On April 22, 2010, the same day that the EPA lead rules went into effect, assistant secretary of labor for OSHA, Dr. David Michaels, issued a memo to regional OSHA administrators titled “Administrative Enhancements to OSHA’s Penalty Policies.”  Although the subject is serious, it can’t go unremarked that the term “administrative enhancements” sounds like ad-speak for a platonic marital aid… perhaps a gift of Post-It notes and a stapler to charm your wife off her feet?

All humor aside–seriously, all humor–this announcement is the culmination of a process that has repositioned OSHA from a compliance organization, or one focused on the carrot of helping companies comply with OSHA regulations, to an enforcement agency–one focused on using the stick of enhanced penalties to change employer behavior.  Changing employer behavior is the focus because it is the employer that controls the workplace; and according to Dr. Michaels “American workers still face unacceptable hazards. More than 5,000 workers are killed on the job in America each year, more than 4 million are injured, and thousands more will become ill in later years from present occupational exposures.”

OSHA’s policy has been to consider several factors that can help an employer discount the nominal penalties if it is cited:

• Its history of violations
• Its good-faith efforts to implement an effective safety program
• Its “quick-fix” response to abate hazards found during an inspection, and
• Its size

These factors are given a different discount value, such as 10% for history and 15% for good-faith efforts.  The discount for size varies according to how many employees a firm has, with the smallest category (1–25 employees) receiving the highest discount.  This offers the greatest advantage to remodelers since the overwhelming majority of firms have fewer than 26 employees.

However, the new “administrative enhancements” change the way these discounts and other policies are to be implemented:

- The time frame for considering an employer’s history of violations will expand from three years to five.

- If an employer has any high-gravity serious, willful, repeat or failure-to-abate violations in this expanded five-year history, then a 10% penalty will be added.

- The time period for determining repeated violations also expands from three to five years.

- Violations will be graded according to their low to high severity, lesser or greater probability, and low to high gravity.  The newly-coined Gravity-Based Penalty will determine fines that range from $3,000 to $7,000.

- The size discount has been reduced (the discount for small employers, with 1-25 employees, has been reduced from 60% to 40%).

- If an employer agrees to hire a third-party safety consultant, it’s eligible for a 20% penalty reduction.

- OSHA has changed the way it adds up multiple discounts.  Previously, it would add up the percentage reductions and discount the penalty by the total percentage.  Now, they will be applied serially (the percentage for each discount factor will be applied one at a time to a declining balance), resulting in a higher net penalty.

- More details can be found at http://osha.gov/dep/penalty-change-memo.pdf.

In reality, few remodeling firms are at risk of an OSHA inspection because most projects don’t rise above OSHA’s target threshold of $1 million, and many remodelers operate individually and hence aren’t viewed as employers.  But a serious accident or fatality has a way of putting even a small company on OSHA’s radar.

It happens that the construction industry incurs the most fatalities of any industry in the private sector, and specialty trade contractors the most in the construction industry (the Bureau of Labor Statistics doesn’t provide a breakdown for remodeling contractors).  According to OSHA, “Falls are the most frequent cause of fatalities at construction sites and annually account for one of every three construction-related deaths.”  In light of OSHA’s new focus on the stick over the carrot, you should review your safety program; but especially so if you do any work requiring your employees (or subs) to perform elevated work.

Note:  Remodeling’s Leah Thayer posted an excellent column in February outlining how OSHA might affect the lives of remodelers.

Rick Provost has over 20 years experience helping to build the country’s largest design/build franchise network specializing in exterior home improvement.  Formerly the President and CEO of Archadeck®, Rick is now a principal in SMI Safety, a safety consulting and staffing business that specializes in industrial construction.  Rick also consults with emerging franchise companies to help them develop growth strategies and business systems.  He can be reached at rickp@smisafety.com.