From Venulex.com
Widespread OSHA recordkeeping mistakes can prove very costly, a federal appeals court in New Orleans recently reminded employers, telling them also not to rely too heavily on the Occupational Safety and Health Review Commission to save them from immense penalties in cases involving certain willful violations. The U.S. Court of Appeals for the Fifth Circuit has upheld the issuance of penalties for each of 141 instance-by-instance willful recordkeeping citations against two related companies for knowingly and intentionally failing to record certain work-related injuries or illnesses.
OSHA had proposed penalties against the two companies totaling $1.21 million dollars. Jindal United Steel Corp. was cited for 82 willful violations with proposed penalties of $9,000 per violation, while Saw Pipes U.S.A., Inc. received citations for 59 such violations, with proposed penalties of $8,000 per violation. The court vacated an order of the Commission which would have greatly reduced the penalties for each company, finding that the Commission's order did not comply with the Occupational Safety and Health Act. Chao, Secretary of Labor v. Saw Pipes, U.S.A., Inc., etc., 5th Cir., Nos. 05-61087-61089 (decided February 21, 2007).
After they received the numerous per-instance citations, the companies contested OSHA's findings and penalties before the Review Commission. A Commission administrative law judge upheld the findings of willfulness, but granted the companies relief on the penalties. He grouped all the penalties for each company and assessed a penalty of $70,000 for each employer—the maximum allowed by the OSH Act for a single willful violation.
The Secretary sought review of the ALJ's penalty determinations by the three-member Review Commission. The companies, however, did not seek cross-review of his affirmance of the willful classification. Because of a vacancy on the Review Commission and a disagreement between the two remaining Commissioners over the grouping of the penalties, the decision of the ALJ became a final order of the Commission. The Secretary then sought review by the court of appeals.
After examining the provisions of the OSH Act, the court concluded that the ALJ had no authority to group the willful penalties proposed by OSHA. Although it agreed with the companies' contention that the Review Commission was not bound by OSHA's penalty proposals—under the OSH Act, the Commission determines penalties, while OSHA merely proposes them—the court held that fact not relevant in this case. It explained:
The Secretary's [OSHA's] charging decision—whether to cite the employer for a single violation or for per-instance violations—is not itself a penalty proposal. The penalty proposed is the amount the Secretary is seeking, not the number of violations. Therefore, the Commission's authority to set a penalty different from that proposed by the Secretary does not entail the authority to change the number of violations charged and disregard the number of violations proven.
In other words, although the Review Commission, in a proper case, could vacate citations, reclassify them if it found they were improperly classified by OSHA, and determine the appropriate penalty for each violation alleged and proven, it could not group per-instance penalties once the violations were established. The decision whether to group alleged violations and penalties or to cite them separately was a matter Congress committed to OSHA's prosecutorial discretion. The court held: "[T]he Secretary may group willful violations at the charging stage, whereas the Commission may not group per-instance willful violations at the penalty stage." In Saw Pipes, the companies had not further challenged the ALJ's decision upholding the willful violations, so the instance-by-instance citations were undisturbed.
The remaining discussion dealt with the appropriate penalties. The court observed that Congress constrained the Commission's discretion in setting penalties for willful violations by imposing a $5,000 statutory floor for each such violation, as well as a $70,000 cap. The ALJ's $70,000 penalty assessment for each company, which was based on his flawed grouping of penalties, did not conform with the statutory requirement, according to the court. The Commission was not free to ignore the statutory penalty range for violations which were established. (In the case of Jindal, the 82 willful violations would result in total minimum penalties of $410,000; in the case of Saw Pipes, the 59 willful violations would result in total minimum penalties of $295,000).
Accordingly, the court vacated the ALJ's penalty assessment and remanded the cases for proceedings not inconsistent with its opinion..
Recordkeeping violations often are cited by OSHA as "other-than-serious" since they do not directly affect employee safety and health. Under the OSH Act, OSHA may propose penalties of up to $7,000 for other-than-serious violations, but is not required to seek any penalty for them. In many instances, OSHA does not.
Where, however, OSHA concludes there is a knowing, deliberate and intentional effort by an employer subject to the recordkeeping rule to avoid recording occupational injuries and illnesses, resulting in significant underrecording, it may cite the employer for a willful violation. Moreover, in its discretion, OSHA may cite on an instance-by-instance basis, reasoning that each employer decision not to include a recordable injury or illness constitutes a separate violation. This has the effect of increasing proposed penalties exponentially. The Fifth Circuit's recent decision makes clear that the Review Commission has only limited authority to address the huge penalties that can result from per-instance citations once the underlying violations are conceded or proven after hearing.
Employers subject to OSHA recordkeeping requirements are advised to review their procedures to make sure all recordable injuries and illnesses are being entered properly on their OSHA 300 logs. This may entail checking entries against other personnel and medical records, such as workers compensation reports of injuries, for consistency. In addition, logs should be checked to assure that they are complete and all required information has been included. Nevertheless, when OSHA has investigated an employer's recordkeeping, and citations are thought to be likely, it may behoove an employer to seek to persuade OSHA that any errors or omissions are not the result of intentional underrecording. Where willful recordkeeping citations have been issued, in some cases, it may pay to resolve the matter quickly with OSHA on satisfactory terms, if possible, rather than litigate before the Review Commission.
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