This week, Washington Legal Foundation published an article  regarding OSHA’s New Enterprise-Wide Approach to Enforcement, authored by EBG attorneys Eric J. Conn and Alexis M. Downs.  The article expands on a February 2012 post entitled “Enterprise Enforcement: OSHA’s Attack on Employers with Multiple Locations,” here on the OSHA Law Update Blog.

The gist of the article and the prior blog post is that companies that operate multiple facilities in different locations, such as national retail and grocery chains, grain cooperatives, large national nursing and medical care organizations, manufacturers, hotel groups, and many others, need to be aware of four new Occupational Safety and Health Administration (OSHA) enforcement trends that have important corporate-wide consequences:

  1. A rise in follow-up inspections and Repeat violations at sister facilities within a corporate family;
  2. OSHA’s pursuit of company-wide abatement provisions in settlement agreements;
  3. OSHA’s requests for enterprise-wide relief from the Occupational Safety and Health Review Commission; and
  4. Implementation of OSHA’s Severe Violator Enforcement Program (SVEP), which incorporates elements of each of the above.

The full article explains these four initiatives and how OSHA is implementing them.

Happy Holidays and Happy New Year to all of you, and Happy 1st Anniversary to the OSHA Law Update blog.  On December 20th, we celebrated our first full year of updates and articles (56 of them) about important OSHA Law topics here on the OSHA Law Update blog.  We would hardly have the energy or enthusiasm to keep the OSHA Law Update current if it were not for all of the incredibly positive feedback, comments, and questions that we have received over the year from all of you.  Thank you for that.

Just as we did last year, as the clock was winding down on a remarkable year of OSHA enforcement and other activity, it is time to take a look ahead to the new year, and offer our thoughts about what we can all expect from OSHA in 2013.  Here is a link to our post from December 2011 in which forecasted 5 important OSHA developments for 2012 (a pretty accurate forecast in retrospect), and here are three developments we expect from OSHA in 2013:

1.  Heavy-handed enforcement will continue to trend up:

During President Obama’s first term in office, OSHA consistently increased enforcement in every measureable way, year over year, and there is every reason to believe that trend will continue.  OSHA’s budget increased early in President Obama’s first team, and that allowed OSHA to hire more than 100 new compliance officers.  The agency also redirected most of the resources and personnel who had formerly been involved in compliance assistance and cooperative programs into enforcement.  As a result of this big increase in enforcement personnel, we saw the number of inspections increase from averages in the mid-30,000’s during the Bush Administration to the mid-40,000’s through President Obama’s first term.  Barring a prolonged trip over the Fiscal Cliff and actual implementation of sequestration, the trend of increasing enforcement personnel and increasing inspections will continue.

In addition to more frequent visits from OSHA, the OSHA leadership team also modified its Field Operations Manual for the purpose of driving up average and total penalties per inspection (i.e., by raising minimum penalties, average penalties, and eliminating penalty reductions available for size and safe history).  As a result, the average per Serious violation penalty doubled from the Bush Administration (approx. $1,000 per violation) to the end of Obama’s first term (approx. $2,000 per violation).  OSHA’s leadership team has expressed a goal of continuing to grow that average to approx. $3,000 per Serious violation.  We also watched the frequency of enhanced citations (i.e., Willful and Repeat violations that carry 10x higher penalties) increase at a rate of more than 200%.  Those changes, and other aggressive enforcement strategies by OSHA, have resulted in the Agency doubling the total number of “Significant” enforcement actions (cases involving penalties of $100,000 or more), and tripling the number of cases involving total penalties over $1M.  That trend is also expected to continue.

The Democratic Party unveiled its Party Platform during President Obama’s Nominating Convention, and offered a glimpse into what we can expect from OSHA in 2013 and beyond.

The platform called for a focus on “continu[ing] to adopt and enforce comprehensive safety standards.”  Many dubbed the 2012 a “status quo election,” which is probably right, and because the status quo at OSHA over the past four years has been a trend of increasing enforcement and focused rulemaking, that is precisely what we should expect from OSHA over the next four years.

Specifically, OSHA will continue to aggressively enforce its existing standards (i.e., increasing numbers of inspections, increasing penalties, and increasing publicity related to enforcement actions).  We anticipate a doubling down on programs and strategies like:

By Alexis M. Downs and Eric J. Conn

Companies that operate multiple facilities in different locations, such as national retail stores, grocery chains, manufacturers, and hotel chains, need to be aware of three new OSHA enforcement trends with enterprise-wide consequences:

  • A rise in follow-up inspections and Repeat violations at sister facilities within a corporate family;
  • OSHA’s increasing pursuit of company-wide abatement provisions in settlement agreements; and
  • OSHA’s recent requests for enterprise-wide relief from the Occupational Safety and Health Review Commission.

Follow-up Inspections and Repeat Violations:

The most significant trend impacting employers with multiple locations is OSHA’s recent fascination with Follow-up Inspections and Repeat citations.  OSHA characterizes citations as Other Than Serious (OTS), Serious, Willful, or Repeat.  The maximum penalty for OTS and Serious citations is only $7,000 per violation, but for Willful and Repeat violations, OSHA can issue penalties up to $70,000 per violation.  By actively pursuing more Repeat violations, OSHA is issuing much higher penalties.

OSHA issues “Repeat” violations when an employer has been cited in the past for a substantially similar violation (generally, a citation issued under the same standard for the same violative condition).  Until recently, Repeat violations were rarely issued because OSHA:

  1. historically treated workplaces as individual, independent establishments;
  2. limited review of employers’ OSHA records for past violations to form the basis for a Repeat to three years back; and
  3. picked inspection targets reactively (i.e., following incidents and complaints), so OSHA was less likely to revisit a workplace within a few years.

Each of these factors has changed under the Obama Administration’s OSHA.  Today, OSHA:

  1. treats related workplaces within a corporate family as one workplace for purposes of Repeat violations;
  2. looks back five years for past violations to form the basis for Repeats; and
  3. proactively selects inspection targets with past violations (at the same or related facilities within a corporate family), with the goal of finding and citing Repeat violations.

As a result of OSHA’s new approach to Repeat violations, in the past four years, OSHA has increased the number of Willful and Repeat violations it issues by more than 215%.  This heavy use of follow-up inspections and Repeat violations is how OSHA has also tripled its number of significant enforcement actions (cases over $100,000) over the past two years.

This practice has had serious consequences for national corporations, by putting them on the hook for Repeat violations throughout the country by virtue of a single citation at just one location.  A company’s failure to investigate and correct the same safety hazard at each of its stores or locations around the country now leads to Repeat violations and substantial penalties, even for the first citation ever issued at another location.

Corporate Settlement Agreements:

Another method OSHA has employed to amplify the impact of a single enforcement action beyond just one location is OSHA’s new practice of seeking corporate-wide abatement in settlement agreements.  Abatement is the act of correcting a safety or health hazard that was identified and cited by OSHA during an inspection.  Because OSHA inspects workplaces, and citations relate only to conditions at the single workplace subject to the inspection, abatement is limited to the conditions identified at that single workplace.

While the law limits the abatement that OSHA can demand in a citation to a single location, in a settlement, parties can make commitments beyond what OSHA can require in a citation.  Consistent with that, in June of last year, OSHA issued a Compliance Directive regarding OSHA’s use of Corporate Settlement Agreements (“CSAs”), with the intent of expanding abatement beyond a single location.  The Directive explains that OSHA may include provisions in settlement agreements to expand abatement requirements to all of a company’s locations rather than just the location where the alleged violation was found and cited.

The Directive states that CSAs allow OSHA to use its resources “more efficiently by avoiding numerous inspections of like corporate locations,” resulting in “more timely reduction and uniform abatement of serious hazards at multiple worksites.”

In some instances, OSHA policy now mandates that Area Offices at least consider incorporating corporate-wide abatement requirements into settlement agreements.  For example, OSHA’s Directive regarding its Severe Violator Enforcement Program requires Area Offices to consider including in every settlement: (1) enterprise-wide abatement requirements; (2) provisions requiring employers to identify all of its current or future jobsites; and (3) consent to inspections at other locations (i.e., waiving OSHA’s warrant requirement).

Enterprise-Wide Relief from the Review Commission:

Despite what seems to be settled law that abatement called for in an OSHA citation must be limited to the location where the violation was identified, OSHA has recently begun to pursue enterprise-wide mandatory abatement.  For example, OSHA has begun to request the Occupational Safety and Health Review Commission grant such enterprise-wide relief in its rulings.

This has been sought by OSHA in at least two occasions in the past two years; once in July 2010 against the U.S. Postal Service, and again in January of this year against a grocery store chain.  In a January 18, 2012 press release, OSHA reported that the Department of Labor sought enterprise-wide relief at more than 60 of the grocery store chain’s separate locations based on hazards identified and cited at only two of its stores.  OSHA reasoned that the employees at the approximately 58 stores that did not receive citations “were exposed or likely to be exposed to” similar hazards.  Both cases remain in the contest phase.

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Given these three trends in enterprise-wide enforcement, companies operating multiple sites must take every citation they receive seriously, regardless of the size of the penalty.  Often the first citation is issued with an innocuous characterization (e.g., Other Than Serious) and a low or no penalty, or OSHA agrees in a settlement to reduce more serious violations to lower characterizations and penalties.  Employers must be careful to weigh the benefit of a low penalty citation or settlement against the potentially high cost of Repeat violations and costly company-wide abatement that may arise during follow-up inspections at related facilities.