Just when you thought it couldn't get any better, federal penalties for workplace safety violations were increased for the first time since 1990, thanks to a provision of the budget bill signed into law by President Barack Obama. The U.S. Department of Labor's Occupational Safety and Health Administration hasn't made an adjustment in its fine structure since 1990, and the new budget directs the agency to raise them and, on a yearly basis, keep them in line with the Consumer Price Index. The index has risen approximately 82% since 1990, and the move is designed to bring the fines in line with inflation over the past 25 years. In the future, fines from the U.S. Occupational Safety and Health Administration and state workplace-safety agencies would continue to rise with inflation. (Berzon, 2015).
According to an article in the Wall Street Journal, the new mandate, will likely increase maximum fines for the most severe citations to $125,000 from $70,000 and for other serious violations to $12,500 from $7,000. Although an increase in OSHA fines has not come as a huge surprise in the construction industry, what has taken many professionals back are the comments of Assistant Secretary of Labor for OSHA, David Michaels, in his testimony before the House Committee on Education and the Workforce Subcommittee on Workforce Protections in October. In his statement before the committee, Michaels said, “Simply put, OSHA penalties must be increased to provide a real disincentive for employers accepting injuries and worker deaths as a cost of doing business.” (Slowey, 2015). Many of our clients would strongly disagree with this statement, including myself. Robert Poole, safety director at HITT Contracting. “It's not true. Thirty years ago I'd say that would be an accurate statement, but those days are gone. It's hard for companies to operate that way now.” (Slowey, 2015).
It should be noted that not everyone affected by the new legislation opposes the move. One prominent lawyer who has represented industry interests in workplace-safety issues for decades said he couldn’t argue with the increase. “It’s very difficult to defend the present penalty structure, ” said Baruch Fellner, who has long represented industry interests on OSHA issues. “If you look at OSHA penalties in the context of other programs, they are in fact for individual items minuscule comparatively speaking. For larger corporations it can be a cost of doing business.” (Berzon, 2015). “It’s progress,” said Peg Seminario, who directs workplace-safety policy for unions under the AFL-CIO. “It’s bringing the penalties for worker-safety violations up to date.” The average fine last year for an incident in which a worker died was $7,000, reduced to $5,050 following settlement talks, according to the AFL-CIO. (Berzon, 2015).
Regardless of what OSHA does with its’ current fine structure, it shouldn't change the focus of any contractors' health and safety program. Up-to-date programs, effective training, and overall accountability are the key to reducing employee injuries and maintaining compliance in the workplace. It's important to remember the benefits of an effective health and safety program go well beyond avoiding fines. Companies with stellar programs know this better than anyone. Increased efficiencies and lower workers compensation costs are just a few of the by-products. Instilling employee safety as a core company value will result in higher profitability and a positive work environment. Achieve that, and higher OSHA fines will be someone else's problem...