How did OSHA calculate that?
The Occupational Health and Safety Administration (OSHA) assesses fines or penalties when they find a hazard and then they complete some magic formula and come up with a fine amount that leaves some shaking their heads in wonderment. As with almost all OSHA regulations, this calculation is not a mystery at all. In fact, OSHA tells us exactly how they are going to determine what the final penalty amount will be before they assign the number.
The Higher/Lesser assignment below really starts the whole determination.
Be aware that penalties greatly increased August 1, 2016 and the initial High point is now $12,471 instead of $7,000. The reduction breakdown final numbers have not been released yet so you will have to do a rough calculation to get a good estimate of the new fine amounts.
Take the number above then reduce appropriately:
Higher/Lesser (see chart above) = initial fine between the high and low
History = 10% reduction allowed
Good Faith = 15% reduction allowed
Quick Fix = 15% reduction allowed
Size = varies up to 30% reduction allowed
Do you want to be a step ahead of OSHA? Do you want to avoid unnecessary fines? Unsure about your OSHA compliance practices? Looking for support in maintaining records, building a safety program or implementing OSHA training? Contact The OSHA Connection today for your no-risk assessment of your business.
Read the entire OSHA memorandum below
March 27, 2012
|MEMORANDUM FOR:||REGIONAL ADMINISTRATORS
|FROM:||DAVID MICHAELS, PhD, MPH|
|SUBJECT:||Annual Review and Scheduled Modification to OSHA’s Interim
Administrative Penalty Policy
On September 27, 2010, I issued a memorandum to Regional Administrators and State Plan designees regarding deployment of OSHA’s Interim Administrative Penalty Policy. The purpose of this memorandum is to provide a brief review of the policy during Fiscal Year (FY) 2011 and to notify you of a planned modification to the interim administrative penalty policy for employers with 1-25 employees. This memorandum will serve as the Agency’s modified interim penalty policy, until the policy is incorporated into the Field Operations Manual (FOM).
Throughout FY 2011, the Agency closely monitored the regional and national impact of the new penalty policy implemented Federal OSHA offices. In general, the new policy was implemented and has performed as intended. However, the higher penalties have notably impacted employers with 1-25 employees. After careful consideration, an increase will be made to the employer size penalty reduction factor for employers with 1-25 employees. The current 40% size reduction factor will be increased to a 60% reduction for size for this category of employers. No other changes will be made to the September 27, 2010, administrative penalty policy.
Scheduled Modification for Employers with 1-25 Employees:
The Directorate of Information Technology (DIT) is currently developing software updates for the Integrated Management Information System (IMIS) and OSHA Information System (OIS) to reflect the new employer size reduction factor for our penalty calculations. OSHA plans to fully implement the IMIS and OIS software updates in all Federal OSHA offices simultaneously.
The OSHA-wide software deployment reflecting the modified penalty policy in IMIS/OIS will occur on April 1, 2012. DIT will begin the software release at the close of business (5:00 pm EDT) on March 30, 2012. Any inspection opened on or after April 1, 2012, will utilize the new penalty policy and associated calculation system. All inspections opened on or before March 31, 2012, will continue to use OSHA’s current penalty policy and calculation system. The current and modified penalty policies will run parallel in IMIS/OIS and require no additional action by the end user. The appropriate calculation system will be based on the opening conference date of the inspection. As a precaution, please refrain from entering new OSHA 1’s into IMIS on Monday, April 2, 2012, until the start-of-day software updates have been completed.
OSHA’s Modified Interim Penalty Policy (Effective April 1, 2012):
The penalty structure described in this memorandum is a statement of OSHA’s general enforce-ment policy and shall normally be applied as set forth below. If, in a specific case, the Area Director determines that it is warranted to depart from the general policy in order to achieve the appropriate deterrent effect, the extent of the departure and the reasons for doing so should be fully documented in the case file. The following language shall serve as Federal OSHA’s Modified Interim Penalty Policy until the policy is incorporated in final form into Chapter 6 – Penalties and Debt Collection of the FOM.
The time frame for considering an employer’s history of violations has expanded from three years to five years. An employer who has been inspected by OSHA within the previous five years and has no serious, willful, repeat, or failure-to-abate violations will receive a 10% reduction for history.
An employer that has been cited by OSHA for any high gravity serious, willful, repeat or failure-to-abate violation within the previous five years will receive a 10% increase in their penalty, up to the statutory maximum.
Employers who have not been inspected and employers who have received citations for serious violations that were not high gravity will receive neither a reduction, nor an increase based on their OSHA inspection history.
The time period to consider for repeated violations has increased from three years to five years. Area Directors may continue to apply a size reduction to the penalty, as appropriate, after considering the need for a deterrent effect.
Severe Violator Enforcement Program (SVEP) Violations
Where circumstances warrant, at the discretion of the Area Director, high gravity serious violations related to standards identified in the SVEP will no longer need to be grouped or combined, but can be cited as separate violations, each with its own proposed penalty. Furthermore, for individual violations for hazards identified in the SVEP, Area Directors must consider the adequacy of the proposed penalty and may, as appropriate, limit adjustment for good faith, history, or size when necessary to achieve an appropriate deterrent effect. The rationale for limited adjustments must be fully documented in the case file.
Gravity-Based Penalty (GBP)
OSHA has adopted a gravity-based penalty determination that provides for a gravity-based penalty between $3,000 and $7,000, as described below.
The penalty reduction structure for size is illustrated below, allowing for penalty reduction between 10 and 60% for employers with 250 employees or less. No size reduction will be applied for employers with 251 or more employees.
|251 or more||None|
* Effective April 1, 2012, Federal OSHA modified the employer size reduction factor for employers with 1-25 employees from a 40% size reduction to a 60% reduction factor.
The current good faith procedures in the FOM have been retained. A penalty reduction is permitted in recognition of an employer’s effort to implement an effective workplace safety and health management system. Employers must have a safety and health program in place to get any good faith reduction; furthermore, good faith reductions are not allowed in the cases of high gravity serious, willful, repeat, or failure-to-abate violations.
The 15% Quick-Fix reduction, which is currently allowed as an abatement incentive program meant to encourage employers to immediately abate hazards found during an inspection, has been retained. However, the 10% reduction for employers with a strategic partnership agreement has been eliminated.
Increase Proposed Minimum Penalties
The minimum proposed penalty for a serious violation was increased to $500. When the proposed penalty for a serious violation would amount to less than $500, a $500 penalty will be proposed for that violation. The proposed minimum penalty for a posting violation increased to $250, if the company was previously provided a poster by OSHA.
Additional Administrative Modifications to the Penalty Calculation Policy
Final penalties will now be calculated serially, unlike the past practice in which all penalty reductions were added and the total percentage was multiplied by the GBP to arrive at the proposed penalty. The penalty adjustment factors will be applied serially and in this order: history, good faith, quick-fix and size.
Sample Moderate Gravity Penalty Comparison: Summed versus Serially Calculation
|Good Faith(15%)||$3,825 – 15%|
|Quick Fix(15%)||$3,251 – 15%|
|Size(30%)||10% + 15% + 15% + 30% = 70%||$2,275 – 30%|
* No proposed penalty shall exceed the statutory limit for a serious violation or $7,000.
State Plan Implications
OSHA has recently communicated with the States regarding its expect ations and the legal requirements for “at least as effective” State penalty calculation policies. The Federal Program Change requirement for the States regarding penalty calculation policies will be included In Chapter 6 – Penalties and Debt Collection of the FOM. Any State choosing to adopt and implement this new Federal policy now should notify their Regional Administ rator and coordinate with DIT on the necessary software changes. However, State Plans need take no action In response to this policy memorandum until further discussions have taken place and the revision to the FOM has been Issued. At that time, the States will have 60 days to provide notice of their intent and 6 months to adopt an Identical or at least as effective penalty policy.
These changes establish general agency policy and do not preclude the agency from assessing a different penalty where appropriate under the Act given the circumstances in a particular case.
Questions regarding OSHA administrative penalty policy should be directed to the Directorate of Enforcement Programs – Office of General Industry and Agricultural Enforcement. Please contact Art Buchanan, Director of the Office of General Industry and Agricultural Enforcement at 202-693-1868 or Buchanan.Art@dol.gov.
Do you want to be a step ahead of OSHA? Do you want to avoid unnecessary fines? Unsure about your OSHA compliance practices? Looking for support in maintaining records, building a safety program or implementing OSHA training?