In my October 2009 column (“Watch out for the new OSHA”), I addressed a bill that had the potential to drastically increase the OSHA penalty structure if passed by Congress.

I also noted that the Obama administration had given OSHA a funding increase for the hiring of new employees to enhance enforcement and rule promulgation efforts. Unfortunately, I didn’t realize just how much I was predicting the future when I said, “For at least the next four years, look for a lot of changes within OSHA and its DOL agencies.”

On April 22, 2010, David Michaels, assistant secretary of labor for OSHA, sent a memorandum to all regional administrators that outlines administrative enhancements to OSHA’s penalty policy. At the same time, a new OSHA Instruction was published that replaces OSHA’s Enhanced Enforcement Program (EEP) with a new OSHA Severe Violator Enforcement Program (SVEP). Both of these new initiatives were accomplished without Congressional approval; they only required the stroke of a pen by Michaels. The enhancements to penalties document is four pages long, while the SVEP is 32 pages long. A brief summary of each initiative follows.

Enhancements to Penalties

OSHA’s Field Operation Manual (FOM) could be described as the compliance officer’s bible. The FOM gives complete instructions on how to decide which jobsites should be inspected, how to do the inspection and how to handle citations. The conclusion of the enhancements to penalties document states the ultimate goal: “These changes will serve to generally increase the overall dollar amount of all penalties. Furthermore, the average penalty for a serious violation will increase from approximately $1,000 to an average of $3,000 to $4,000.” That is a 300 to 400 percent increase!

In the OSHA press release announcing the changes, Michaels is quoted as saying, “For many employers, investing in job safety happens only when they have adequate incentives to comply with OSHA’s requirements. Higher penalties and more aggressive, targeted enforcement will provide a greater deterrent and further encourage these employers to furnish safe and healthy workplaces for their employees.”

One noteworthy change in the enhancements to penalties is an expansion of the historical examination time period for companies with repeat citations. Prior to this initiative, any company cited for the same item within a three-year time period could be cited as a repeat offender. That time period has now been expanded to five years. Keep in mind that the maximum fine for a serious violation is $7,000. In comparison, the fine for a repeat citation can be as much as $70,000.

Additionally, when calculating a citation, a company has always received a 10-percent credit for “good history” if it hasn’t had any serious, repeat or willful citations or a failure to abate citations within the previous three years. That time period has also been expanded to five years under the new memorandum. What’s more, under some circumstances a company could even receive a 10 percent increase in the fine if its history for the previous five years hasn’t been stellar!

And while a company’s size has influenced fines in the past, with reductions of up to 60 percent for small businesses, that, too, has changed (see Table 1). According to Michaels, the area director has complete decision-making authority and can deny part or all of the credits for history and size if it “is necessary to achieve the appropriate deterrent effect.”

Changes are also being made in how a compliance officer calculates the gravity of the potential citable item. The severity will start at “low,” which equates to maximum citations of $3,000, and proceed six steps to “high,” which can carry a $7,000 penalty. The current 25-percent reduction for “good faith”--meaning that an employer has established an effective health and safety system within its corporate structure--will be retained except for citations deemed as high-gravity, serious, willful, repeat or failure to abate. Further, the minimum amount for a serious citation will now be $500 per item. And unlike in the past, when all reductions could be applied at the same time, reductions must now be taken serially. This change can significantly increase the base amount of the citable item.

Enlarge this picture Table 1. Penalty Reductions Based on Company Size

Severe Violator Enforcement Program

The main points in the SVEP are highlighted in the executive summary provided by OSHA (see the sidebar on the right). Note the last bulleted item, which says that a nationwide referral will be established between both the federal OSHA and all state plan states. Previously, all citations stayed within the jurisdiction in which they were issued for the purpose of repeat and penalty calculations. It appears that OSHA now wants to combine all of the information so that if a company is deemed a severe violator in one state, that designation will also apply across all of that firm’s locations.

Some portions of the SVEP make sense, but I am quite concerned about how a company might get listed as a severe violator. If a company does everything correctly but has one or two employees who don’t follow safety practices, the company could get cited by OSHA. If that company is cited for two or three repeat items in fall protection, trenching, or one of the other high-hazard categories in the next five years, it could get placed in the SVEP--even if these citations occurred at different locations. The program also requires follow-up inspections for all SVEP companies, even if proof of abatement was provided to OSHA.

Companies that are truly nonresponsive and don't care about their workers certainly deserve to be penalized. However, I am always concerned about businesses being penalized unfairly. I believe that the administrative enhancements to OSHA’s penalty structure have the potential to be the single most significant change that has come out of OSHA since Sandee and I first began our consulting business 18 years ago. Couple that with the SVEP, and the potential exists to send a lot of $100,000-plus citations to businesses in the next few years. If enough legislators in Washington get behind the increased OSHA penalty structure, the results may very well be devastating to businesses.

I will be thoroughly reviewing these changes in the coming weeks and posing a number of questions to my OSHA contacts.


For More Information:

•   The OSHA News Release introducing the SVEP and citation changes can be found at: www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=NEWS_RELEASES&p_id=17544

•   The direct link to the Administrative Enhancements to OSHA’s Penalty Policies is: www.osha.gov/dep/penalty-change-memo.pdf

•   The direct link to the new Severe Violator Enforcement Program is: www.osha.gov/dep/svep-directive.pdf 

Sidebar: SVEP Executive Summary

This Instruction establishes enforcement policies and procedures for OSHA’s Severe Violator Enforcement Program (SVEP), which concentrates resources on inspecting employers who have demonstrated indifference to their OSH Act obligations by committing willful, repeated, or failure-to-abate violations. Enforcement actions for severe violator cases include mandatory follow-up inspections, increased company/corporate awareness of OSHA enforcement, corporate-wide agreements, where appropriate, enhanced settlement provisions, and federal court enforcement under Section 11(b) of the OSH Act. In addition, this Instruction provides for nationwide referral procedures, which includes OSHA’s State Plan States. This Instruction replaces OSHA’s Enhanced Enforcement Program (EEP).


Significant Changes from the Enhanced Enforcement Program (EEP)

•    High-Emphasis Hazards are targeted, which include fall hazards and specific hazards identified from selected National Emphasis Programs.

•   The Assistant Secretary has determined that Nationwide Inspections of Related Workplaces/ Worksites are critical inspections for the purpose of 29 CFR §1908.7(b)(2)(iv).

•  Creates a nationwide referral procedure for Regions and State Plan States.

Source: www.osha.gov/dep/svep-directive.pdf

Sidebar: In the Hot Seat

One possible outcome of OSHA’s increased enforcement efforts is unreasonable or unnecessary citations. If you believe your firm has been cited unfairly or that the fine is too high, you will need to first request an informal conference with the area director. Each area director is authorized to offer up to a 30-percent reduction in the proposed penalties during an informal conference. Higher reductions must be approved at a later date by a regional administrator.

One bright spot in the memorandum is that area directors are authorized to offer up to an additional 20-percent reduction if cited firms agree to retain an outside safety and health consultant. However, there is no word yet on any strings that may be attached to that stipulation, such as forwarding reports to OSHA.