What Are the Hidden Costs of an OSHA Citation?

Congress surprised everyone when they made an almost 80 percent increase in Occupational Safety and Health Administration (“OSHA”) penalties after nearly 25 years in 2016. As a result of that, today a serious violation can cost up to a hefty fine of $13,260, and a Willful or Repeat violation can cost up to $132,598. Typically, these citations often include multiple items, so it is very common that they multiply these figures.

When construction companies or other industrial employers receive this kind of serious citation, they often rush to speak to their lawyers to request an informal conference with OSHA to reduce the fine. Because when the OSHA representative offers a large settlement reduction in the fine it can save the company a lot of money. But is it really a good deal? Saving several thousand dollars and moving on without fixing the cause of the problem may cost much more over the long term.

For many companies – especially in the construction industry – the greatest hidden cost is the missed business opportunity. Many construction companies bid to prequalify or perform work for federal or state departments of transportation or other agencies. These agencies commonly ask prospective contractors to submit serious OSHA citations they have received. When a prospective contractor exceeds a predetermined threshold, they get disqualified, which sometimes costs the contractors hundreds of millions of dollars of potential work.

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Large power, chemical, and manufacturing companies sometimes also have similar requirements and are not willing to work with contractors with too many serious OSHA violations on their records. They also evaluate applicants based on their Experience Modification Ratios (“EMR”), which can be based on OSHA 300 forms for workplace illnesses and injuries records.

Companies that accept a reduction in the monetary penalty while allowing OSHA to enter a Final Order with a violation on record can also become a potential candidate for the “Repeat” violation. This can lead to possible tenfold penalty increases, that is if OSHA finds a repeated violation of the same standard or same activity, usually within a three-year period. Large employers with composite operations and multiple worksites are particularly unguarded to “Repeat” violations, and typically they are the employers that receive penalties amounting to more than a million dollars.

Sometimes saving a few thousand dollars through early settlement might seem like a good deal. But taking a closer look at the legal worth of the citation –  and considering a legal defense if a viable reason is available –  is often the smarter option.

The best way to avoid citations and their hidden costs is to comply with OSHA standards. That’s why here at CloudApper we have developed Safety Assure for helping employers establish safe workplaces without the administrative burden. Our easy-to-use mobile app for OSHA recordkeeping for injury and illness enables your employees to log incidents, accidents, near misses, and observations with ease and wherever these events are noticed to enable you to take prompt action. Complying with safety standards to avoid penalties and lower operational costs have never been easier!