By Jerry Redmond, Senior HR Compliance and Employment Consultant
On Jan. 13, 2022, the U.S. Occupational Safety and Health Administration (OSHA) announced another increase in the maximum civil monetary penalties for violations of federal Occupational Safety and Health standards and regulations. The new monetary penalties will be nearly 5% higher than the current maximum penalty amounts.
Effective Jan. 13, 2022, the maximum penalty for “Willful” or “Repeated” violations is $145,027, a nearly $10,000 increase from the 2021 maximum for the same kinds of violations. The maximum penalty for “Failure to Abate” violations is $14,502 per day after the abatement date. Finally, the maximum penalty allowed for “Serious,” “Other-Than-Serious,” and “Posting Requirements” violations is $14,502, an increase of nearly $1,000 from the 2021 maximum amounts. Importantly, states that operate their own Occupational Safety and Health plans are required to adopt maximum penalties levels at least as effective as federal OSHA’s.
The Federal Civil Penalties Inflation Act Improvements Act of 2015 (Inflation Adjustment Act) requires OSHA to adjust its maximum monetary penalty levels to account for inflation no later than Jan. 15 of each year. Adjustments are made by issuing a final rule, which becomes effective when published in the Federal Register. The current adjustment is tied to the percent change between the October 2021 Consumer Price Index for All Urban Consumers (CPI-U) and the October 2020 CPI-U.
CITATIONS VS VIOLATIONS
OSHA issues a citation when they find a violation. The citation provides a deadline date by which a violation needs to be resolved. There are a few types of violations.
- Serious — The minimum penalty is $975 per violation and then up to the maximum of $13,653 per violation.
- Other-than-Serious — The penalties start at zero and run up to the maximum of $13,653.
- Willful or Repeated — If Serious, the minimum penalty is $9,753 per violation and then up to a maximum of $136,532 per violation. If it is Other-than-Serious, the first repeated violation is $390. The second repeated violation is $975 and third at $1,950.
- Posting Requirements — Here the penalties start at zero and run up to the maximum of $13,653.
- Failure to Abate — This starts at the maximum penalty of $13,653 per day.
- Di Minimis — These are violations of OSHA technical rules that don’t impact safety. There are no penalties, but it is recorded in your case file.
On top of this, OSHA has established Gravity Based Penalties (GBP), which lower the amount of the penalty. For example, a high gravity violation receives the maximum penalty while a moderate gravity violation ranges from $7,802 to $11,703 and a low gravity violation is at $5,851.
10 MOST FREQUENT OSHA VIOLATIONS
Each year OSHA publishes the top 10 most frequently cities standards It can offer support to your own observations of what to watch with your operation. Here’s the list for the year ending September 2020.
- Fall Protection in Construction
- Hazard Communication
- Respiratory Protection
- Scaffolding, construction
- Ladders, construction
- Lockout Tagout
- Powered Industrial Trucks – forklifts
- Fall Protection Training
- Eye and Face Protection
- Machinery and Machine Guarding
The Rest of the Cost
When an organization collects a citation for a violation followed by penalties, there’s a cascade of follow-on ramifications.
Loss of Business Opportunity
During the bidding process for construction projects, as one example, federal or state agencies typically require bidders to report safety citations. Private organizations can also implement similar requirements for both construction and manufacturing projects. If an organization has safety citations, they could be dropped from the list of qualified bidders. That could mean the loss of hundreds of thousands or even millions of dollars before you even get into the bidding process.
Loss of Reputation with Customers
Safety violations and accidents can come to the attention of your customers. They can easily consider this a reflection on your organization and its ability to keep on top of all aspects of your operation, from delivering products and services to working safely. Note that all OSHA violations are open to the public via an online search through the Establishment Search Tool.
Increased Workers’ Compensation Claims and Premiums
As safety issues arise, workers can get injured. That, in turn, leads not only to lost employee time but also to administrative work to address the claims. And all this is followed by fines. Then there’s the increased cost of insurance coverage as the organization becomes more of a risk to the insurer.
Increased Employee Turnover
As employees get injured or see their friends get injured, that will impact their morale and their respect for the organization. All too often, they know more about the operation than supervisors and managers. As you well know, hiring today is a big challenge, keeping your employees perhaps more so as other attractive opportunities appear. You don’t want to give employees any reason for moving on to another employer.
Serious Impact on Performance
All the items above can have a significant impact on your organization’s overall performance. On the other hand, if you’re focused on safety and educating your employees on how to approach their work in a safe manner, that is going to be felt everywhere in your organization. Taking time to improve in one area often leads to improvements throughout including productivity as well as cost and schedule performance.
Return on Investment in Safety — Prevention Pays Off
Given all those costs accumulating on top of citations, it makes investing in workplace safety extremely cost-effective. It’s far better to prevent both violation and employee injuries in the first place.
A widely quoted study by OSHA states that companies implementing effective safety and health programs can reduce injury and illness rates by 20% or more and generate a return of $4 to $6 for every $1 invested.
Employers always should endeavor to comply with workplace safety obligations to avoid being cited. If an employer receives a citation, they should seek legal guidance to fully assess the risks of choosing to accept the citations versus contesting them. We can help.
The Keys to Compliance are Education, Prevention, and Protection
A driving force behind any safety program should be the health and well-being of employees. Some key factors in those programs are education, prevention, and protection, which can be the subjects of multi-day trainings and seminars. Here are a couple reminders.
- Education and training are so important that OSHA devotes quite a few of its online resources to those topics. You can find information concerning the OSHA Training Standards Policy Statement on its website. OSHA also provides assistance to employers in developing their programs and training.
- Prevention can be accomplished multiple ways, and often involves safety walkthroughs to identify potential hazards and develop plans of action to mitigate them. Additionally, some equipment can monitor certain situations that could become dangerous. For example, portable and wearable gas and other equipment such as flame detectors should be a part of certain safety programs, to help protect workers and worksites; and
- Appropriate personal protective equipment (PPE) for the circumstance and setting is also critical to safety and compliance.
It is important for employers to be cognizant of these increases. While it might sometimes seem like an attractive option to simply accept a “Serious” penalty and pay the $14,502 fine instead of paying to challenge the citation, such instant gratification could pose issues (and serious financial headaches) for an employer in the future. This is particularly true where the timeframe for challenging a citation is short, making the business decision on whether to challenge the citation that much more difficult. However, it is important to consider the following: while the maximum penalty for a “Repeated” violation is $145,027, in the next few years, the maximum penalty could reach over $150,000 after inflation adjustments are applied. It is also routine for an employer to receive multiple violations in one OSHA Citation and Notification of Penalty. Multiple penalties at $145,027, let alone any other penalty after inflation, could have drastic effects for a business and/or a worksite. Therefore, employers should consciously weigh the potential exposure the inflated rates may pose in the future when considering whether to challenge “Serious” violations today.
Need help? East Coast Risk Management offers full-service safety consulting. Our team of experienced safety professionals focus well beyond just regulatory compliance in the workplace. We will work to maximize your safety program. We offer extensive safety services including audits of your facilities and safety program, mock OSHA inspections, an extensive selection of customized trainings led by one of our safety pros, development and implementation of job safety analysis, and much more.
You can reach anyone on our safety, human resources, or our claims management teams by calling 724-864-8745 or email us at info@eastcoastrm.com. We will be happy to help!
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