of investigation. It concluded that the amounts by which OSHA reduces penalties “threatens to negate the deterrent value of citations.” For example, in 2012, the average penalties in a fatality case totaled $9,800 initially, but the average post-settlement penalties in such cases dropped to $6,300. The average “willful” violation penalty started at $49,500 but settled for $21,000, which the average willful citations in a hazard complaint case dropped from $140,000 to $98,000 in settlement.
CPR made a number of recommendations that OSHA will likely take to heart in the next administration (depending on the outcome of the election, of course):

  • Empower workers and their representatives by giving them a meaningful voice in the settlement process. CPR suggests that OSHA include workers in settlement conferences, possibly with a separate conference if requested, and that employees who filed hazard complaints should be informed of possible settlement terms, period of abatement required, protections against whistleblower retaliation, and other issues germane to the case.
  • Provide OSHA area offices with additional guidance on calculating penalty reductions and negotiating settlements. The guidance should discourage officials from agreeing to large discounts and other concessions “as a matter of practice.” Specifically, CPR says that penalty reductions should be off the table when the economic benefits of noncompliance exceed the proposed penalties. Area offices should demand that employers do more than just “comply” with the law in order to get a beneficial settlement.
  • Establish national guidelines discouraging informal settlement of cases involving “unconscionable” violations, such as those involving trench collapses, machine guarding, lockout/tag out violations, or cases involving hospitalizations or fatalities.

CPR adds that citations should only be withdrawn (vacated), modified, or reclassified when there is clear error on the part of the inspector, when evidence clearly cannot support the citations, or when the employer has provided convincing evidence to support an affirmative defense (e.g., unpreventable employee misconduct).
Meanwhile, as OSHA considers its response to the CPR report, conferences continue apace and beneficial outcomes remain frequent. They are typically held within the first 15 working days after the employer receives the citation and penalty package. If the employer does not file a written notice of contest before that period elapses, the penalties become final if not otherwise altered during conference. Simply scheduling the conference does not preserve your contest rights, however, so if the OSHA office cannot squeeze in your case before the contest period elapses, you have no choice but to file a formal contest. Most office will still hold a conference even if a contest was filed, but any settlement must be ratified by the U.S. Department of Labor’s solicitor’s office.
Strategically, it is almost always worthwhile to conference citations and penalties, taking every opportunity to get favorable changes made to the underlying citation, or to take advantage of the reductions that often are offered by the area director if appropriate mitigating information is presented or affirmative defenses are persuasively presented. It is worth noting, of course, that OSHA can make citations worse, for example increasing negligence based on information presented at conference and changing a serious citation to a willful violation if the employer makes admissions against interest. Most critically, if evidence is presented that supports a finding that false statements were initially given or falsified documents were produced to OSHA, criminal prosecution can follow! In fact, in late 2015, the U.S. Department of Justice advised its attorneys to consider prosecuting more OSHA cases in the future. Therefore, particularly in significant cases, employers should consider availing themselves of the right to counsel at the conference level. The stakes are getting higher and higher. ■
About The Author:  Adele L. Abrams, Esq., CMSP, is an attorney and safety professional who is president of the Law Office of Adele L. Abrams PC, a nine-attorney firm that represents employees in OSHA and MSHA matters nationwide. The firm also provides occupational safety and health consultation, training, and auditing services. For more information, visit www.safety-law.com.
Modern Contractor Solutions – September 2016
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