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The Egregious Penalty Policy and Violations of Specific Standards: Secretary of Labor vs. The Hartford Roofing Co., OSHRC Docket No. 92-3855, September 15, 1995

Date: Feb 01, 1996


The OSH Review Commission decision in Hartford discussed below, like the Arcadian case discussed in a previous column, was decided in September, and in November, OSHA decided not to appeal; however, OSHA has appealed the Arcadian case to the Court of Appeals.  The issues in these two cases are of broad importance, and the outcome will affect OSHA's authority to propose large penalties in many enforcement situations.  Given that the issue is unsettled in Arcadian, before relying on the case, check with an attorney to determine if a final decision has been rendered by the higher court.  Moreover, it is not clear whether OSHA will react to the Hartford decision by changing its egregious violations policy, or if it will look for another case to press its view before the Commission at a later date.  With regard to citations of specific standards where OSHA attempts to apply the egregious policy, employers should contact an attorney for assistance as soon as it is received.  Citations involving the general duty clause should always be reviewed by an attorney. 

In 1986, OSHA adopted what is commonly referred to as its egregious penalty policy, under which the impact of its enforcement actions would be magnified by the publicity surrounding dramatically increased penalties.  OSHA's criteria for imposing penalties under the policy can best be described as situations where OSHA believes an employer's actions were so far outside acceptable standards of conduct as to justify what can best be described as punitive fines. Under the policy, if OSHA determines that an employer "egregiously" violated the law, it issues a separate citation and proposed fine for each instance of an alleged violation.  Thus, if five machines had missing guards, each instance would be cited as a separate violation with a separate penalty.  Under normal circumstances, OSHA would group instances of like violations and issue a single citation.  Thus, if five machines had missing guards, all five instances would normally be cited under a single violation, with a single penalty. 

In the early egregious penalty cases, multimillion dollar penalties were reached when employers were cited for hundreds of separate items; for example, a separate citation for each failure to record a particular type of illness or injury.  Because of the allegedly egregious nature of the behavior OSHA found faulty, the citations were always considered willful violations producing individual penalty amounts of $5000 or more.  When the penalty structure was changed in the 1990 Budget Reconciliation Act, the maximum penalty increased seven-fold, creating the possibility of truly astronomical penalties.  

In later cases, OSHA introduced a new twist.  OSHA took the position that each employee exposed to a particular hazard constituted a separate violation and began citing employers on that basis.  The effect of this additional multiplier kicked in, and even small employers were faced with quite large fines, some exceeding $1,000,000. 

Hartford Roofing illustrates the approach.  Six employees were working on a 200 x 300 foot roof, 39 feet above the ground, with a parapet of 24 inches or less in areas where the employees were working.  OSHA's fall protection standard for construction, 29 C.F.R.' 1926(g), required a fall protection system because the perimeter was unprotected under' 1926.502(p)(8).  Hartford's six employees, OSHA reasoned, were each exposed to the fall hazard.  Thus, OSHA cited six alleged violations and proposed penalties of $35,000 each because of Hartford's history of prior violations.  The six alleged violations could have been abated through the single act of installing a guardrail which could have protected all six workers.  Total penalty:  $210,000. 

In Arcadian, a case we discussed in a previous column, a similar approach was used by OSHA after an explosion and fire in Arcadian's Lake Charles, Louisiana fertilizer plant.  However, instead of citing Arcadian for violations of a specific hazard, OSHA alleged violations of the general duty clause, which requires employers to provide "each of his employees . . . a place of employment free from recognized hazards."  To make its point more forcefully, OSHA alleged 87 instances of violations under the general duty clause, one for each employee in the plant, and proposed penalties of $50,000 each, for a total of $4,350,000

Both cases were appealed to the OSHRC after the Administrative Law Judges (ALJ) rejected OSHA's employee-by-employee penalty assessment method.  The ALJs found that, because the citations were based on a single course of conduct, citations on a per employee basis were not permitted.  In Hartford, the Commission agreed with the ALJ's conclusion, holding that OSHA's attempt to cite on a per-employee basis contravened explicit and clear statutory language enacted by Congress directing the Agency to cite employers who violate "a requirement of any standard."  Where the requirement implies a single course of action to abate a hazard, only a single violation may be found, regardless of how many employees are present.  

As we discussed in Arcadian, the Commission reaffirmed its position that Congress granted the Commission the authority to assess penalties; OSHA's responsibility is to propose them.  OSHA can, where the regulation prohibits individual acts, cite multiple violations for each separate act not in conformance with a standard or, in its discretion, group violations and propose a single penalty.  According to Arcadian, OSHA may not propose and the Commission may not assess multiple penalties for the same violation of the general duty clause.  Left undecided in Arcadian was whether penalties for violations of specific standards contained in the Code of Federal Regulations could be magnified by citing an employer for each exposed employee where the action OSHA condemns affects all of a group of employees equally, rather than when the employer is directed to take particular steps for each individual employee.  

As with the general duty clause violations in the Arcadian case, in Hartford the Commission said OSHA can issue only one citation when a single workplace condition as defined by the standard can be addressed by a single course of action, even though it affects a number of employees.  The Commission's reasoning was that, in both of these cases, the Act and the standard prohibit the course of action, -- in Hartford, to use a fall protection system when employees all exposed to fall hazards or to protect employees from recognized hazards; in Arcadian, to prevent exposure of employees to a recognized hazard -- unlike the Commission's earlier decision in the Caterpillar case.  There the company failed to record individual cases or recordable illnesses or injuries.  In Caterpillar, the Commission said each instance of a failure to record the injury or illness was a separate act.  Moreover, the regulation at issue requires employers to "enter each recordable injury or illness on the log and summary" meeting the established criteria.  Thus, OSHA contemplated that separate individual decisions would be guided by the terms of the regulation. 

In contrast, the standard in Hartford and the duty in Arcadian required the employer to address a hazard.  Once the hazard was addressed, all affected employers would be protected.  Illustrating the distinction, the Commission referred to the OSHA respirator standard.  There the failure to provide each employee with a respirator to protect against exposure to a hazardous air contaminant would represent a separate and distinct -- and hence separately citable -- violation.  But where the remedy is a single course of action -- e.g., to provide engineering controls under Section 1910.1000(e) -- only a single violation exists.  Thus, although OSHA can use the number of exposed employees to adjust the penalty for the violation, the Agency may not simply increase the number of citations by issuing one for each exposed employee where a single practice, method, or condition affects more than one employee.

This article appeared in Compliance Magazine(February 1996) and it is reprinted with permission of ComplianceMagazine. Copyright © 1996 by IHS Publishing Group. Allrights reserved.

For further information about this article, please contactDavid G. Sarvadi at 202-434-4249or by e-mail at sarvadi@khlaw.com.