An amendment in the 2015 US Budget Act is allowing OSHA to increase its fines for the first time in 26 years. The Act, which was signed into law by President Obama late last year, allows OSHA to increase the penalties associated with workplace safety and health violations. The increases, which average approximately 80%, are intended to account for increases in inflation.
Why weren’t OSHA’s penalties keeping up with inflation? It turns out that OSHA was one of four agencies exempted from the Federal Civil Penalties Inflation Adjustment Act (FCPIAA) of 1990. This Act allowed cost of living adjustments to be made to the vast majority of federal civil penalties. The provision in last year’s Budget Act abolishes OSHA’s previous exemption from the FCPIAA.
OSHA’s new penalty structure means that their $70,000 maximum fine can now be increased to $125,000. This is good news, seeing as stiff penalties play “an important role in deterring violations” (according to the language in the FCPIAA). Many studies support this claim, including a recent study by the Institute for Work & Health.
The Institute reviewed data on citations & penalties - and the frequency or severity of workplace injuries occurring between 1990 and 2013. The study found “strong evidence” that citations and penalties reduce injuries. Interestingly, it also found some evidence that regulatory inspections that do NOT include a fine have no effect in reducing injuries.
This study echoed the findings of an earlier study by the same Institute that looked at data between 1970 and 2003. Simply put, both studies indicate that worker health and safety improves after an employer receives an OSHA fine. This in turn means that fewer workers get injured, become ill, or die on the job.
Even with the proposed increases, OSHA’s penalties pale in comparison to penalties that the EPA imposes on violators. An incident at a DuPont chemical plant in Tonawanda, NY in 2010 illustrates this disparity. In brief, a contractor was killed at the facility when hot sparks from his welding job ignited flammable vapors. A co-worker was also injured.
OSHA investigated the incident and cited DuPont and the contractor for a total of 17 serious violations. The agency proposed $61,500 in fines for DuPont and $55,400 in fines for the contractor. These fines very likely were negotiated to lower amounts during the settlement hearings.
The EPA investigated that DuPont during the same time frame and identified several violations of the Clean Air Act. It imposed a fine of $724,000 on the company.
The tally from this one incident: OSHA proposed total fines of $116,900 versus EPA fines of $724,000. Remember that a worker was killed in this incident. Were the penalties commensurate with the loss of human life and the degree of damage to the environment? Your value system and perspective are sure to influence your answer.
Cashins & Associates applauds the increase in OSHA fines and supports governmental initiatives that promote employee health and safety. It’s not just a cliché- workers are a company’s most important asset. Let's work together to protect them.