Impact of an OSHA Citation
Workplace accidents and OSHA inspections put a lot on the line for employers, especially if they lead to citations. Because OSHA recently increased penalties for citations (raising some fines by as much as 80%), and subjects certain businesses to enhanced scrutiny under its Severe Violator Enforcement Program (SVEP), the need to ensure compliance through carefully crafted plans and policies is of critical important –before any incidents or inspections. Unfortunately, some plans fail to address all pertinent issues, especially when they’re not tailored to business- or industry-specific issues. Others simply prove ineffective.
If your business has recently received a citation, it is in your best interests to act immediately; you have rights and options to raise a defense, mitigate penalties, and defend against what can be a devastating impact. Far too many employers resign themselves to accepting OSHA citations and penalties without exploring available options, and many others make problems worse by mishandling them altogether.
OSHA citations come with penalties that that have a far-reaching impact on employers, their reputation, and the future of their businesses, and they should make any enterprise facing such consequences intent on seeking the legal support and representation needed to defend against them or evaluate options that take other considerations into account. Below, we explain how an OSHA citation can impact your business.
In 2016, OSHA expressed its intent to step up enforcement efforts by adjusting fines for citations for the first time in over two decades. Such a long period of inactivity coupled with a targeted focus on holding employers accountable for violations meant that some fines were increased substantially. These fines are assessed according to the classification of violation that occurred. As of January 2, 2018, the following penalty amounts apply:
- Serious / Other-Than-Serious / Posting Requirements - $12,934 per violation
- Failure to Abate Prior Violation – $12,934 per day beyond the abatement date
- Willful / Repeated Violations - $129,336
Ancillary Costs & Collateral Consequences
Fines alone can be substantial, especially if employers have a history of violations, previous citations, or issues that have made them subject to OSHA’s Severe Violator Enforcement Program or criminal violations. However, the price of fines issued by OSHA alone are not the only burdens employers may face. Ancillary costs and consequences that may persist into the future of an employer can also have a significant impact on a businesses’ bottom line and solvency. These include:
- Costs associated with abatement – Employers are required by law to certify full and complete abatement of alleged hazards, which means they must first determine what, according to OSHA, should be done to abate the condition noted in the violation. In some cases, this can be as straightforward as employee training. Often, however, OSHA requires substantial changes in materials, equipment, and practices used by employers. Not only do these changes inherently cost time and money, they may also impact employers through slowed or reduced rates of production, which directly affects revenue.
- Risks of future litigation – OSHA citations create the potential for collateral literation, including civil lawsuits related to liability, workers’ compensation, personal injury or wrongful death lawsuits, indemnification proceedings, and more. They can also open the door to parallel inspections and sanctions from other regulatory authorities, including the Environmental Protection Agency (EPA). These matters are fact-specific, but that can be substantially impacted by OSHA citations.
- Repeat citations – OSHA’s repeat citation policy allows the agency to classify new violations involving similar hazards as repeat violations, which carry fines up to $129,336. This can significantly impact employers, especially when companies operate multiple locations and facilities.
- Willful citations – Violations classified as willful allege employers intentionally and knowingly disregarded regulations. OSHA dedicates additional resources to handling willful citations, which can not only result in significantly enhanced fines, punitive damages, and criminal violations, but also future risks involving increased oversight (i.e. more frequent inspections and citations) and company reputation. In some cases, willful violations may have criminal implications, especially if they result in catastrophes and / or death.
- Competition / loss of contracts – Reputation is not only important to shareholders, employees, and consumers, but also to contractors and other companies with whom employers conduct business. Poor safety records can play an important role in competing for new business, and retaining current contracts, which is why citations can put companies at a disadvantage and threaten their bottom line. In highly competitive industries, this can be magnified, as some companies decline projects involving businesses with even “serious” violations.
The far-reaching impact of an OSHA citation helps illustrate that even when penalties associated with a citation seem insignificant or manageable, they can end up being extremely costly. As such, assessing the cumulative impact of penalties, fines, and future consequences is critical to evaluating options and making informed decisions, such as whether or not a citations should be contested, strategies formulated for re-classification and mitigation of consequences, or settled for reasonable terms.
Regarded as one of Texas’ leading law firms in OSHA law and citations defense, Hendershot Cowart, P.C. is prepared to help Texas employers and others nationwide immediately following workplace accidents, inspections, and citations. Discuss your particular situation with a member of our team by calling (713) 489-2028.