Higher OSHA Fines Raise Employer Concerns, Questions

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By Bruce Rolfsen

July 19 — With OSHA fines increasing by up to 78 percent starting Aug. 2, attorneys representing employers worry OSHA will delay some citations in order to take advantage of higher penalties.

They also want the agency to explain how it will calculate penalties and reductions under the new fine ceilings.

“Clients are expressing concern that OSHA might be waiting to issue citations and proposed penalties in the clients’ pending inspections begun after Nov. 2, 2015,” attorney Eric Hobbs of Ogletree Deakins PC told Bloomberg BNA. “And, I’m confident OSHA is doing so, but only in cases with which they’re trying to make a point or send a message.”

Ben Huggett of Littler Mendelson PC told Bloomberg BNA, “Although there is no reason to believe OSHA will intentionally delay closing the average case until after July 30 in order to collect greater penalties, for those cases where OSHA has decided to issue a willful violation—and thus to expressly punish the employer for its conduct—the agency could decide to wait so that greater penalties could be issued.”

A different opinion came from Charlie Morgan, an attorney with Alston & Bird LLP.

“In my view, OSHA is focused more on the abatement/correction of the alleged condition rather than the penalty, so they would not want to delay issuing the citation,” Morgan told Bloomberg BNA.

“Also, OSHA’s deadline for issuing citations is relatively short—six months—so I doubt they want to add in any more delay on what is already somewhat of a tight time frame,” Morgan added. “I will of course be proven wrong if we see a slew of OSHA citations issued on Aug. 2.”

Increase Amounts

OSHA maximum fines increase approximately 78 percent on Aug. 2, raising the highest willful or repeat violation penalty from $70,000 to $124,709 and boosting the cap for serious and failure-to-abate violations from $7,000 to $12,471.

The federal law authorizing the increases, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, didn't raise minimum fines for serious and failure-to-abate violations. The law did raise the minimum repeat or willful to $8,908, up from the current penalty of $5,000.

OSHA maximum fines hadn't been increased since 1990. The boost—actually 78.156 percent—adjusts for inflation since then. The Department of Labor's interim final rule (RIN:1290-AA31) explaining the new maximum penalties was issued June 30 (81 Fed. Reg. 43,429) and takes effect Aug. 1.

The new fine levels apply to any citation issued beginning Aug. 2, even if the inspection and alleged violations occurred months before.

Lesser Fines, Major Concerns

While much of the attention has focused on maximum penalties, the increase can also apply to lower fines. For example, a violation that had warranted a $1,000 fine could become a $1,780 penalty.

Although the final rule setting the new maximums doesn't address how OSHA will calculate fines, James Curtis of Seyfarth Shaw LLP said he expects OSHA will increase fines across all levels by 78 percent.

Exactly how the new maximums will affect lower fines isn't known outside of OSHA because the agency hasn't shared its guidance, Curtis said.

The overnight increase in penalties could produce cases in which fines for similar violations cited just days apart produce very different fines.

Huggett said that based on his prior experience when Mine Safety and Health Administration penalties were increased, it may be possible to resolve some of the unfairness of higher penalties during settlement discussions with OSHA.

Limited Options

Employers who were inspected several months ago and are expecting to be cited don't have many administrative options to speed up OSHA's internal review process in order to have citations issued before Aug. 2, attorneys said.

“For any employers with pending inspections where the company would like to see the citations issued before July 29, it is important that they ensure all outstanding document or interview requests are complied with so that OSHA can conclude its inspection,” Huggett said. “Unfortunately, beyond that, there is little that employers can do to speed up the government.”

Penalty Manual

OSHA last updated guidance for determining penalties in the 2015 edition of the agency's Field Operations Manual, a handbook detailing the inspection and citation process.

Penalties are based on the probability of a hazard injuring a worker and the severity of the likely injury, the manual says. The combined probability and severity determine the violation's “gravity.” The higher the gravity, the higher the fine.

The manual's calculation tables used to determine the “gravity-based penalty” call for fines of $3,000 to $7,000 for serious violations and $5,000 to $70,000 for repeat and willful violations.

The proposed “gravity-based penalty” can be reduced by several factors such as the number of employees, whether prior inspections found the workplace to be in compliance with OSHA requirements, and if the employer had a safety and health management system in place.

To contact the reporter on this story: Bruce Rolfsen in Washington at brolfsen@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com .

For More Information

The interim final rule is available at http://src.bna.com/gpb.

A DOL factsheet on fine increases is available at http://src.bna.com/g11.

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