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OSHA Fines Set To Increase by 78% Next Month, Is Your Company Ready?

In case you hadn’t heard, OSHA civil fines are increasing by 78% in August (yes, next month). Texas manufacturers without updated health and safety programs are at risk for significant fines and penalties that can run into the $10s or even $100s of thousands of dollars.

This article will summarize why these increases are happening, how much they could end up costing your company, your risk for being inspected, and the most common violations that OSHA is likely to cite if your company gets inspected.

Why Are OSHA Fines Increasing?
An obscure provision in the Bipartisan Budget Act of 2015, H.R. 1314, Sec. 701, signed into law by President Obama on November 2nd 2015, allows for significant increases for OSHA civil fines to keep pace with inflation, retroactively to 1996. This is a “Budget Act,” so the law and associated fine increases are assumed to be used to help reduce the ballooning budget deficit. It’s important to note that OSHA fines are payable to The Treasury Department, not directly to OSHA. Now you know the “why.”

How Much Could This End Up Costing Your Company?
Statistics show that manufacturers without a full time, qualified Health & Safety Manager will typically receive between 3-8 “Serious” citations if subjected to a Comprehensive inspection by OSHA. This currently results in an average $15,000 - $50,000 fine per inspection, but with the proposed increases the average fine is now projected to be between $37,000 - $125,000 per inspection!

Based upon the Bureau of Labor Statistics’ CPI Inflation Calculator, the maximum allowable OSHA fines are estimated to be as follows:

“Serious” citations (the most common types of citations) have a current maximum fine of $7,000, but will increase to as much as $12,471 each.
“Willful” citations have a current maximum fine of $70,000, but will increase to as much as $124,709 each.
“Repeat” citations have a current maximum fine of $70,000, but will increase to as much as $124,709 each.

Citation Explanations:

These are the major citation types that manufacturers need to be aware of, but there are others.

“Serious”:

These are violations that could result in a “Recordable” injury. A Recordable is essentially a serious injury requiring medical care. There’s much more to the definition, but this is a good basic definition.
Serious violations are by far the most common type of citation issued by OSHA

“Willful”:

A Willful occurs when OSHA can prove that an employer was a aware of a health or safety hazard, but failed to take any action to correct it.
OSHA has a detailed methodology for investigating Willfuls, including confidential employee interviews as well as documentation and record reviews.

“Repeat”:

As the name implies, this is when a company gets cited for a violation that was previously cited. These are typically repeat instances of past Serious violations.
For companies who have previously been cited by OSHA, these increases can be financially devastating. 2, 3 or more Repeat citations can easily run into total fines in excess of $100,000 or even $200,000! (Fines that exceed $100,000 are called “Significant Enforcement Cases,” and these types of fines have more than doubled since 2007.)

In addition to these direct financial costs, companies who get fined face additional reputational damage once OSHA issues negative press releases (which they always do) that can find there way into local newspapers, on-line, and in trade journals for the local community, competitors, and worst of all, customers to see.

What Is Your Company’s Risk Of Getting Inspected?

Before getting into potential inspection triggers, it’s important to note the difference between a “Comprehensive” inspection and routine inspection. A Comprehensive often involves review of all, or most, of a company’s health and safety compliance requirements including written programs, employee training records, record keeping and detailed inspections to identify physical hazards in the plant. These inspections can involve 1 or more enforcement officers, and can last a few hours, or up to several days or even weeks depending on the severity of the situation. These inspections can be incredibly disruptive and costly for a company.

On the other hand, a routine inspection is typically very short in duration and may only focus on a single, or few hazards, and typically result in relatively low fines.

There are a number of different factors and issues that can trigger an OSHA inspection, but below are the big ones to worry about.

Employee Complaints:

Employee complaints are the #1 trigger of inspections, year after year.
Recent data indicate that up to 24% of inspections are triggered by an employee complaint. This number has risen in recent years from 17-18%, and that’s because OSHA takes these complaints very seriously.
Complaints can come from current employees, or former employees who were fired or laid off.
In addition, employee family members, and virtually anyone including police, EMS, or competitors, who are aware of a serious hazard at a company can file a complaint with OSHA.
OSHA has a procedure for evaluating the validity and severity of complaints prior to initiating an inspection.
Employee complaints typically result in a routine inspection, but can easily turn into a Comprehensive if the enforcement officer determines a need to do so.

Employee Injuries: As of January, 2015, employers must notify OSHA within 24 hours when an injury results in:

Loss of an eye
Amputation
In-patient hospitalization.

A fatality occurs: Must notify within 8 hours.

High Injury or Illness Rates:

Companies with a high DART score (Days Away, Restricted, Time Off), typically above 7, will be added to OSHA’s “SST” enforcement program (Site Specific Targeted Inspections)
SST inspections are typically Comprehensive.

National Emphasis Programs, or “NEPs”:

At any given time, OSHA has national and regional NEPs which target companies that have certain serious hazards in their processes.
NEP inspections are typically Comprehensive.
Current NEPs that could impact ARMA members are:

Noise Levels: Failure to test for high noise levels & failure to implement Hearing Conservation Programs when necessary.
Fall Hazards in General Industry: Employees working above 4” must be provided fall protection (guardrails, walkways/platforms, harnesses/lanyards, tie-off points, etc.)
Steel Fabricators
Amputations: Primarily involves machine guarding issues.
Combustible Dust: Excessive dust, fiberglass, etc. which creates significant fire & explosion hazards. Housekeeping issues.
Lead & Hexavalent Chromium: Process that contain these toxic metals require extensive health controls, such testing & Respiratory Protection Programs.
Silica & Isocyanates: Process that contain these toxic materials require extensive health controls, such testing & Respiratory Protection Programs.

Companies are often lulled into a false sense of security if they’ve never been inspected by OSHA, but as you can see from these various triggers, one “bad day” or event can quickly spiral and change everything. Companies must recognize and manage these risks and be prepared.

What Are The Most Common Violations?

OSHA can issue citations for any number of violations including the following:

Written “Program” deficiencies:

Manufacturers must have a customized Health & Safety Manual that includes all applicable OSHA health and safety “Standards” that apply to that company’s operations. For example, a typical manufacturer’s H&S Manual would need to include Hazard Communication (chemical safety), PPE (Personal Protective Equipment), Lockout/Tagout (control of hazardous energy), etc..

A generic, downloaded manual doesn’t suffice.

Each Standard within the Health & Safety Manual has multiple “elements” that employees must manage over time, including inspections, employee training, testing, written procedures, etc.
Employee Training:
Virtually all OSHA standards have an employee training requirement, and most take 30-60 minutes on average to train.
Many of these training requirements are recurring and must occur annually.
Training should be customized to a company’s particular operations and hazards.
OSHA 300 logs (300, 301, 301A)
The majority of citations involve physical hazards on the shop floor.
Examples include machine guarding issues, lack of employee PPE use, damaged electrical cords and boxes, trip hazards, lack of Lockout/Tagout use.
Record Keeping:
Physical Hazards.

Top 10 General Industry Citations (Hazards) Issued by OSHA In Texas in 2015:

1. General Duty Clause: This is a “catch-all” to address hazards not otherwise addressed in OSHA standards.

2. General Machine Guarding: Guarding placed on machinery/equipment to protect workers from moving parts, blades, pinch points, etc, that could result in serious injuries such as amputations, cuts, burns, crushed fingers, etc..

3. Written Hazard Communication Program: Chemical Safety Standard

4. Strain Relief on Extension Cords: Defective cords creating electrical shock and electrocution hazards.

5. Machine Guarding at Point of Operation: Guarding drill bits, band saw blades, etc. from “point of use” (ie: hands and fingers)

6. Conductors Entering Electrical Boxes Not Protected from Abrasion: Electrical hazards.

7. Compressed Air Used For Cleaning Not Reduced to 30 PSI

8. Work Rest on Grinder Not Adjusted Within 1/8” From Abrasive Wheel

9. Tongue Guard Not Adjusted Within ¼” of Abrasive Wheel

10. Electrical Equipment Not Listed or Labeled: Cheap “Overseas” Products

As this article demonstrates, OSHA compliance requirements are extensive, and as a result many small manufacturers really struggle to keep up. The pending fine increases are a critical reminder of the importance of getting your company’s health and safety programs up to date, in the event that an inspection is triggered.

If you’re unsure of your company’s compliance condition and need help, Berg Compliance Solutions is offering a free, no obligation, and confidential summary OSHA compliance assessment for ARMA members during July and August. Interested companies should call 512-457-0374 or email rcarr@bes-corp.com.