- Bigger penalties
- More 'shaming'
- Better focus on 'meaningful' inspections
- Updated Field Operations Manual
As is often the case, the year’s end signals an opportunity to look back and reflect on significant developments that have occurred, to turn one’s attention forward – and to think ahead. This annual focus can relate to almost anything, including politics, entertainment, your health, your family, and yes – even the Occupational Safety and Health Administration (OSHA).
Indeed, 2015 was in many ways a groundbreaking year for OSHA, and this article provides a recap of certain noteworthy developments, all of which are likely to impact employers well into 2016 and beyond.
Federal Budget Permits OSHA to Significantly Increase Penalties
Pursuant to the federal budget signed into law on Nov. 2, 2015, OSHA will be permitted to increase its penalties for the first time in 25 years – and not by any nominal amount, but approximately 82% instead. Whereas the Federal Civil Penalties Inflation Adjustment Act of 1990 had exempted OSHA from increasing its penalties (and served to bar any increases for decades), the recent budget contained an amendment striking the exemption.
This astounding increase is the result of a one-time “catch-up” provision that allows OSHA to increase its penalties by the amount of the inflation rate change since 1990, the last time penalties were raised. Although OSHA is not required to increase its penalties, its doing so is fully expected. Notably, the catch-up increase is required to go into effect by Aug. 1, 2016, after which further annual increases — tied to increases in the Consumer Price Index — will be required as well. This will place OSHA among other federal agencies, such as the Food and Drug Administration and the Environmental Protection Agency, which increase fines annually according to inflation.
These increases will have obvious immediate dollars-and-cents implications for employers. For example, a $7,000 maximum penalty for a “serious” or “other-than-serious” violation could increase to as much as $12,744, and a current maximum penalty of $70,000 for a “repeat” or “willful” violation could increase to as much as $125,438. This will significantly increase the risk and potential financial impact of OSHA showing up at your door for an inspection, which could be further compounded by OSHA alleging multiple violations.
As for the “why” of this pending increase, some may hypothesize that OSHA is simply performing a long-overdue adjustment to account for many years of inflation. Others may argue that the increase is designed to combat a more tangible issue, relating to employers not being incentivized to implement sufficient safety procedures. As far back as 2010, OSHA head Dr. David Michaels stated in testimony before the House of Representatives that “employers often consider it more cost-effective to pay the minimal OSHA penalty and continue to operate an unsafe workplace than to correct the underlying health and safety problem.” While many employers would no doubt take issue with that statement, it cannot be denied that this significant penalty increase will get their attention. Time will tell whether these increased penalties will also lead to increased safety at the workplace.
More Shaming on the Horizon with “Scarlet Letter” Electronic Reporting
OSHA not only relies on its fines to enforce its regulations (which, of course, will be going up), but also on something even more fundamental than that: “shaming,” a term first voiced approximately five years ago by Dr. Michaels. In this regard, OSHA frequently issues press releases identifying (and perhaps in OSHA’s view, exposing) employers that have been issued citations for serious violations found after both routine inspections and accident investigations. These press releases are noteworthy because they reveal the employer’s name, the cited violations, and the proposed penalties – all before the employer has the opportunity to resolve or adjudicate the citation(s) at issue. Employers who do not comply with OSHA’s regulations therefore face not only a monetary fine, but also the possibility of damage to their reputation.
Based on a new rule that was submitted for final review in 2015, employers will soon face a heightened level of shaming. The new rule will soon require employers with 250 or more employees to electronically submit injury and illness records to OSHA on a quarterly basis. Smaller employers will be required to electronically file their Form 300A, which summarizes their annual injury and illness data. After OSHA redacts the submission to remove any personal identification information of the injured employee(s), it will publish the record directly to its website. Therefore, where once OSHA had to publish a specific release about a company, now potentially damaging information from all companies will be at the public’s fingertips.
This new policy undoubtedly aims to establish better compliance with OSHA’s guidelines from companies across the country. Employers will know that their injury and illness records will be accessible at any time by employees, competitors and the general public at large. To avoid embarrassment and potential reduced business, employers will want as few incidents on their records as possible. The hope is that employers will therefore work to make their jobsites safer by more strictly complying with OSHA’s regulations. It remains to be seen whether such a “scarlet letter” policy will lead to better employer compliance and reduced employer injury and illness.
OSHA to Tackle More Complex Inspections and Workplaces
In the past, OSHA used the number of inspections it conducted as the primary metric to measure its enforcement activity. According to OSHA head Dr. Michaels in a memorandum dated Sept. 30, 2015, although the metric “served a useful purpose, it penalized those field managers that took on more complex inspections,” including inspections involving ergonomic hazards, chemical exposures, workplace violence, and Process Safety Management (“PSM”) violations.
In September 2015, OSHA announced a new enforcement weighting system that assigns greater value to complex inspections requiring more time and resources. The system assigns “Enforcement Units” to each inspection. Routine inspections count as one unit, while those requiring greater resources may count as up to nine units. As Dr. Michaels noted at the National Safety Council Conference in October 2015, the new system “will help us better focus our resources on more meaningful inspections.” The fiscal year 2016 Operating Plan for OSHA implements the Enforcement Weighting System, and includes appropriate metrics.
OSHA Updates Its Field Operations Manual
In October 2015, OSHA issued the latest update to its Field Operations Manual (FOM), the most recent since 2011. Significantly, OSHA’s updated FOM — which, among other revisions, increases the agency’s authority to levy penalties and grants greater authority to inspectors — serves as a reference guide for OSHA field personnel, providing enforcement policies and procedures relating to OSHA investigations and enforcement proceedings. This nearly 300-page manual contains 16 chapters addressing all aspects of the inspection and enforcement process, including, for example, chapters on “inspection procedures,” “violations,” “penalties and debt collection,” and “post-citation procedures and abatement verification.” In basic terms, the FOM shows much of what OSHA does, how it does it, and the respective rights of employers and OSHA.
Among other things, the updated FOM includes multiple revisions to the chapter on penalties, including penalty adjustment factors. For example, “good faith” penalty discounts – previously 35% – were reduced to 25%. Furthermore, penalty discounts for businesses with 26-100 employees (previously 40%) were reduced to 30% and penalty discounts for businesses with 101-250 employees (previously 20%) were reduced to 10%. Also, with respect to “repeat” citations, OSHA increased the length of time that it will “look back” for the prior same or similar citation from three to five years.
As noted above, the revised FOM also gives greater discretion to OSHA inspectors, allowing them to deny employer/employee participation in an inspection, while workers can authorize a third party to act as a representative during an inspection if they don’t have a recognized bargaining agent. Additionally, a fatality or other catastrophic event at a multi-employer worksite could trigger one or more unprogrammed inspections for the other employers — regardless of their involvement in the event.
These developments in 2015 make clear that OSHA intends to continue its efforts to increase the effectiveness of its enforcement activities. As noted previously by Dr. Michaels when discussing the role of OSHA: “Deterrence must be a primary objective of our enforcement activities.” 2015 served as a reminder of OSHA’s continuing agenda in this regard, and 2016 will likely continue along this same path. As a result, employers need to take heed.
Michael Rubin is a partner in the OSHA and Worksite Safety Practice Group at the law firm Goldberg Segalla. He devotes a significant portion of his practice to OSHA, including counseling clients regarding inspections, responding to citations, and the intricacies of the OSHA recording and reporting requirements. He may be reached at firstname.lastname@example.org. Stefan A. Borovina is an attorney in the OSHA and Worksite Safety Practice Group at the law firm Goldberg Segalla. He defends clients in a wide variety of liability claims and counsels on minimizing OSHA liability and responding to citations. He may be reached at email@example.com.