Discount on Danger: Is OSHA Giving Too Many Discounts to Employers that Injure or Kill Workers? Thinkstock

Discount on Danger: Is OSHA Giving Too Many Discounts to Employers that Injure or Kill Workers?

The median OSHA fine in an investigation involving a worker fatality is $5,800, which is less than the cost of the funeral for the dead worker. Will the ability to increase maximum penalties change that?

As of August 1, OSHA can increase the maximum penalty level for employers that violate occupational safety and health laws by as much as 78 percent. But how effective is the threat of those increased fines if OSHA continues to negotiate settlements that decrease or even eliminate fines?

In November 2015, Congress enacted legislation requiring federal agencies to adjust their civil penalties to account for inflation. The Department of Labor adjusted penalties for its agencies, including OSHA. OSHA’s maximum penalties, which were last adjusted in 1990, will increase from $70,000 for a willful or repeated violation to $124,709 per violation. Going forward, the agency will continue to adjust its penalties for inflation each year based on the Consumer Price Index. The maximum penalty for “Serious Other-Than-Serious Posting Requirements” will jump to $12,471 per violation from $7,000, and the same fine will be issued per day for failure to abate violations.

The new penalties will take effect on August 1.  Any citations issued by OSHA on or after that date will be subject to the new penalties if the related violations occurred after Nov. 2, 2015.

The Center for Progressive Reform is advocating that OSHA reexamine its settlement policies, even as it prepares to increase the maximum penalties that can be issued to employers who violate workplace health and safety laws.

The center has issued a new report, “OSHA’s Discount on Danger: OSHA Should Revise Its Informal Settlement Policies to Maximize the Deterrent Value of Citations,” that includes a new data analysis that according to the center, “reveals a systemic discounting of fines by the agency.”

The report was released one day before OSHA’s July 1 statutory deadline to increase the maximum fines for health and safety violations for the first time in 26 years. CPR member scholars and staff see this as an opportune time for OSHA to reexamine related policies, particularly the informal settlement process that so often results in discounted fines.

“Federal law required an act of Congress to increase the amount OSHA is allowed to fine companies that put their workers in danger,” said Thomas McGarity, member scholar at the Center for Progressive Reform and a contributing author of the report. “But the agency doesn’t need congressional legislation to fix the way it settles citations with scofflaw employers or to maximize the deterrent effect of the fines it gives to companies that break the law.”

When OSHA issues penalties, companies can contest them, during which time they aren’t legally required to correct the violations that put workers in danger. Often, OSHA will negotiate a settlement that significantly reduces the fines if the company agrees to promptly remediate the hazards found during the inspection. According to the center, during the Obama administration, OSHA closed cases at a median of 25 percent below its initial fines in cases involving worker fatalities. The center claims that “OSHA’s pursuit of the quick fix resulted in median penalties of only $5,800, less than the cost of an average funeral.”

Even in the poultry processing industry, one of the most dangerous in America, companies that break the law have been granted significant discounts on penalties. OSHA reduced fines for poultry processors by a median of 40 percent. In 2015, that meant the median amount companies paid for failing to do things like install machine guards, provide personal protective equipment or address ergonomic risks was only $4,475.

“When violators in one of America’s most dangerous industries are awarded significant discounts on danger, it’s clearly time for a change,” said Katherine Tracy, co-author of the report. “Companies are supposed to be following the law and keeping their workers safe. They shouldn’t be rewarded with lower fines simply because they threaten to contest a citation or because they make empty promises.”

To better prevent worker deaths and injuries and to hold employers accountable for violating health and safety standards, the report’s authors recommend that OSHA do the following:

  • Establish national guidelines discouraging the agency’s area offices from informally settling certain types of cases. When employers ignore basic, proven safety measures, such as trench collapse prevention methods at construction sites and automatic machine shutdowns in situations where workers could be injured and killed, OSHA strongly should discourage its area offices from settling cases. Such egregious safety failures should not be tolerated or rewarded with discounts.

  • Demand that employers do more than simply abate the hazards that caused a specific health or safety violation. To prevent worker injuries and deaths, OSHA should seek enhanced terms during settlement negotiations with violators. These could include a formal injury and illness prevention plan, comprehensive third-party audits of existing hazards and practices, and fixes to hazards company-wide, rather than focusing on abating one hazard at a time. 

  • Engage workers and their representatives in the settlement process. OSHA can do more to involve and engage workers and their representatives in enforcing health and safety standards, including reaching out to workers and inviting them to participate in the settlement process. Posting paper copies of proposed citations in the breakroom seemed reasonable in the 1970s, but with the advent of e-mail, text messages and other forms of modern communication, OSHA needs to explore new ways to engage workers.

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