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In 2009, the Occupational Safety and Health Administration (OSHA) assembled a work group to evaluate the agency’s penalty practices. That group reached the general consensus that OSHA’s penalties were too low to have an adequate deterrent effect. Accordingly, earlier this year, OSHA announced its intention to make several significant changes to the penalty calculation system outlined in its Field Operations Manual. The basic details of those changes, which will increase the average serious penalty from $1,000 to $3,000 or $4,000, are outlined in an Administrative Penalty Information Bulletin on OSHA’s website. While the agency has not yet incorporated these changes into its Field Operations Manual, according to multiple outlets citing OSHA sources not publically available, these changes went into effect on October 1, 2010.
The new penalty policy increases the amount of the base penalties set forth under OSHA’s gravity-based penalty determination system. Under the existing regime, the base penalty for a low gravity violation is $1,500. Under the new policy the base penalty for such a violation doubles to $3,000. The base penalty for each level of severity and probability under the prevoius gravity-based penalty determination system similarly increases by $2,000 or $2,500 under the new policy, up to a maximum base penalty of $7,000 for a high gravity serious violation.
Additionally, the new penalty structure expands the time period OSHA will consider when determining whether an employer’s past compliance history justifies a penalty adjustment. Under the old regime, OSHA looked at the employer’s history of violations over the previous three years, but will now consider the previous five years. An employer that has been cited for any high gravity serious, willful, repeat, or failure-to-abate violation during that period will receive a 10 percent increase in their penalty. Conversely, an employer who has been inspected in the previous five years and failed to receive any high gravity serious, willful, repeat, or failure-to-abate violation will receive a 10 percent reduction.
The new penalties policy also changes a number of the other adjustments presented in the current Field Operations Manual. While the current good faith procedures are largely retained, the 10 percent reduction for employers with a strategic partnership with OSHA has been eliminated. Good faith reductions in the case of high gravity serious, willful, repeat, or failure-to-abate violations have also been eliminated. Additionally, the new penalties policy reduces the percentage of size-reduction adjustments for small employers between 10 percent and 20 percent, depending on the size of the employer (employers with over 250 employees remain ineligible for a size reduction). Further, any reductions granted will no longer be added together before being deducted from the proposed penalty, but instead, will be calculated serially in the following order: history, good faith, “quick fix,” and size. The new serial deduction policy is expected to result in consistently higher penalties.
Finally, the new policy provides for additional discretionary adjustments under OSHA’s new Severe Violator Enforcement Policy (SVEP). For high gravity serious violations, the new penalty regime takes into account the standards identified in the SVEP, allowing area directors to cite each standard violated as a separate violation, rather than combining violations, and further allowing the directors to limit adjustment for good faith reductions “to achieve the necessary deterrent effect.”