OSHA Raises Civil Penalties for 2020, but Data Shows Companies Often Skirt Their Large Penalties
On Jan. 15, OSHA raised its civil penalties by approximately 1.8 percent, which seems like a steep change. Still, though, new analysis shows that companies are using the abatement process to dramatically lessen their charges.
This week, OSHA’s civil penalty numbers went up for the 2020 year, and the change is as high as 1.8 percent. The final rule implements annual inflation adjustments of civil monetary penalties assessed or enforced by OSHA and other agencies within the Department of Labor (DOL) in 2020, as required by the Inflation Adjustment.
OSHA’s penalty increases for workplace safety and health violations include:
- For a willful violation, in which an employer knowingly failed to comply with an OSHA standard or demonstrated a plain indifference for employee safety, the minimum penalty increases from $9,472 to $9,639 and the maximum penalty increases from $132,598 to $134,937;
- For each repeated violation for an identical or substantially similar violation previously cited by the agency, the penalty ceiling rises from $132,598 to $134,937;
- For each serious violation for workplace hazards that could cause an accident or illness that would most likely result in death or serious physical harm, the maximum penalty increases from $13,260 to $13,494;
- For each other-than-serious violation, the maximum penalty increases from $13,260 to $13,494;
- For each failure to correct violation, the maximum penalty increases from $13,260 to $13,494; and
- For each posting requirement violation, the maximum penalty increases from $13,260 to $13,494.
These changes take effect immediately and apply to any penalties assessed after January 15.
While a nearly two percent inflation in civil penalty numbers is cause for attention, new analysis shows that companies are actually taking advantage of OSHA’s abatement process.
Companies are knocking down the numbers for their penalties by significant amounts. Basically, U.S. companies can take advantage of the government’s push to get them to correct safety hazards identified in enforcement cases by offsetting some abatement costs against fines.
One analysis by law firm Drew Eckl & Farnham shows that companies caught up in OSHA enforcement cases received, on average, a 41 percent offset in their penalties after taking steps to abate their violations of federal safety rules. The law firm analyzed OSHA data involving the largest 100 largest enforcement cases brought nationally by the agency from 2015 through December 2019.
Really, it’s quite common that these companies can dramatically decrease their penalties. In those 100 cases, $40 million of initial penalties were reduced to $24 million following an offset of $16 million of abatement. Of the 100 cases examined, only three companies received a no abatement offset (12 are pending abatement or remain open), while 36 received an abatement offset of 50 percent or more.
The largest single abatement offset was $1.37 million, while another company received a 93 percent offset in penalties dues to abatement.
The analysis has one major conclusion: companies rarely pay the full maximum penalties allowed under federal law, even when companies are found to have committed repeat or willful violations. Only 12 of the 63 companies with repeat/willful violations and whose cases are finalized received the maximum penalty, which in 2019 increased to $132,598 per willful or repeated violation.
Neil Brunetz, an attorney at Drew Eckl & Farnham who represents companies in OSHA enforcement actions, says the analysis underscores his general advice to companies that “preventative maintenance of your safety program is likely cheaper than waiting for OSHA to dictate your abatement and corrective actions.
Basically, if companies invest the amounts they would spend in abatement without incurring the remaining penalty, they will actually save a significant amount, based on this review of OSHA enforcement actions.
*Note: Cases being contested, or that are open, have uncertain outcomes or have been referred to debt collection were not included in the analysis. The data also includes only those enforcement cases with initial penalties of $40,000 or more, as this is the data OSHA makes publicly available via its website.
On November 2, 2015, Congress enacted the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, the Inflation Adjustment Act, to improve the effectiveness of civil monetary penalties and maintain their deterrent effect.
On July 1, 2016, the DOL published an interim final rule establishing an initial “catch-up” adjustment for civil penalties the Department administers. The Labor Department has issued annual inflation adjustments of civil penalties in 2017, 2018, and 2019.