ATLANTA--Efforts to increase penalties for violating the Occupational Safety and Health Act (OSH Act) have been blocked on Capitol Hill, but the Occupational Safety and Health Administration (OSHA) has taken several steps to increase penalties, Nina Stillman, an attorney with Morgan Lewis in Chicago, noted during a session Tuesday at SHRM's 2012 Annual Conference and Exposition.
OSH Act penalties are low, she said. When a tank full of sulfuric acid exploded at the Motiva Enterprises oil refinery in Delaware, it killed Jeff Davis, a refinery worker, whose body dissolved in the acid. The OSH Act penalty was only $175,000. But in the same incident, there was a $10 million penalty for violating the Clean Water Act for the death of fish and crabs.
Assistant Secretary of Labor for OSHA David Michaels has noted in a memo that the OSH Act’s penalties “are too low to have an adequate deterrent effect,” Stillman noted. OSHA has increased the penalties by:
Lengthening the time for considering an employer’s history of serious, willful, repeat or failure-to-abate violations from three to five years.
Lowering the reduction levels provided to employers based on size—for example, no size reduction will be allowed for employers with more than 251 workers, according to the memo.
Increasing minimum penalties for serious violations to $500.
Limiting OSHA area directors’ discretion to offer penalty reductions without obtaining approval from OSHA regional offices.
Eliminating the 10 percent reduction for employers participating in a strategic partnership.
Raising final penalties from a range of $1,500 to $7,000 to a range of $3,000 to $7,000.
However, on April 6, 2012, the U.S. Circuit Court of Appeals for the District of Columbia held that OSHA’s citation policy for old recordkeeping errors violated the OSH Act’s provision that no citation may be issued after six months following the occurrence of any violation (AKM LLC d/b/a Volks Constructors v. Secretary of Labor, OSHRC Docket No. 06-1990, June 2007).
The biggest way OSHA has increased penalties has been through repeat violator citations. Stillman said OSHA “is doing repeats all over the place.”
Repeat citations are very costly for employers, she said, noting that they can be up to five times the penalty of the first-offense citation.
Stillman added that during the past two years there has been an expansion of OSHA’s willingness and ability to cite repeat violations. The agency has broadened the scope of what is defined as a repeat offense and is using a citation at one facility of an employer as the basis for a repeat violation citation at another facility anywhere in the country.
Despite these steps by OSHA to increase penalties, corrective actions—abatement—typically are much more costly than OSH Act penalties, Stillman noted.
“The penalty may be small, but abatement can run in the millions,” she remarked.
She recalled a case she worked on where OSHA wanted an employer to slow down its production lines, which would have cost $5 million each year. “I was told to litigate that case ’til the cows come home,” she said, because every year of litigation saved the company $5 million.
Often, companies contest penalties to buy time, she said, noting that OSH Act penalties differ from damages under equal employment opportunity laws, where back pay accrues.
“OSH Act penalties don’t increase over time,” she noted.
Allen Smith, J.D., is manager, workplace law content, for SHRM.