OSHA MATH: CALCULATING THE FULL IMPACT OF THE 2016 PENALTY INCREASE

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

Under the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015, OSHA penalties will undergo annual inflation adjustments beginning on January 15, 2017. A one-time “catch up adjustment”, however, must be announced by the agency by July 1, 2016. This “catch up adjustment” will take effect no later than August 1, 2016.  The purpose of this one-time “catch up adjustment” is to make inflation adjustments since the last increase in OSHA fines in 1990.

Many experts are predicting that the “catch up adjustment” could mean an 80% increase in OSHA penalties effective August 1. The following shows how such an increase would affect the current maximum penalties:

“Other then Serious” and “Serious” Violations:

  • $7,000 currently
  • $12,600 after August 1, 2016

“Willful” and “Repeat” Violations:

  • $70,000 currently
  • $126,000 after August 1, 2016

“Failure to Abate” Violations:

  • $7,000 per day currently
  • $12,600 per day after August 1, 2016

To fully appreciate the full importance of these increases, however, employers must also understand the means by which penalties can be assessed by OSHA.  A single OSHA inspection can result in multiple penalties based upon the number of violations and/or hazards discovered.  On October 29, 2009, for instance, BP Products of North America was assessed a record $81,340,000 in total penalties based upon only two inspections.

OSHA, moreover, generally combines separate violations of a single OSHA standard into one proposed penalty. Similarly, when a single hazard violates more than one OSHA standard, the violations may be grouped into one proposed penalty. There are instances, however, when violations will not be combined or grouped into one proposed penalty:

Multiple Establishments or Worksites:  Violations of an OSHA standard at more than one establishment or worksite of the same employer generally draw a separate penalty for each establishment or worksite.

Multiple Employee Exposures: For egregious violations, a penalty can be assessed for each employee exposed to a single hazard. CPL 02-00-080

Multiple Violations of OSHA Standard: For egregious violations, a penalty can be assessed for each violation of the same OSHA standard. CPL 02-00-080

For most OSHA inspections, therefore, the full impact of the penalty increases will be multiplied by the number of discovered violations and/or hazards. For egregious violators, the full impact of the penalty increases may be multiplied even further.  This much is certain; the number of OSHA inspections resulting in combined penalties exceeding six figures and seven figures will increase dramatically beginning this year.

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ENTERPRISE-WIDE ABATEMENT RULING RAISES STAKES OF OSHA INSPECTIONS!

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

A citation stemming from an OSHA inspection typically specifies (1) the hazards which must be abated by the employer, and (2) the deadline for abating the hazards.  For employers with multiple locations,  these abatement requirements have historically been limited to hazards at the location inspected by OSHA.  In recent years, however, OSHA has periodically sought to impose enterprise-wide abatement requirements even as to alleged hazards at locations not inspected by the agency.

Proposing broader abatement requirements for employers with multiple locations is not merely a remedial strategy of OSHA.  An employer subject to enterprise-wide abatement requirements is also vulnerable to future enterprise-wide inspections by the agency to  verify that the requirements are being followed.

A September 30, 2013 ruling by Administrative Law Judge William Coleman in Secretary of Labor v.  Delta Elevator Service Corp.  placed the legality of OSHA’s strategy in doubt. In rejecting OSHA’s request for enterprise-wide abatement,  Judge Coleman ruled that “while enterprise-wide abatement has occurred in [Occupational Safety & Health Review] Commission cases where the parties have agreed to such abatement in a voluntary settlement agreement … there is no Commission or other precedent holding that such abatement may be directed pursuant to the “other appropriate relief” clause in Section 10(c) of the [OSH] Act.”  He also noted: “… the requested relief in this case would require an order that (1) is not based on any work performed at a worksite where an inspection took place, and (2) is not the subject of any allegation contained in the citation …”

A December 23, 2015 OSHA news release, however, boasts of a new ruling which the agency now contends provides precedent for enterprise-wide abatement requirements.  In Secretary of Labor v. Central Transport, LLC,  Administrative Law Judge Carol A. Baumerich ruled that, under the “other appropriate relief” clause in Section 10(c) of the OSH Act, the “Commission has the authority … to  order  enterprise-wide relief in cases where appropriate.”

To be sure, OSHA’s news release may be overstating the importance of an un-reviewed decision by one Administrative Law Judge.   After all, Judge Baumerich specifically noted that Judge Coleman’s earlier 2013 ruling was “not controlling” as to her ruling.  Still, the underlying message of the news release is plain – OSHA will continue to seek enterprise-wide abatements from employers with multiple locations.  Indeed, OSHA may be emboldened to make such requests more commonplace.  Employers with multiple locations must thus consider that the financial stakes of an inspection may have just been raised by OSHA.

WHAT IS AT STAKE IN AN OSHA INSPECTION?

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

Suppose a plaintiff’s lawyer arrives unannounced at a private employer’s work site and asks for permission to collect evidence to support a potential future personal injury suit against the employer.  The employer’s decision would be a an easy one; the plaintiff’s lawyer would be sent on his way.  Absent a court order obtained during discovery in a civil suit which has already been filed, a plaintiff’s lawyer generally does not have the legal authority to enter the private property of an employer for the purpose of collecting evidence, if any, which can be used against the employer.  By that time, however, the employer is likely in a better position to defend against a personal injury suit than the date of the plaintiff’s lawyer’s unannounced arrival.

The surprise arrival of an OSHA Compliance Safety & Health Officer at an employer’s work site certainly presents a different situation for an employer.  After all, the Occupational Safety & Health Act (“OSH Act”) grants OSHA the legal authority to enter and inspect an employer’s place of work without any prior notice to the employer.  The purpose of OSHA’s visit, however, is similar to that of the plaintiff’s lawyer above – to collect evidence, if any, which can be used against the employer.  Rather than seeking such evidence to be used in a personal injury suit, however, the Compliance Officer is looking for evidence to support one or more citations against the employer.  In this respect, the inspection is the beginning of a civil or even criminal legal process in which the employer is suddenly and without warning on the defensive.  At stake are fines which can be up to $70,000 for each willful or repeat violation, and criminal penalties which can include imprisonment for a willful violation which results in an employee’s death.

To be sure, compliance with the OSH Act and OSHA Standards is the best defense to an OSHA inspection.  Even good faith efforts to comply with the OSH Act and OSHA Standards, however, do not always rid a work place of violations.  Furthermore, many citations are simply the product of faulty paperwork by an employer and not an actual unsafe condition in the workplace.

Fortunately for employers,  due process , statutory and procedural protections are available in the event of an OSHA inspection.  There is also no law which prohibits an employer from developing and maintaining contingency plans in the event of an inspection.  Other than compliance, education and preparation are thus the best defense strategies for an employer for minimizing the risk of a costly inspection.  It is the hope of this writer that this blog will assist employers in this education and preparation.