The New York Times Series on OSHA: How Will It Affect OSHA Criminal Enforcement?

Two distinguished management attorneys examine the impact of a newspaper series faulting OSHA's infrequent pursuit of criminal penalties.

by Melissa A. Bailey and Stephen C. Yohay

In late December 2003, the New York Times published a series of articles that was highly critical of the Occupational Safety and Health Administration (OSHA). (The series was written by New York Times writer David Barstow and consisted of three articles published on Dec. 21, 22 and 23, 2003.) The articles recounted tragic workplace accidents that resulted in fatalities and willful violations, but were not referred by OSHA to the Department of Justice ("DOJ") for potential criminal prosecution.

While the long-term impact of the series is not clear, Congress has clearly taken notice, and legislation has been introduced that would increase the criminal penalties available for willful violations of federal OSHA standards that cause employee fatalities. It also seems likely that in high-profile cases, OSHA may become more reluctant to enter into settlement agreements and may refer more cases to DOJ. Also, even without an OSHA referral, DOJ has the power, so far seldom used, to initiate its own investigation of a workplace fatality, and the Times series may spur DOJ to take this initiative more often. Finally, employee advocacy groups have begun to clamor for criminal investigations where major accidents have occurred.

Criminal Penalties Under the OSH Act

A willful violation of an OSHA standard that results in the death of an employee is a misdemeanor that carries a maximum prison sentence of 6 months and a maximum fine of $250,000 for an individual and $500,000 for an organization. A "willful" violation is generally defined as an intentional violation or a violation committed with "plain indifference" to the requirements of the standard. Of course, to prove a crime, the government must prove the elements of the violation beyond a reasonable doubt, a substantially greater burden of proof than in the usual OSHA civil case.

All workplace fatalities must be reported to OSHA within 8 hours, and OSHA typically arrives at the worksite to investigate soon after the report. OSHA's internal fatality investigation procedures state that an "initial determination whether there is potential for a criminal violation" must be made "early in investigations." The "potential" for a criminal violation is based upon "evidence that an OSHA standard has been violated and that the violation contributed to the death," and whether "there is reason to believe that the employer was aware of the requirement of the standard and knew it was in violation of the standard."

If the local OSHA area office believes that a criminal investigation should be conducted, the case is referred to an OSHA regional office for review, and then to the Office of the Solicitor, the branch of the Department of Labor whose attorneys represent OSHA. Nominally, the Office of the Solicitor makes the final determination as to whether a matter will be referred to DOJ for criminal investigation and prosecution. In practice, criminal referrals are often discussed and approved by the OSHA national office, including the assistant secretary of labor for OSHA. In especially high profile cases, the secretary of labor's staff may become involved.

In states subject to federal OSHA enforcement, criminal investigations normally result from OSHA referring a matter to DOJ. (In 21 states and Puerto Rico, the state government enforces occupational safety and health requirements. In those states, any criminal investigation or prosecution would not be conducted by DOJ, but rather by state or local prosecutors.) As noted, however, even if OSHA does not conclude that a violation is "willful," DOJ may still investigate and criminally prosecute an employer. In addition, local prosecutors may investigate and prosecute for state law crimes such as manslaughter and criminally negligent homicide. In fact, the Times series points out that some states now require OSHA inspectors to report fatalities caused by safety violations to prosecutors, and other states, including Arizona, California and Michigan, have increased penalties for violations that result in fatalities or severe injuries. (Arizona, California and Michigan are among the states that have state occupational safety and health plans.)

The New York Times Series

The first article described a trench collapse that killed a 22-year old plumber's apprentice in June 2002. According to OSHA's investigation, the employer failed to place a trench box into the trench or slope the sides to keep the trench from collapsing. In 1989, the same company committed an identical violation with the same result a collapsed trench that caused a fatality, which resulted in a $13,700 fine and a promise to follow OSHA's trenching standards. Based partially on the previous violation for the same conduct, OSHA issued a citation alleging a willful violation with a proposed penalty of $90,000. In a settlement agreement, OSHA agreed to reduce the penalty to $54,000, and more significantly, to re-characterize the violation from "willful" to "unclassified." No criminal referral was made.

The article highlights the technique of reclassifying violations from "willful" to "unclassified." The "unclassified" device for settling citations arose in the 1990s. Technically, the OSH Act does not create a category of violation termed "unclassified." The term was created by the Office of the Solicitor and the OSHA defense bar as a means of resolving difficult, high-profile cases. In a fatality situation, the re-characterization of a citation often has significant benefits for the employer. As a condition of agreeing to re-characterize a willful violation as "unclassified," OSHA usually demands payment of most of the proposed penalty amount stated in the original citation. Also, such settlements serve the goal of employee protection because OSHA typically secures the employer's agreement to implement substantial changes or improvements in safety or operational programs and work methods that are beyond what OSHA usually could obtain even if a citation is affirmed.

In exchange, the employer eliminates the stigma of a willful violation and reduces the chances that the citation will be used against the employer in collateral state court litigation, such as may be brought by the employee's family. In most states, workers' compensation provides the exclusive remedy for an employee's family in the event of a fatality. In some states, however, an employer whose action is proven to be "intentional," "willful" or "quasi-criminal" may be liable for some degree of additional damages, including pain and suffering and punitive damages. If an employer accepts a willful OSHA violation in a settlement agreement or is found by a judge to have committed a willful violation, it is typically easier for an employee or his family to use the citation to prove that an intentional tort was committed, or to increase the settlement value of such claims.

Another potential benefit of re-characterization to the employer is that it may decrease the chances of criminal prosecution. While DOJ or state authorities may investigate violations that OSHA does not characterize as "willful," they are typically less likely to do so. The case for a criminal violation is less compelling to a jury, and federal prosecutorial resources are stretched, particularly given the war on terrorism. As such, DOJ may be reluctant to investigate a violation that OSHA does not deem willful and that could result only in a misdemeanor conviction.

The second Times article discussed the reasons OSHA does not refer more cases for criminal prosecution, but does not provide a definitive explanation. Former OSHA officials were reported by the Times to have stated that "Washington" values "numbers" more inspections and more citations issued. Involvement in a criminal case takes time away from generating these types of numbers, they reportedly said, because of the time and resources needed to investigate and prosecute such a case. In addition, some officials were critical of the Office of the Solicitor. According to the article, "OSHA investigators used words like 'smoke screen' and 'snow job' to describe the legal objections they encounter," and also stated that the Office of the Solicitor does not refer cases to DOJ unless the violations are "obscenely willful." The sources for these comments were not identified by the Times.

The Political Fall-Out

Perhaps the most significant effect of OSHA's criminal enforcement policies occurred before the Times series was published: increased scrutiny from state authorities. Some states, like California, Michigan and Washington, have long maintained active state occupational safety and health plans with relatively aggressive enforcement policies. California, in particular, was singled out in the third Times article as prosecuting more criminal cases than all other states combined.

Other states have responded on a more ad hoc basis to highly-publicized fatalities and catastrophes. For example, Delaware state authorities prosecuted a refinery after a sulfuric acid tank collapsed, killing one employee. After OSHA agreed to unclassified violations, Delaware's Attorney General brought criminal charges. According to the Times article, the company pleaded guilty and paid the maximum fine of $46,000. State law has since been amended to permit a maximum fine of $250,000.

Congress has also taken notice of OSHA's criminal enforcement record. Prior to the Times series, Sen. Jon Corzine, D-N.J., introduced Senate bill S. 1272, which would make criminal violations of OSHA standards Class C felonies rather than misdemeanors that would carry a maximum prison sentence of 10 years. The day after the series was published, Sen. Frank Lautenberg, D-N.J., sent a letter to OSHA Assistant Secretary John Henshaw calling OSHA's failure to refer more cases for criminal investigation an "astounding record of failure" and "gross negligence" on OSHA's part. Sen. Lautenberg intends to introduce a bill requiring OSHA to provide a periodic update to Congress on the number of workplace fatalities and a description of "any and all actions taken by OSHA to punish those companies which have placed these employees in danger."

A Rush to Judgment Should Be Avoided

The Times series resulted in significant adverse publicity for OSHA with the public, organized labor and Congress. It is unclear how OSHA will respond. So far, the official response has appeared to be muted. Informally, some OSHA officials have disagreed with the Times' approach, suggesting that OSHA is not and should not be expected to function as a criminal enforcement agency. Such officials have noted that that investigating and assisting in criminal prosecutions imposes on the modest resources of OSHA and the Solicitor's Office, which are better allocated to more traditional enforcement and educational activity. In an election year, it is likely to be problematic for advocates of reform to persuade Congress to increase OSHA penalties. It will be fascinating to observe whether OSHA's enforcement approach will reflect a response to the New York Times articles.

It is to be hoped, we suggest, that the atmosphere created by the Times articles will not stimulate a rush to judgment in individual cases. Criminal investigations, especially when a grand jury is involved, often take years to complete even before a prosecutorial decision is made to seek an indictment. The process creates substantial emotion, expense and long-term uncertainty for all involved, including not only the employer, but also individual managers, employees, witnesses and victims' families. A decision to initiate such proceedings should not result from artificial pressures, but should be guided by the objective evidence that is yielded by the civil investigation.

Melissa A. Bailey and Stephen C. Yohay are partners in the Washington, D.C. office of Arent Fox PLLC, where they are members of the firm's OSHA Practice Group representing employers in safety and health compliance, litigation and legislative matters.

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