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OSHA Reduced ’07-’09 Fines by $321M Without Studying Safety Impact, Auditors Say

Friday, October 8, 2010

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The federal agency charged with overseeing workplace health and safety reduced fines to 98% of the employers it cited for violations—$321 million in all—in one 23-month period without ever evaluating the impact of the breaks.

Furthermore, the Occupational Safety & Health Administration may have granted $127 million in inappropriate reductions, according to a new audit by the Department of Labor’s Office of Inspector General.

A driving factor for reducing penalties was the employer’s right to contest an inspection, “which could delay abatement and continue to expose employees to hazards,” auditors said.

“OSHA Needs to Evaluate the Impact and Use of Hundreds of Millions of Dollars in Penalty Reductions as Incentives for Employers to Improve Workplace Safety and Health” is the title of the highly critical audit (Report Number: 02-10-201-10-105), which examined 49,192 federal OSHA inspections of non-federal employers between July 2007 and June 2009.

Large Fines, Large Reductions

The inspections resulted in 142,187 citations and $523.5 million in initial penalties, which were later reduced by $351.2 million  (67%), according to the audit, released Sept. 30.

Not only did OSHA routinely grant drastic reductions in fines, auditors said, but it did so in many cases where the reduction was clearly unwarranted—for example, in cases of employers with previous violations.

Worse, the auditors said, OSHA has never measured the effect of its fine reductions on workplace safety, which it is charged with overseeing.

OSHA’s penalty structure “is designed primarily to provide an incentive for preventing or correcting violations voluntarily,” according to the Occupational Safety & Health Act, which created the agency.

Reductions in penalties “are based on the general character of an employer’s safety and health performance ...”

‘History of Serious Violations’

However, both policies were regularly violated in many of the cases studied, OIG said. For example, auditors report:

• OSHA’s information system “cannot effectively track violations company-wide,” so the agency could not always consider the employer’s overall safety record as required.

• A total of 4,791 employers cited during the audit period had “a history of serious violations” but received a total of $86.6 million in penalty reductions. These averaged $18,076 per employer and ranged up to $480,400.

• Half of those with serious violations received reductions of $42.6 million “on subsequent inspections where a similar standard was violated, indicating the employer’s hazard corrections may not have been comprehensive and company-wide.”

• As much as $127 million (36 percent) in penalty reductions may not have been appropriately granted.

• Small businesses received the largest reductions (an average of 78%), but generally had the worst safety and health records.

• Reductions granted primarily because of a company’s size “resulted in what amounts to an entitlement, as 98%  of all citations were reduced at the maximum rate.”

• OSHA Area Directors did not document justification for reductions resulting from informal settlement agreements—about 49% of those reductions or $31.8 million.

• OSHA incorrectly granted $1.1 million in history reductions to employers with prior violations.

No Evaluation

Furthermore, all of these reductions were granted without OSHA ever evaluating their impact on workplace safety and health, the auditors found.

The criticisms are not new, the auditors note. OSHA’s use of penalty fines and their impact on the workplace safety and health have been the subject of reports by OIG and the General Accounting Office since September 1987, the report says. Even in August 2004, GAO reported that OSHA had not effectively evaluated its penalty assessments, the audit says.

Recommendations

OIG auditors made 11 recommendations, saying OSHA should, among other things:

• Develop and implement a method of evaluating the impact of reductions on workplace safety and health.

• Increase transparency by displaying base fines, reductions, and citation histories on its web site.

• Train Area Directors in documenting reductions.

• Revise the “good faith” policy accorded employers with previous violations.

OSHA Responds

In responding to the audit, OSHA took issue with how some of the auditors’ calculations were done. For example, OSHA said, OIG used maximum fines as its starting point, rather than calculating a maximum fine based on the employer’s size and record.

In addition, auditors examined the employers with histories of serious violations as a group, rather than examining them individually, to determine the severity of the previous violation, OSHA said.

Moreover, it is the death of a worker should not necessarily preclude an employer from receiving future reductions, because the cause of death may not have been work-related.

Furthermore, OSHA said, new violations should not be examined in the context of previous violations, because “each inspection presents a unique environment with a number of variables that must be taken into consideration.”

Auditors Response

Based on OSHA’s response, the auditors clarified two recommendations, but they added: “Our overall conclusions remain unchanged.”

The full report and response are available at http://www.oig.dol.gov.

   

Tagged categories: Fatalities; Health and safety; OSHA; Violations

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