On April 22, 2010, David Michaels issued a memo to the OSHA Regional Administrators outlining changes to OSHA’s penalty policies.  Some of these administrative changes are being made now and will end with the advanced reprogramming of government computers and updating OSHA Information System scheduled to be completed by October 2010.  Shown below are the anticipated changes.

Previously OSHA went back three years to check if an employer had a history of violations.  This historical look will now go back five years.  If an employer has been inspected in the last five years and has no serious, willful, repeat, or failure-to-abate violations, employer receives a 10 percent penalty reduction for history.  If an employer has been cited by OSHA in the past five years for any high gravity serious, willful, repeat or failure-to-abate, they will receive a 10% penalty increase up to the statutory minimum.  If an employer has not been inspected or received any of the citations mentioned above, they will not receive a reduction or increase.

The time period to determine repeat violations will also increase from three to five years, also.

The agency will be adopting a penalty reduction for size.  Employers with 250 employees or less will receive a reduction of 10-40 percent.  Larger employers with 251 employees or more are not eligible for a size reduction.

Good faith reduction procedures will be kept.  The good faith penalty reduction is given to an employer who has made an effort to implement an effective safety and health program.  Employers are not eligible for a good faith reduction if they are receiving a high-gravity serious, willful, repeat or failure-to-abate violation.

The 15% Quick Fix reduction is retained and given to employers who immediately abate hazards found during an inspection.  However, the 10% strategic partnership reduction is eliminated.

Another interesting modification to the penalty calculation is that the penalties will be calculated serially, rather than the present practice where all of the penalty reductions are added together and the total percentage is used.  Example:  employer receives a $5000 penalty with the following reductions:  10% - history, 15% - good faith, 15% - quick fix and a 30% size reduction. 

Old Method:  Add these together (10+15+15+30) and penalty is reduced by 70%.  The company’s penalty is $1500 ($5000 X 70%).

New Method:  $5,000 X 10% = $500 or penalty is now $4500, reduce $4500 by 15% new penalty is $3825, reduce $3825 by 15% new penalty is $3251, then apply the 30% size reduction and the employer end up with a penalty of $2275.

Old method employer pays $1500, new serially calculation method results in a $2275 penalty.

Gravity based penalties are also increased from $1000 to $3000-$5000.

In an informal hearing, smaller employers (250 or less) are eligible for an additional 20% reduction, if that employer agrees to hire an outside safety and health consultant.

Area directors have authority to offer up to a 30% penalty reduction to employers during an informal conference.  Any reduction over 30% will have to be approved by the Regional Administrator.  However, an employer has to be in good standing—any previous penalties paid (or current with penalty payment plan) to receive any penalty adjustments.

OSHA is raising its penalties.  This is the first time that OSHA raised its penalties since 1990.  A serious violation, one that may cause death or serious injury is raised from a maximum of $7,000 to $12,000, with the average fine $3,000-4,000, up from $1,000.  The maximum penalty for a willful violation is raised from $70,000 to $250,000.

"Although we are making significant adjustments in our penalty policy within the tight constraints of our law, this administrative effort is no substitute for the meaningful and substantial penalty changes included in PAWA," said Dr. Michaels. "OSHA enforcement and penalties are not just a reaction to workplace tragedies. They serve an important preventive function. OSHA inspections and penalties must be large enough to discourage employers from cutting corners or underfunding safety programs to save a few dollars."

$150,000 fine for a worker killed on the job, but a $10 million fine for killing fish in the same incident. Unbelievable!  In the 40 years, that OSHA has been around, there has been only one increase in penalties.  David Michaels, Assistant Secretary for OSHA, tells Congress it’s time for change.  OSHA’s mandate is to protect workers, but their efforts are thwarted by some unscrupulous employers who find it cheaper to pay a small fine rather than make the required changes.

OSHA can only visit a small number of workplaces each year and a way is needed to ensure employers comply with safety.  Enhanced penalties will be an incentive for employers to “do the right thing”.

Federal civil penalty for a serious violation is $7000.  A serious violation is ones that pose a substantial probability of death or serious physical harm to workers.  In fact, if a worker is killed the maximum fine is $70,000.

In no way are these penalties putting a price on a worker’s life, but a deterrent to employers to ensure compliance.  The increase in penalties will bring OSHA into the 21^st century and their penalties comparable to other government agencies. Some examples, the Department of Agriculture can fine up to $130,000 to a milk processor for willful violations and the Environmental Protection Agency can impose a penalty of $325,000 for Clean Air Act violations.

Do I think a penalty increase is a good thing?  Sometimes.  Good employers can be swept up with the bad ones.  Even though an employer is doing everything right, it is challenging to prove.  I know what you’re going to say, if there is a violation an employer is guilty and there are safeguards built in to protect them.  In my opinion the OSHA system is based on the concept of guilty until proven innocent and I have seen employers with a concern for their employee’s health and safety hit with some massive undeserved fines.  While they have been successful in proving their innocence, it is still time-consuming and expensive.

If penalty increase brings the bad apples to task and they start complying with OSHA regulations then I’m all for it. If it saves even one life, I’m all for it.  If it makes doing business for the good guys onerous and more expensive, then I’m against it.  I want OSHA to carry a big stick, let’s wait and see how they wield it.