Having an unsafe work environment is about to get a lot more costly for businesses.
For the first time since 1990, the Occupational Safety and Health Administration (OSHA) this year will increase its fines to account for inflation. The increase was authorized in the Bipartisan Budget Act of 2015 signed into law in November.
Industry experts estimate the increase could be as much as 80 percent, making it more imperative than ever for businesses to make workplace safety a top priority.
“This is something businesses should be putting on the front burner,” says Kyle Meinert, a risk adviser at HNI, a New Berlin, Wisconsin-based insurance, benefits and business advisory firm.
Particularly small businesses, which “can’t necessarily absorb the size of the increased citations,” he notes.
Current estimates using October 1990 to September 2015 Consumer Price Index data allow for a nearly 80 percent increase in OSHA fines for 2016, says Meinert.
While the exact amount of the increase has yet to be determined, OSHA spokesman Ted Fitzgerald said the Labor Department is required to publish an Interim Final Rule in the Federal Register on or before July 1, and that the new penalty levels will take effect no later than Aug. 1.
OSHA will be conducting outreach to employers, he noted.
But if industry estimates come to fruition, OSHA fines, for example, for willful or repeat violations could increase from a current maximum of $70,000 per violation to approximately $125,000 per violation, says Meinert.
Keep in mind if a business receives an OSHA citation, it may be eligible for a reduction. For example, at the discretion of OSHA’s area director, a company with fewer than 25 employees may receive an automatic 60 percent penalty reduction, explains Charles Hunt, chief operating officer of Massapequa Park-based Able Safety Consulting LLC, which provides OSHA compliance assistance. In most cases, businesses may also receive a 20 percent penalty reduction for hiring a third-party health and safety consultant, he adds.
Still, “it’s seldom they only find one violation,” says John Ho, a partner in the Garden City law office of Bond, Schoeneck & King and a former OSHA prosecutor, noting if multiple violations are found “the numbers could add up pretty quickly.”
To be proactive, every company should have a plan to deal with an OSHA visit, suggests Ho. This includes identifying which manager would do the “walk around” with the inspector, and what protocol to follow.
Companies should also create a corporate health and safety plan that includes the intent of the company as well as employee buy-in — meaning every employee has received a copy and signed off on it, adds Hunt.
Some industries, such as construction and manufacturing, will be under more scrutiny than others, but every workplace should make sure their OSHA posters are up, says Ho.
It’s important to have written safety and health programs to address any hazards present in the workplace, notes Baruch Fellner, a partner at Gibson, Dunn & Crutcher LLP’s Washington office who specializes in OSHA law.
In addition, conduct periodic safety audits and have a safety and health committee consisting equally of management and employees, he advises. So if a compliance officer comes in and asks employees if they’re involved in safety issues, they “don’t have a deer-in-headlights response,” says Fellner.
There should be a degree of knowledge and expertise in-house, he explains. If not, have a safety consultant who can be immediately called upon to interact with the compliance officer.
Also keep in mind OSHA has a free on-site consultation program.
It comes down to growing your organization’s safety culture, notes Meinert. “Encourage all employees to be safety ambassadors.”
OSHA penalties assessed in fiscal 2015