In addition to exposing their employees to serious injuries and even fatalities, non-compliant employers expose themselves to severe punitive measures, including huge fines and penalties and even potential criminal liability directed towards business owners. When these things happen, businesses often suffer additional public humiliation and PR nightmares when OSHA issues press releases that get published and written about in local newspapers, trade journals and on-line for the local community, competitors and worst of all, customers to see. If that weren’t bad enough, according to the recently approved Federal budget for 2016, OSHA has been authorized to increase fines next year to account for inflation back dated to 1996 which will result in an estimated 80% increase to the existing fine schedule (see details below).
Recent OSHA Enforcement Trends
- OSHA enforcement efforts are currently at historically high levels and have been rising consistently since 2008 with no signs of slowing down.
- The number of “Significant Enforcement Cases” (ie: single inspection resulting in total fines exceeding $100,000) has more than doubled since 2007.
- Fines are issued in over 75% of inspections of manufacturers. This percentage rises dramatically for manufacturers who don’t have a full time, qualified health & safety manager.
- The average comprehensive OSHA enforcement inspection fine ranges between $15,000 and $50,000, but in many cases can exceed $100,000.
- OSHA could show up at your door at any time, without warning to conduct an enforcement inspection.
- Historical data shows that 20% of all inspections are triggered by an employee complaint, but this number rose to 23% in 2013 (most recent data). This is because OSHA is giving increased attention to “whistleblower” complaints in recent years.
What Can Trigger An OSHA Inspection?
- Poor safety performance: High DART scores (Days Away, Restricted, Transfer) can result in companies being added to OSHA’s “SST Program” (Site Specific Targeting Program) and targeted for inspections. These inspections are typically “comprehensive” in nature, and will include scrutiny of all aspects of a company’s OSHA compliance programs including policies, procedures, employee training records, record keeping requirements, & physical hazards on the shop floor. These “comprehensive” inspections typically result in the highest fines.
- National Emphasis Programs (NEPs): OSHA continually identifies high hazard industries and specific hazards to be targeted for comprehensive inspections. Examples of current NEPs in Texas that impact manufacturers include Fall Protection, Steel Fabricators, and Noise hazards.
- Employee injury or fatality: OSHA instituted new injury and fatality reporting guidelines that went into effect January 1st of 2015 as follows:
o Report all fatalities to OSHA within eight hours
o Report each work-related inpatient hospitalization, as well as amputations and losses of an eye, to OSHA within 24 hours
When OSHA receives notification of a serious employee injury, or especially a fatality, they will often respond with an enforcement inspection.
Explanation of Various Citation Types
- WILLFUL: A willful violation is defined as a violation in which the employer either knowingly failed to comply with a legal requirement (purposeful disregard) or acted with plain indifference to employee safety.
- SERIOUS: A serious violation exists when the workplace hazard could cause an accident or illness that would most likely result in death or serious physical harm, unless the employer did not know or could not have known of the violation. This is the most common type of citation.
- REPEATED: A company may be cited for a repeated violation if the company has been cited previously for the same or a substantially similar condition and, for a serious violation, OSHA’s region wide inspection history for the agency lists a previous OSHA Notice issued within the past five years; or, for an other-than-serious violation, the establishment being inspected received a previous OSHA Notice issued within the past five years.
- OTHER-THAN-SERIOUS: A violation that has a direct relationship to job safety and health, but is not serious in nature, is classified as “other-than-serious.”
OSHA Fines Set To Increase By 78% in August, 2016
The recently passed Bipartisan Budget Act of 2015, H.R. 1314, Sec. 701, signed into law by President Obama on November 2nd, 2015 allows for significant increases for OSHA civil penalties and fines to keep pace with inflation, retroactively to 1996. The provision apparently allows for continued increases in OSHA fines to account for future costs of inflation.
Based upon the “CPI Inflation Calculator” from the Bureau of Labor Statistics (BLS) website, the maximum allowable OSHA fines beginning next year are estimated to be:
- “Other Than Serious” citations have a current maximum fine of $7,000, but will increase to as much as $12,500 each
- “Serious” citations have a current maximum fine of $7,000 but will increase to as much as $12,500 each
- “Willful” citations have a current maximum fine of $70,000 but will increase to as much as $125,000 each
- “Repeat” citations have current maximum fine of $70,000 but will increase to as much as $125,000 each
See details from the new legislation below:
Sec. 701. Civil monetary penalty inflation adjustments.
Section 701(a) establishes the short title for this section as the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.” Section 701(b) amends the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note) to:
1. Require all agencies with civil monetary penalties covered by the statute to update penalties based on their value in the last update prior to 1996 and the change in the CPI between that date and October 2015. The increase in penalties that results from this “catch up” calculation would be capped at 150% (so a penalty now set at $10,000 could not increase to more than $25,000).
4. Apply these provisions to the Occupational Safety and Health Act and civil penalties assessed under the Social Security Act.
Presumably these increases will help cover the massive US debt and budget deficit, since OSHA fines are not payable directly to OSHA, but instead to the United States Treasury.
Potential Personal Criminal Liability for Business Owners
Most business owners don’t understand that there’s potential personal criminal liability associated with work related fatalities, but there is:
- If an employer is convicted of a willful violation of an OSHA standard that has resulted in the death of an employee, the offense is punishable by a court imposed fine or by imprisonment for up to 6 months or both.
- A fine of up to $250,000 for an individual, or $500,000 for a corporation, may be imposed for a criminal conviction.
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