The Occupational Safety and Health Administration (OSHA) budget for 2016 removed an exemption from the Federal Civil Penalties Inflation Adjustment Act of 1990 that allowed all federal agencies except OSHA to raise their fines every year based on inflation rates. This will allow OSHA to increase its penalty rates by 80 percent, effective Aug. 1, 2016, and make annual cost-of-living increases in penalty rates.
In addition, OSHA is set to approach inspections differently, trading frequency for rigor, which could mean that once a company is being inspected there’s a chance it will incur multiple penalties.
Smart Business spoke with Richard Artino, vice president at Spooner, Inc., about what companies need to know about OSHA’s new penalties and approach.
What is OSHA’s new penalty structure?
This is how the categories break down:
- For other-than-serious violations, the maximum is increasing from $7,000 to $12,600.
- A serious violation was $7,000, now it’s $12,600.
- A willful violation was $70,000, now it’s $126,000.
- Repeat violations were $70,000, now they’re $126,000.
Who could be hit by the increased fines?
While all employers will be subject to the new fine structure, there are some industries that tend to have higher accident rates than others. The construction industry, for example, gets inspected more frequently than others. Companies in the health care industry are being targeted more by OSHA because more employees are getting hurt by lifting patients in and out of bed, and by slips and falls. The Northeast Ohio region has the highest number of employee complaints and subsequent number of inspections resulting from those complaints compared with the rest of the U.S.
Small to midsized businesses are going to be hit harder by the larger fines, even if they go to an informal conference and get a discount. Companies with three or four serious violations could be penalized more than $50,000. The maximum discount is around 40 to 50 percent, which still equates to a $25,000 fine.
Are more OSHA inspections expected?
That’s not been made clear yet. What is clear, however, is that OSHA is changing its approach to inspections. Specifically, it will switch from trying to reach a certain number of inspections per year to conducting more rigorous inspections. That could mean more penalties per company because more can be uncovered during longer inspections.
More detailed inspections will likely mean more employee interviews, provide the time to wait for sample results and make return visits, and generally dive deeper. That can mean more citations and bigger penalties.
What changes should companies make to lower their risk of incurring a penalty?
Know what regulations apply to a business. Companies that want to ensure they’re in compliance can get a hazard assessment performed. Once they understand the regulatory environment in which they operate, they can have a compliance audit performed that will identify any gaps and create an action plan to close them.
Companies should also look at a trend analysis of the most common injury types that happen with their employees and create safety activities around those, which is a step toward mitigating or eliminating accident occurrences. Those activities combined should keep a company from getting on OSHA’s radar screen.
How do the costs of compliance compare to the costs of noncompliance?
Noncompliance threatens a company’s competitive advantage. It leads to higher workers’ compensation claim costs, higher insurance premiums, an increased chance of high punitive fines, and can translate to low employee morale and high turnover, which brings with it lower productivity and lower quality. An unsafe workplace also negatively impacts the ability to attract top talent.
OSHA fines are increasing and the method of inspection is changing, which increases the chance of being hit with multiple penalties. To avoid this, have a compliance and trend analysis conducted to ensure regulations are being followed and that the work environment is safe.
Insights Workplace Health & Safety is brought to you by Spooner Inc.