This blog post is the 8th highest traffic page on our website, so I have added my own comments and updates (August 2021) in parentheses & bold text where appropriate based on our extensive experience helping clients navigator OSHA enforcement actions.
Date: June 22 2005
Excerpted from Missouri Employment Law Letter, written by attorneys at the law firm Armstrong Teasdale LLP
In an attempt to preserve government resources, the Occupational Safety and Health Administration (OSHA) has been taking the conservative approach of resolving many cases through settlement rather than litigation. But those settlements, while tempting to cost-conscious employers, are usually too good to be true. This article examines some potential problems with rushing into a settlement with OSHA and provides some ideas for protecting your long-term interests.
Legal landscape
The Occupational Safety and Health Act (OSH Act) contains caps on the penalty that can be assessed for each alleged violation by an employer being cited for the first time. In that scenario, the statutory maximum for each serious or other-than-serious violation is $7,000. (Note: since this article was written, OSHA increased fines by 78% in 2016 and have continued to increase fines every year since to account for inflation. As of 8-2021 the current maximum fine is actually $13,652 per violation)
At the other end of the scale, the potential penalty range increases to a maximum of $70,000 (current maximum is $136,653) per alleged violation for employers that “willfully or repeatedly” violate the OSH Act. Furthermore, if you willfully violate the Act and your violations cause an employee’s death, you’re subject to criminal penalties, including up to $10,000 ($250,00 for an individual and $500,000 for a corporation) in fines and up to six months’ imprisonment. The substantial increase in the penalty range for repeat and willful citations provides a major incentive to avoid being cited repeatedly.
OSHA’s tempting offer
These days, OSHA commonly cites employers for alleged violations of the OSH Act and then offers an informal settlement agreement to resolve the case and avoid litigation. For example, your company might be cited for two serious citations, each with a proposed penalty of $1,500. At the same time it issues the citation or during an informal settlement conference a few days later, OSHA will present you with an informal settlement agreement under which your total penalty is reduced from $3,000 to $1,500. The fact that OSHA is immediately willing to cut its fines in half should tell you something.
(Actually in our experience, the typical expedited offer is 40% off original fines, not 50% and is only offered if the OSHA area director believes that the company responded to the citations in “good faith” with the intention of improving their OSHA compliance obligations in a timely manner. In other words, in our experience OSHA doesn’t offer these expedited agreements “to everyone.”)
In connection with a typical informal settlement agreement, you may be required to provide your regional OSHA office with OSHA 300 logs for the next three years. And the two “serious” citations would be deemed affirmed by the Occupational Safety and Health Review Commission (OSHRC) and not subject to review by any court or agency. You might be tempted to take the offer because it doesn’t seem to make good business sense to litigate a case involving a penalty of only $1,500. But there’s more to it than just the amended penalty.
There are a number of reasons OSHA’s typical proposal isn’t in your company’s best interests. First, OSHA won’t go away forever. The informal settlement agreement might make the inspectors go away in the short term, but once it has established a violation of the law through an informal settlement agreement, the agency may return to inspect your facility and issue repeat or willful citations, using the settlement agreement as proof of a violation. (Agreed, especially knowing that the maximum for these citations is $136,000+ each and the probability of repeat violations is relatively high for most companies.)
The informal settlement agreement drafted by OSHA doesn’t contain the language necessary to protect your company. Rather, it contains language favorable to OSHA. The agreement establishes and affirms your violation of the law and deprives you of the right to have it reviewed by a court or agency. Once that occurs, you have violated the OSH Act, and the potential for repeat and willful citations (and up to $70,000 in fines) now comes into play. Signing an informal settlement agreement means “pleading guilty” to an amended citation and sets you up for future willful and repeat citations.
Second, the act of considering an informal settlement agreement presents a time crunch. You have only 15 workdays to contest an OSHA citation. The clock begins ticking once you receive the citation.
Sometimes, in conjunction with offering an informal settlement agreement, OSHA will schedule an informal conference in an attempt to settle the case. Fifteen workdays typically doesn’t allow you enough time to analyze an informal settlement agreement, schedule and attend a conference, and still negotiate a favorable resolution before the deadline. Likewise, it doesn’t give OSHA enough time to focus on your case and adequately consider your position. Oftentimes, the result is that you either miss the deadline or sign the agreement in haste to avoid the deadline. Either way, you have waived the right to defend yourself, and your violation of the law has been established.
(If you have a functioning safety program, including written programs, records, etc. and believe that citations were not valid then 2 weeks is plenty of time to prepare for an Informal Conference and argue your case. We have helped several clients prepare for these conferences and have succeeded in getting citations and fines reduced or thrown out. But in most cases, the best you can hope for is a 40% reduction in fines)
Third, an informal settlement agreement may require you to send OSHA 300 logs to your regional OSHA office when the OSH Act imposes no similar requirement. All the Act requires is that you maintain the log at your workplace and allow OSHA to view your records on request. Typically, OSHA would have to undertake the effort of inspecting your facility to view the logs. If you send the agency your records, however, you open yourself up to the possibility of an inspection when OSHA might otherwise leave you alone.
(In 2016 OSHA implemented new OSHA 300 log electronic reporting requirements, so this is no longer an issue. Most employers must submit their logs regardless as a result of this new regulation.)
In summary, it’s been my experience that the best course of action to take in the event of being cited and fined for valid violations (ie: you know you’re guilty and cannot reasonably defend yourself with existing OSHA compliance documentation & records), and if you’re offered an expedited settlement, is to take the offer and commit to improving your safety program.
Although accepting this offer means that violations will remain on your record for 5 years, leaving your vulnerable to costly Repeat and Willful violations during that time period, hiring a lawyer to fight the citations is a waste of time and money because you’ll likely lose that battle anyway. In other words, even the best lawyer can’t “re-write history” if you didn’t have a functioning safety program prior to the inspection and citations.
If you find yourself in this predicament, the best thing to do is commit to building and managing a safety program and preparing your company and staff for the possibility of future OSHA inspections.
Here are other blog posts I’ve written regarding the OSHA inspection and enforcement process that you might find helpful:
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By Russell Carr | 2022-03-21T12:51:05-05:00 September 29th, 2015 | Good To Know | Comments Off on Should You Contest OSHA Citations?
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How A Sales Guy Transformed Into An Environmental, Health & Safety Expert & Advocate For Small Businesses I've spent my entire 30+ year career working within the manufacturing and “industrial services” sectors. The first 15 years of my career focused on sales of hazardous materials related products and services to the manufacturing sector, then for the last 16+ years transitioned into entrepreneurship, founding 3 small industrial services related contracting businesses. As you’ll see below, running these companies eventually lead me to found yet a 4th business, but more on that in a minute…. Here’s a brief description of the first 3 companies: Berg Environmental Services, Inc.: hazardous waste disposal & transportation services, founded in August of 2003 3rd party wind energy operations & maintenance services provider to utility scale wind farms throughout the US, founded in September 2007 3rd party oil & gas exploration & production services provider, founded in August of 2011 Each of these companies operated in extremely dangerous working conditions and exposed my employees to a wide range of serious health & safety hazards on a daily basis. To complicate matters, 2 of the companies also exposed the environment to significant potential harm. In other words, I learned very early the critical importance of managing environmental, health and safety issues so as to ensure the safety of our employees and the environment, as well as minimizing related risks. But I also learned how incredibly difficult and challenging this endeavor can be due to the wide range of complicated and continually changing environmental, health and safety rules and regulations that impacted the companies. To summarize the challenges: First I had to determine which regulations applied to each company, then I had to build compliance programs to meet those regulations, and finally I had to ensure that the programs were being managed and followed by our staff on a daily basis. All while trying to run and grow 3 profitable businesses…. It was overwhelming and I always struggled to keep up. To make matters worse, throughout this time I also witnessed the devastating price that companies, management and ownership can pay for failing to manage EHS compliance. This included seeing one of my hazardous waste management clients get sent to jail over environmental issues, another client’s management team threatened with jail time, a direct competitor get fined $378,000 by OSHA fine after an employee was nearly killed, and many others face major fines and penalties. Full disclosure, one of my companies got fined by OSHA at one point, & another was cited by TCEQ, so I know how it feels. In summary, I learned first hand how incredibly difficult it is for small companies to manage EHS compliance due to a common lack of the critical expertise, time and resources that are needed to keep up, and how this situation then ends up exposing them to these potentially catastrophic risks that can literally destroy lives and businesses. This later inspired me to found my 4th company, Berg Compliance Solutions in 2012, which is dedicated to helping other small businesses, and business owners, to manage EHS compliance and risk. Education BA, Philosophy, University of Colorado, Boulder, December, 1990. Summary of Professional Experience & Qualifications: 30+ years serving the manufacturing & industrial services sectors 30+ years of sales and marketing experience 16+ years as small business owner & entrepreneur: Founded and operated 4 small businesses since 2003. Environmental, Health & Safety Compliance & Program Related: 19 plus years of hazardous waste management including EPA, TCEQ & RCRA regulations 8 years of DOT/FMCSA compliance experience, including hazardous materials transportation 8 years of combined experience implementing and managing OSHA health and safety compliance programs for 2 high risk energy services businesses Successfully implemented and gained ISO 9001 Quality Management Certification and OHSAS 18001 (Occupational Health & Safety Advisory Service) Certification for wind energy maintenance business. Regulatory Enforcement Related Experience: Served as expert witness in criminal environmental compliance enforcement cases Superfund-CERCLA OSHA enforcement inspections, investigations and resolution in following industries: industrial services, manufacturing & construction. TCEQ enforcement inspections, investigations and resolution in manufacturing.
