OSHA Poised to Flex Regulatory Muscle

Proposed Changes in OSH Act, rules and informal policies add up to stiffer fines, penalties

Hidden in the Miner Safety Reform Bill are the most significant changes in the OSH ACT in forty years. In July, companion bills entitled the Robert C. Byrd Miner Safety and Health Act were introduced in both the House and Senate which included significant changes to address safety in both mines and other workplaces. While these bills were originally intended to address recent mine tragedies, the focus has shifted to include other private workplaces as well.

The portions of the proposed bills that will affect the OSH Act include: increasing civil and criminal penalties, expanding family members' rights in settlement of violations, requiring abatement during the period that citations are contested and enhancing protection for whistleblowers.

Significant Increase in Fines

Under the proposed bill, fines for "serious/other than serious" citations will increase from a maximum of $7,000 to $12,000. They have also added an additional fine of between $20,000 and $50,000 if there is a fatality associated with a "serious" citation. Fines for "willful" citations will increase from a maximum of $70,000 to $120,000. If there is a fatality associated with a "willful" citation, the employer will face additional fines between $50,000 and $250,000. Currently, there is no automatic additional penalty if there is a fatality in the workplace.

Criminal Penalties and Burden of Proof

The proposed bill also increases the penalty for criminal violations of the OSH Act, lowers the burden of proof and expands the scope of who may be criminally liable. These provisions are extremely controversial and are generally opposed by industry groups including the U.S. Chamber of Commerce. The proposed bill would remove the requirement that a death occur before a criminal penalty could be issued for a "willful" citation. In addition, the criminal penalties associated with a fatality will be changed from a misdemeanor (fine of $10,000, 6 months imprisonment or both) to a felony (fine of up to $250,000 (individual)/$500,000 (corporation), 10 years imprisonment or both). If no fatality is associated with the "willful" citation, then the employer would be subject to a similar fine, with potential imprisonment of up to 5 years.

Under the new law, the parties who could be criminally prosecuted will be expanded from the "employer" to "any officer or director" of the company under a lower burden of proof, from a "willful" to a "knowing" violation of the law. Since these terms are not precisely defined, even Human Resource or Safety Directors could potentially be prosecuted criminally.

Abatement During Content

Another controversial proposed change is one which would require employers to abate all serious/willful/repeat citations even if they file a Notice of Contest to appeal the citations. Under the proposed amendments, filing of a Notice of Contest would not stay the time period for abatement even if the employer ultimately prevailed. A company could be cited in a follow up inspection for a "failure to abate" citation which could result in fines of up to $12,000 per day while the appeal is pending. The only way to avoid the abatement obligation would be to file a Motion for Stay with the Occupational Safety and Health Review Commission showing that the employer has a substantial likelihood of success in its contest, and that the stay would not adversely affect the health and safety of the workers. This would be an extremely difficult and costly burden to overcome on an expedited basis. It would also require an additional hearing on this separate motion, in addition to the hearing on the merits.

Victim's Rights/Increased Whistleblower Protections

The proposed law would also require the involvement of the victim, or the victim's family in the case of a fatality, in any settlement discussions with OSHA. Currently, only a union has a right to be present during the Informal Conference and other meetings with OSHA. This would ultimately lead to higher fines since OSHA would likely be influenced by the victims to resist lowering the fines during negotiations.

The time period for bringing whistleblower complaints against an employer would expand greatly from 30 days to 180 days under the proposed law and it could also be triggered by informal internal complaints to the company (as compared to formal complaints to OSHA.)

When Might This Become Effective?

While both the House and Senate have been back in session since September 13, 2010, they have a limited window of opportunity to consider new legislation as they will adjourn in October. Senate Republicans oppose passing a bill which is aimed at mine safety when the official investigation results have not been completed (and are not expected before the end of the year). This may delay any vote until 2011, however, it is still possible that it could be considered in 2010.

Other Regulatory and Policy Changes

In addition to the proposed changes in the law, OSHA has already taken measures to increase employer fines by altering the way penalties are calculated through informal policy changes as well as implementing a new Severe Violator Enforcement Program which will target those employers who have had workplace fatalities and serious citations in high risk industries. The policy change effectively increases the amount of fines issued against employers by changing the factors for employers to earn reductions in fines as well as the amount of minimum fines. The result is that the average fine will now be 3 to 4 times what it was under the prior policy.

Ergonomics and Injury and Illness Prevention Programs

OSHA is expected to issue its final rule updating recordkeeping requirements to add a separate column for recording musculoskeletal disorders (MSDs) in 2011. Many believe that OSHA's inclusion of this column is the first step to a new ergonomics standard. OSHA is taking a different approach by potentially regulating ergonomics through a far more expansive standard. OSHA is in the earliest stages of rulemaking by holding public meetings on its proposed Injury and Illness Prevention Program ("I2P2") standard. The I2P2 standard would require all employers to create a program to identify all potential hazards and to plan, implement, evaluate and improve processes to protect worker safety. This would include ergonomic hazards as well. Employers would be subject to citations for an underlying ergonomic hazard as well as the failure to have a proper I2P2 Plan to address those hazards. This could lead to further citations and fines for employers.

Outlook for the Future?

Employers will face greater fines from OSHA whether or not the law is amended, but if the reform bill is passed, expect significant changes for all private employers. Moreover, with new criminal penalties at its disposal, expect OSHA to look for "test cases" to make examples of unsafe employers. OSHA is on pace to conduct more inspections and to issue higher overall fines than ever for fiscal year 2010. As a result, employers should remain vigilant in their efforts to comply with applicable OSHA standards. Employers would be well advised to consult with competent counsel to conduct audits regarding OSHA compliance both in practice as well as in written policies.

Mark Kittaka is a Partner at Barnes & Thornburg LLP

This Barnes & Thornburg LLP artice should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.


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