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How Much Are You Budgeting for Safety for 2011?

OSHA has recently (October 1, 2010) announced that penalties for violations are increasing. They are also increasing substantially. What had previously cost companies $1,000 for a serious violation last summer is now going to cost between $3,000 and $4,000 under the new system.

Before OSHA went into effect, contracts were mainly based on labor, materials and human lives. If you had a contract valued at $35,000,000, your company was expected to have 35 people die. In today’s world, you would never think about basing your budget on such a calculation…or would you?

It is, or has been, easy for unscrupulous contractors to calculate the cost of OSHA fines and incorporate that into their budget and this was because the cost of violations hadn’t changed since the 70’s. At that time, $1,000 for a serious fine could hurt a company – today, $1,000 is only a fraction of the cost of a job and can be built into that budget.

OSHA isn’t being secretive about how the new penalties will be decided. Open up their website (www.osha.gov) and it’s all right there! Although, keep in mind, if OSHA feels as though a violation has taken place and they want to assess a different penalty, they will.

History: The time frame OSHA is now considering includes the last five years rather than the last three. This includes penalties for repeat violations. Also, those who have had no vi0lation that time will get a 10% reduction in the fine and those with high gravity serious, willful, repeat or failure-to-abate violations will receive a 10% increase up to the statutory maximum. Those with less serious violations in the last five years would receive no reduction or increase.

Severe Violator Enforcement Program: Under certain circumstances determined by the Area Director, some high gravity serious violations will be cited as separate violations with individual penalties instead of being grouped together.

Gravity-Based Penalty OSHA is using a gravity-based penalty structure. Serious violations will result in citations from $3,000 to $7,000.

Size Reduction: Companies with 250 employees or less could receive a penalty reduction from 10% to 40%. Companies with more than 251 employees would receive no reduction.

Good Faith: Much of the current good faith procedures will remain in place. Penalties can be reduced in recognition of an employer’s efforts to use an effective workplace safety and health program. There must be a safety and health program in place to get any sort of reduction. However, high gravity, serious, willful, repeat or failure-to-abate violations cannot receive good faith reduction. Also, while the 15% Quick-Fix reduction that encourages employers to fix hazards during inspections remains. While the strategic partnership agreement 10% reduction will now be eliminated.

Minimum Penalties: The minimum serious violation citation has been increased to $500. The minimum posting violation is now $250 if the employer was previously provided a poster by OSHA.

Additional Administrative Modifications to the Penalty Calculation Policy: Penalty adjustment factors are now applied serially instead of the reductions being added and then multiplied by the gravity-based penalty.

Currently in Congress is also “The Protecting American Workers Act” which would change the maximum penalty for a serious violation from $7,000 to $12,000 and the maximum penalty for a willful violation from $70,000 to $250,000.

Instead of factoring all this extra “OSHA violation” money into next years budget, why not just budget for a good safety and health plan and training for your employees? Doesn’t this make more sense?

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