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:
- historically treated workplaces as individual, independent establishments;
- limited review of employers’ OSHA records for past violations to form the basis for a Repeat to three years back; and
- 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:
- treats related workplaces within a corporate family as one workplace for purposes of Repeat violations;
- looks back five years for past violations to form the basis for Repeats; and
- 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.
* * * * * * * *
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.