In recent years, the Occupational Safety and Health Administration (“OSHA”) has faced perceived criticism that its enforcement options have failed to provide effective disincentives for employers to comply with workplace safety regulations. Specifically, for the last twenty-five years, OSHA’s maximum penalties have remained stagnant, and published data shows that criminal referrals are limited. But it has never really been a question of whether OSHA possesses the desire or aggression to enforce its regulations. Rather, it is more of whether its bark is supported by a strong bite. And that question appears to be answered in the affirmative in 2016.
Civil Penalty Increases
Under the current statutory scheme, the maximum civil penalties for each classification of violation are as follows: (1) Willful—$70,000.00; (2) Repeat—$70,000.00; (3) Serious—$7,000.00; (3) Other-than-Serious—$7,000.00. 29 U.S.C. §§ 666(a), (b), (c). These penalties were set in 1990, and they have remained that way ever since.
Under this penalty structure, employers frequently argue that OSHA cites excessively varied violations following an investigation. As the argument goes, in an effort to procure a higher total penalty, OSHA ignores appropriate grouping and instead inappropriately focuses on punishment. While there is often merit to this argument, OSHA counters that the agency is limited by the statutes and cannot achieve an effective disincentive for the employer to reform its safety culture or particular procedures, unless it stubbornly clutches at a wide variety of violations totaling a higher penalty amount. The result of this back-and-forth is often a tug-of-war at the informal conference or later during OSHRC litigation that actually works to take the focus off of the true dispute or inhibits the parties from arriving at an appropriate resolution.
In August 2016 though, this argument may be framed somewhat differently. The federal budget, signed on November 2, 2015, allows OSHA to adjust its civil penalties upwards by around eighty-two percent (82%). That means that violations classified as “Willful” and “Repeat” may fetch as much as $127,400.00 in separate penalties; while “Serious” and “Other-than-Serious” violations could be coupled with around $12,740.00 per penalty for each such violation.
Two possible results could occur:
- First, and hopefully, OSHA could cite less varied violations in a given investigation, focusing its resources (and by association, those of the employer) on the particular incident or procedure in question. For example, instead of citing two “Serious” violations under two different regulations for the same alleged hazard to achieve a five-figure penalty, OSHA can now cite one and focus the discussion on the most appropriate regulation. This scenario could lead to quicker resolutions and more effective safety reforms in the workplace. That is, the agency and the employer would have more latitude to work together on what the agency believes is the true problem.
- Second, and more realistically, OSHA could use the increased statutory maximums to slap employers with mammoth total civil penalties. Employers (particularly smaller ones) would then have little choice between contesting the violations and otherwise facing extreme budget cutting measures to pay the large penalties. With money being the driving factor in such a situation, the focus is taken off safety and placed squarely on finances.
Which of these two possibilities becomes a reality remains to be seen. But in between now and August 2016, employers can prepare by investing in a proactive approach. This could include, for example, the engagement of a third-party safety consultant to conduct a comprehensive inspection of the employer’s workplace(s). This option should be done in conjunction with legal counsel to ensure the employer is free to work through identified safety issues without fear that the issues could be used against it later.
Criminal Consequences Increase
Like increased civil penalties, employers could see increased criminal referrals following OSHA investigations, even where a violation does not result in the death of an employee. The OSH Act already provides criminal sanctions for three types of conduct: (1) a willful violation of a particular standard that results in an employee’s death; (2) an advance warning of an OSHA inspection; or (3) the falsification of documents filed or maintained under the OSHA Act. 29 U.S.C. §§ 666(e), (f), (g). Any of these types of conduct could result in up to six months in prison and/or varying degrees of criminal monetary penalties. Nevertheless, criminal consequences for employers currently are somewhat limited; in 2013, for example, only three criminal referrals resulted from the OSH Act.
Increased cooperation among divisions of the U.S. Department of Justice (“DOJ”) and the U.S. Department of Labor (“DOL”) tasked with ensuring safe workplaces could mean that those numbers will rise considerably. On December 17, 2015, U.S. Deputy Attorney General Sally Quillan Yates (“Yates”) informed all U.S. Attorneys that she had executed a Memorandum of Understanding (“MOU”) with the Deputy Secretary of the DOL. The purpose of the MOU was to establish “a process and framework for notification, consultation, and coordination between DOJ and DOL to aid both agencies in more effectively implementing our national workplace statutes.”
Yates encouraged the U.S. Attorneys to “consider criminal referrals from [the] DOL.” In addition to the three types of criminal conduct under the OSH Act itself, the DOJ will have various other crimes with which to charge employers. In the OSHA context, these potential crimes include, but are not limited to, obstruction of justice, false statements, witness tampering, and conspiracy. If a matter is referred for criminal action, the particular division of the DOL at issue (e.g., OSHA, Wage and Hour, or Mine Safety and Health Administration) will prepare a detailed memorandum and recommendation to grease the prosecutorial wheels, so to speak. This means that the U.S. Attorney who ends up with the referral will have a much easier road towards an indictment and/or conviction because, in all likelihood, the memorandum and recommendation will include much, if not all, of the necessary evidence to prove the elements of the crime.
So what does this mean for employers? Generally, OSHA inspections and investigations will need to be handled as expeditiously and cooperatively as possible. A failure to provide or an unreasonable or unjustified delay in providing requested documentation to OSHA, for example, could be viewed as an obstruction of justice. So employers should designate one person or department in the company through which to funnel requests for documents from an OSHA inspector to ensure this does not occur.
In addition, the actions or statements of individual supervisors or managers can bind the employer as a whole during OSHA investigations. But supervisors or managers are often unaware of this and proceed in, what is often called, a “rogue” manner—either contesting the OSHA investigation on their own or failing to forward correspondence to higher managers. With that in mind, employers should educate their supervisors and managers before an inspection occurs on what to expect and do and what rights the employer has during an OSHA inspection. Employers should also now, as a matter of due course, coordinate a legal representative to be present during supervisor or manager interviews with OSHA inspectors.
OSHA’s enforcement of its regulations in 2016 is likely to change from years past. At a minimum, employers will see OSHA utilize a different penalty structure in the fall, but it is unknown, at this time, whether this will have the desired effect. In addition, OSHA will now have more avenues through which to refer criminal actions. Employers therefore must prepare for a different legal landscape resulting from OSHA inspections in this regard. It is now more crucial than ever to train supervisors and managers to handle inspections and to ensure a legal representative is present during OSHA interviews of those supervisors and managers.