How New OSHA Penalties Will Impact Businesses and Organizations

For the first time since 1990, the U.S. Occupational Safety and Health Administration will raise its penalties for safety and health violations in the workplace. Those fines haven't increased in more than two decades, but due to a new congressional budget bill signed by President Barack Obama, penalties will increase sharply—some by as much as 80 percent, according to The Wall Street Journal. In addition, it's expected that the fines for workplace safety and health violations will continue to rise in the future due to inflation. As the penalties increase, businesses will have to invest more time and money in workplace safety and health in order to achieve and maintain compliance with OSHA regulations in order to avoid the fines. Thanks to the penalty hikes, corporate risk assessment will become an even more integral aspect of the average American business or company.

The Federal Civil Penalties Inflation Adjustment Act of 1990 permitted an increase in federal penalties across the board in order to adjust the fines in accordance with inflation. However, OSHA, along with a few other agencies, was exempt from those increases. The Omnibus Budget Reconciliation Act of 1990 spurred an increase in OSHA's penalties that year, but the administration wasn't going to have to adjust penalties in the future due to inflation.

However, the new budget bill, which President Obama signed into law Nov. 2, will cause OSHA's fines to play catch-up with current inflation rates. The adjustments will take place before Aug. 1 of next year and OSHA will be given the authority to adjust penalties in the future to keep up with inflation. The penalties, while minor as compared to fines issued by other governmental agencies, such as the Environmental Protection Agency, are still sizable. The more acute fines could increase from $70,000 to $125,000 and more minor citations will jump from $7,000 to $12,500.

Reactions, predictably, have been mixed. Some, especially those in the legal community who focus on addressing workplace safety and health violations, hope that the increase in fines will encourage companies to take workplace safety and health more seriously. There is validity to that point. According to the U.S. Department of Labor, prior to the founding of the OSHA more than four decades ago, 14,000 workers died on the job annually. Currently, there are only 12 deaths daily, and according to the Bureau of Labor Statistics, preliminary fatal work injuries for 2014 totaled 4,679. Last year, the average fine from OSHA when a worker was killed on the job was approximately $7,000, though that number dropped to around $5,000 due to settlements. Some lawyers hope that the penalty increase will cause the OSHA to focus less so on minor citations and more on major issues, thanks to the monetary hikes.

Others, especially lawyers who represent industries (such as the housing industry) that are making a comeback following the recession are concerned—any new fines and penalties could damage these fragile industries, especially during a time when their recovery is so critical to the nation's economy. Other, smaller businesses, also may find the penalties to be too high for them to afford as well. Regardless, in order to avoid paying these increased penalties, companies across the nation will have to focus extensively on ensuring that they meet all of the OSHA's workplace safety and health standards/regulations—which means that risk assessment must become a priority for all businesses, both large and small.

The Elements of Risk Assessment
Risk assessment involves analyzing every aspect of a business, from the cubicles to the loading dock, in order to determine compliance with all OSHA standards/requirements, as well as going beyond the standards in assessing what could occur in the workplace, in order to prevent accidents or incidents from happened. A business owner can work with a risk assessment specialist to move through the entirety of a business, examining each and every facet for any potential vulnerability or anything that might not be up to OSHA standards/regulations and could lead to a workplace accident or incident.

Furthermore, a business owner should work to determine best practices for employees in order to avoid any potential injuries or illnesses when employees are working during the business day. Risk assessment goes beyond simply looking for aspects of a business that might be vulnerable to accidents or injuries—a proper workplace risk assessment will look at how potential scenarios, such as natural disasters, could affect workers and the company's productivity and bottom line as a whole. Risk assessment also should feature a business impact analysis that will involve analyzing how workplace accidents or incidents may affect a business's performance. Ultimately, with a proper risk assessment, a business owner can ensure that the entire company is up to current OSHA standards/regulations, which should not only help to avoid any preventable accidents or incidents, but also can help a company avoid the potential of costly OSHA fines.

While the increase in OSHA penalties is significant, a business owner can use the increase as an incentive to confirm that the enterprise is up to code with OSHA. Avoiding penalties—and workplace accidents—is in the best interest of all parties involved.

Thomas D. Schneid, J.D., LLM., is the Chair and Interim Graduate Program Director in the Department of Safety and Security at Eastern Kentucky University. Email tom.schneid@eku.edu or visit http://safetydegree.eku.edu/ for more information.

References
http://www.wsj.com/articles/osha-fines-to-rise-for-first-time-since-1990-1446603819
http://www.safetyandhealthmagazine.com/articles/13258-osha-fines-to-increase-significantly
http://www.ready.gov/risk-assessment
http://www.huschblackwell.com/businessinsights/employers-beware-osha-penalties-to-increase-for-first-time-since-1990

Posted by Thomas D. Schneid on Dec 16, 2015


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