An April 22, 2010 memorandum from OSHA Administrator David Michaels to the agency's Regional Administrators outlines "Administrative Enhancements to OSHA's Penalty Policies" that will be implemented as agency personnel are trained over the next several months. The action is being taken in response to an agency work group's finding that "the Agency's penalties are too low to have an adequate deterrent effect." The changes are intended to result in higher average penalties overall as well as increasing the average penalty assessed for serious violations from $1000 (current) to $3000-$4000.
Among the changes specified in the memo are:
- The period for considering an employer's prior violation history will be expanded from to 5 years (currently it is three years).
- An employer who has been inspected by OSHA within the previous 5 years and has no serious, willful, repeat, or failure-to-abate violations will receive a 10% proposed penalty reduction for history.
- An employer cited by OSHA for any high-gravity serious, willful , repeat, or failure-to-abate violation within the previous 5 years will receive a 10% increase in their penalty, up to the statutory maximum.
- Employers who have not been inspected in the previous five years and employers who have received citations for serious violations that were not high-gravity will receive neither a reduction nor an increase for history.
- The time period for considering whether a violation qualifies as a "repeat" will be extended to five years.
- Area Directors may continue to apply a penalty reduction based on size after considering the need for a deterrent effect.
Reductions Based on Company Size
- 1 - 25 employee companies eligible for 40% penalty reduction
- 26-100 employee companies eligible for 30% penalty reduction.
- 101-250 employee companies eligible for 10% penalty reduction.
- No rsized-based reduction for employers haveing mor than 250 employees.
Good Faith Reductions
- 15 - 35% penalty reductions will continue to be permitted in accordance with current guidance in the Field Operations Manual, but establishment must have an effective workplace safety and health program in place.
- Good faith reductions will not be given in cases of high gravity serious, willfull, repeat, or failure-to-abate violations.
- A 15% "Quick Fix" penalty reduction will be permitted for those who immediately abate hazards found during the inspection.
- The 10% penalty reduction for workplaces having a Strategic Partnership agreement is eliminated.
Increased Minimum Penalties
- The minimum penalty for serious violations will be $500 (i.e., even if applicable penalty reductions would result in a penalty less than $500, the penalty for a serious violation will be $500.)
- The penalty for failing to post the OSHA Poster will increase to $250 if OSHA has previously provided a poster to the employer.
The new policy calls for penalties to be calculated serially is the order of history, good faith, quick fix and size, rather than summing the percentages first and applying the total to the initial gravity based penalty. This method results in significantly higher penalty amounts.
Area Director Discretion
- Area Directors retain authority to determine whether a penalty should be reduced based on history or size should be granted.
- At informal conferences, Area Directors will be authorized to offer up to a 30% penalty reduction. Any higher reduction must be approved by the Regional Administrator.
- Area Directors may offer an additional 20% reduction if employer agrees to retain an outside safety and health consultant.
- No penalty reductions will be permitted at an informal conference for employers who have an outstanding penalty balance owed to OSHA at any of his establishments (unless already on a penalty payment plan and making timely payments).
- Area offices using expedited settlement agreement procedures may only offer a 30% penalty reduction; but an additonal 20% may be granted if the employer commits to hiring an outside consultant.
The entire penalty change memo is attached below.