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Submitted Statement of Peg Seminario, Director Safety and Health, AFL-CIO To the House Committee on Education and Labor Subcommittee on Workforce Protections Hearing on "Protecting America's Workers Act: Modernizing OSHA Penalties"

03/15/2010 12:00 am

Chairman Woolsey, Ranking Member McMorris Rodgers and other members of the committee, I appreciate the opportunity to submit this statement on behalf of the AFL-CIO in strong support of the Protecting America’s Workers Act – legislation to strengthen and improve the Occupational Safety and Health. Act.

Nearly four decades ago, Congress enacted the Occupational Safety and Health Act (OSH Act) of 1970, promising America’s workers the right to a safe job.  While progress has been made since the OSH Act was passed, the toll of workplace injuries, illnesses and fatalities remains enormous.  In 2008, 5,071 workers were killed on the job—an average of 14 deaths a day. An estimated 50,000 workers died from occupational diseases and millions more were injured.  Major hazards including silica, toxic chemicals, infectious diseases and ergonomic hazards have not been addressed.

For many groups of workers, workplace conditions are particularly dangerous.  Fatalities and injuries among immigrant and Latino workers are much greater than among other groups of workers due to their concentration in hazardous jobs, their vulnerability because of immigration status and their lack of union representation.  Workers in the construction industry continue to be at especially high risk, with fatality rates much higher than those of workers in other industrial sectors. 

Millions of workers still lack basic OSHA protections and rights.  More than 8 million state and local public employees in 25 states are not covered by the OSH Act.  Flight attendants, farm workers and other groups of workers are caught in a jurisdictional limbo with limited or no legal protection.  And for federal workers, OSHA has no authority to enforce the correction of cited violations.

Penalties for serious and willful violations of the job safety law are weak, even in cases in which workers are killed or injured.  The median OSHA penalty in cases involving a worker’s death is less than $4,000, which is clearly inadequate and provides no deterrence.  Protections for workers who report hazards or job injuries are also weak.  There is a growing trend among employers to attempt to shift the responsibility for safety and health onto workers, by adopting behavioral safety and injury discipline programs, instead of fixing workplace hazards.  Workers’ and unions’ rights to participate in OSHA enforcement actions are limited, resulting in settlements that fail to protect workers.

Under the Obama administration, OSHA is getting back to its mission of protecting workers.  The agency is moving to issue new standards, to strengthen enforcement and to ensure workers’ rights.  But many of the deficiencies and weaknesses in OSHA protection can only be addressed through changes in the law.  

The Protecting America’s Workers Act (PAWA) - H.R. 2067, S. 1580- would address major weaknesses in the OSH Act and provide workers stronger job safety rights and protections.  The legislation would extend coverage to millions of workers, including public sector workers, who currently lack protection.  It would improve anti-discrimination protections so workers can raise job safety concerns without fear of retaliation, and strengthen worker and victim rights. And the legislation would provide stronger civil and criminal penalties fro company that put workers in serious danger and repeatedly violate job safety standards. 

The AFL-CIO strongly supports all the provisions of this legislation.  This hearing and our testimony today will focus on PAWA’s  penalty provisions - why they are needed and how they will enhance the protection of workers’ safety and health.

OSHA Enforcement and Penalties are Too Weak to Create an Incentive to Improve Conditions and Deter Violations

The Occupational Safety and Health Act places the responsibility on employers to protect workers from hazards and to comply with the law.  The law relies largely on the good faith of employers to address hazards and improve conditions.  For this system to work, it must be backed up with strong and meaningful enforcement.  But at present, the Occupational Safety and Health Act and the OSHA enforcement program provide limited  deterrence to employers who put workers in danger.  OSHA inspections and oversight of workplaces are exceedingly rare.  There are no mandatory inspections even for the most dangerous industries or workplaces.  In FY 2009, there were approximately 2,200 federal and  state OSHA inspectors combined. .  OSHA has the capacity and resources to inspect workplaces on average once every 94 years -- once every 137 years in the federal OSHA states. 

Over the years OSHA’s oversight capacity was diminished, as the number of inspectors declined at the same time the workforce  increased.  The FY 2010 appropriations provided for an increase in OSHA’s enforcement staff and an increase in funding for OSHA state plans, and returned federal enforcement staffing levels back to their FY 2001 levels.  Even with this recent increase, the number of federal OSHA enforcement staff today is 450 fewer than it was in FY 1980, while the size of the workforce is 40 percent larger than it was at that time. .

Since there is no regular oversight, strong enforcement when workplaces are inspected and violations are found is even more important.  But the penalties provided in the OSH Act are weak.  Serious violations of the law (those that pose a substantial probability of death or serious physical harm to workers) are subject to a maximum penalty of $7,000.  Willful and repeated violations carry a maximum penalty of $70,000 and willful violations a minimum of $5,000.  These penalties were last adjusted by the Congress in 1990 (the only time they have been raised).  Unlike all other federal enforcement agencies (except the IRS), the OSH Act is exempt from the Federal Civil Penalties Inflation Adjustment Act, so there have not even been increases in OSHA penalties for inflation, which has reduced the real dollar value of OSHA penalties by about 40%.  For OSHA penalties to have the same value as they did in 1990, they would have to be increased to $11,600 for a serious violation and to $116,000 for a willful violation of the law.

By comparison, the Mine Safety and Health Act requires mandatory inspections - four per year at underground mines and two per year at surface mines.  As a result of Congressional action following the Sago mine disaster and other disasters in 2006, the Mine Act now provides for much tougher penalties.  The MINER Act increased maximum civil penalties for violations to $60,000 (from $10,000), which may be assessed on an instance-by-instance basis.  The 2006 mine safety legislation also added a new provision for “flagrant” violations, with a maximum civil penalty of $220,000.  Since the MINER Act was passed, there has been a significant increase in MSHA penalties. In CY 2009, MSHA assessed $141.2 million in penalties for violations, compared to $35 million assessed in CY 2006, before the penalty provisions of the MINER Act went into effect.

The maximum civil penalties provided for under the OSH Act are rarely assessed.  Indeed, just the opposite is the case.  In FY 2009, the average penalty for a serious violation of the law was $965 for federal OSHA and $781 for the state OSHA plans combined.  Again this is the average penalty for violations that pose a substantial probability of death or serious physical harm.  California had the highest average penalty for serious violations and South Carolina had the lowest.  Both of these are state plan states. California amended its OSHA law in 2000 to increase penalties, with the maximum penalty for a serious violation in that state set at $25,000 compared to $7,000 maximum penalty under federal OSHA and the other state plans.

For violations that are “other” than serious, which also carry a statutory maximum under the OSH Act of $7,000, the average federal OSHA penalty was just $234.  Clearly, for most employers these levels of penalties are not sufficient to change employer behavior, improve workplace conditions or deter future violations.

OSHA penalties for violations that are willful or repeated also fall well below the maximum statutory penalties.  For both willful and repeat violations, the OSH Act provides a maximum penalty of $70,000 per violation.  For violations that are willful, a $5,000 mandatory minimum penalty is also prescribed.  In FY 2009, the average federal OSHA penalty for a willful violation was $34,271, and the average willful penalty for state plans was $20,270.  For repeat violations, the average federal OSHA penalty was only $3,871 and for state plans the average was $1,757, a fraction of the statutory maximum penalty for such violations. 

Even in cases where workers are killed, penalties are abysmally low.  According to OSHA inspection data, the average serious penalty in fatality cases for FY 2009 was just $2,425 for federal OSHA and $3,805 for the state plans combined. (The state plan average includes penalties for California which higher due to the higher statutory penalties provided for under the Cal/OSHA law). The average total penalty assessed in fatality cases was just $7,668 nationally ($8,152 for federal OSHA and $7,032 for the OSHA state plans).   These averages include open cases, which when finally resolved, will result in a reduction in these average penalty levels. 

A state-by-state review shows that there is wide variability in penalties assessed in cases involving worker deaths, with the penalties in some states exceedingly low.  For example, in FY 2009, in the state of Colorado,  the average penalty in worker fatality cases was $25,309, but in the state of South Carolina the average penalty in such cases was only $809, the lowest in the nation.

The overall average penalties for fatalities include a number of high penalty cases, which can greatly increase the average.  For example, in Colorado in FY 2009, a proposed penalty of $128,500 in a fatality case at a MillerCoors brewery, greatly increased the average penalty in fatality cases.  The median penalty, which is the mid-point of penalties, is much more representative of the typical penalty in fatality cases, and is much lower.

In 2008 the Senate Committee on Health, Education, Labor and Pensions Majority staff conducted an in-depth investigation of OSHA enforcement in fatality cases.  Their study - Discounting Death: OSHA’s Failure to Punish Safety Violations That Kill Workers - analyzed detailed enforcement data for thousands of fatality investigations and individual case files for hundreds of enforcement cases.  It found that OSHA penalties in cases involving worker deaths were consistently low and routinely reduced in settlement negotiations.  For all federal OSHA fatality investigations conducted in FY 2007, the median initial penalty was just $5,900.  But after negotiation and settlement, the median final penalty for workplace fatalities was reduced to only $3,675.  For willful violations in fatality cases, the final median penalty was $29,400, less than half the statutory maximum of $70,000 for such violations.

The following examples are typical of OSHA enforcement and penalties in many fatality cases:

In January 2009, a worker was killed in a trench cave-in in Freyburg, Ohio. The victim Andrew Keller was 22 years old.  The company, Tumbusch Construction, was cited for 3 serious violations and penalized $6,300.  The penalties were reduced to $4,500.  Six months later, in June 2009, OSHA found similar violations at another jobsite of Tumbusch Construction.  This time the company was cited for both serious and willful violations with a total of $53,800 in penalties proposed.  The company has contested the violations. 

In July 2009, in Batesville, Texas, one worker was killed and two workers injured when natural gas was ignited during oxygen/acetylene cutting on a natural gas pipeline. The employer – L&J Roustabout, Inc. was cited for 3 serious violations with $3,000 in penalties. The case was settled for $1,500.

In August 2009, in Lamar, South Carolina, Andrea Taylor, 28, an employee of Affordable Electric was killed on the job.  South Carolina OSHA cited the company for 5 serious violations of electrical and lock-out standards with a proposed penalty of $6,600. In an October 2009 settlement, 3 of the violations were dropped and the penalties reduced to $1,400.

In August 2009, at SMC, Inc. in Odessa, Texas, a worker was caught in the shaft of milling machine and killed.  The company was cited for 1 serious violation. The $2,500 proposed penalty was reduced at settlement to $2,000.

In Michigan, in 2006, Midwest Energy Cooperative was fined $4,200 for 2 serious violations for excavation and safety program requirements in the death of Danny Young, 27, who was killed when a backhoe hit a gas line that exploded. The case was settled for $2,940.

What kind of message does it send to employers, workers and family members, that the death of a worker caused by a serious or even repeated violation of the law warrants only a penalty of a few thousands dollars?  It tells them that there is little value placed on the lives of workers in this country and that there are no serious consequences for violating the law.

The OSH Act and OSHA Enforcement Policies Discount Penalties for Violations Even in Cases of Worker Death

So why are OSHA penalties for workplace fatalities and job safety violations so low?  The problems are largely systemic and start with the OSH Act itself.  The Act sets low maximum penalty levels, particularly for serious violations, which carry a maximum of $7,000, clearly not a deterrent for many companies.  For example, in 2008, a Walmart store employee in Valley Stream, New York was trampled to death, when the company failed to provide for crowd control at a post-Thanksgiving sale. The company was cited for one serious violation and penalized $7,000, the maximum amount for a serious violation.

For a willful or repeat violation the maximum penalty is $70,000.  In assessing penalties, under the Act, employer size, good faith, history, and gravity of the violation are to be taken into consideration. 

Throughout its history, OSHA procedures for considering these four factors have resulted in proposed penalties that are substantially below the maximum penalties.  The agency starts with a gravity based penalty, which is then reduced by specified percentages for each of the other 3 factors (except in certain circumstances).  Under OSHA’s current penalty policy, for high gravity serious violations, except in rare cases, OSHA starts with a base of $5,000, not $7,000 to determine the penalty.  This is true even for fatality cases, which under OSHA policy are supposed to be classified as high-gravity.  In fatality cases, no reductions are allowed for good faith, but penalty reductions are still allowed for employer size and history. 

Under the penalty policy, reductions for employer size range from 20 percent (for employers with 101-250 employees) to 60 percent (for employers with 1-25 employees), but a larger reduction of 80 percent reduction is provided for serious violations that are willful for employers with 10 or fewer employees.  The reduction for no history of serious, willful or repeat violations in the past 3 years is an additional 10 percent.  So in many cases there is an automatic 30 to 90 percent discount in penalties, regardless of the gravity of the violations that are found.

OSHA’s general policy is to group multiple instances of the same violation into one citation, with one penalty.  So, for example, if five workers are injured due to an employer’s failure to provide guarding for machines, the employer will only be cited once for the violation, even though five workers were hurt.  This policy further minimizes the level of overall penalties in enforcement cases, including fatalities.

In 1986, OSHA instituted a policy to provide for instance-by-instance penalties in those cases where there was a flagrant and willful violation of the law.  This “egregious” policy as it came to be known, was designed to penalize employers who put workers at risk and to send a message to other employers about the potential consequences of not complying with the law.  Over the years, the egregious policy has had some positive impact, particularly when used as part of an industry-wide enforcement initiative, as was the case in the 1980’s and early 1990’s, when it was used for widespread injury reporting and ergonomic hazard violations.  But in recent years, the impact of the policy was reduced, as  Bush Administration appointees to the Occupational Safety and Health Review Commission (OSHRC) took an exceedingly restrictive view of the types of violations that may be cited on an instance-by-instance basis. 

The initial citations and penalties in OSHA enforcement cases, weak to begin with, are reduced even further in the resolution of cases.  Due to limited staff and resources, OSHA area directors and Department of Labor solicitors are under tremendous pressure to settle cases and avoid time consuming and costly litigation.  In both informal settlements by the agency, and formal settlements after employer challenges to OSHA citations, penalties are routinely cut by another 30 – 50 percent. 

Another way the impact of OSHA enforcement is minimized is through downgrading the classification of citations from willful to serious, which greatly reduces civil penalties and undermines the possibility of criminal prosecution under the OSH Act.   In some cases OSHA has utilized a practice of changing the characterization of willful or repeat violations to “unclassified,” even though the OSH Act makes no provision for the issuance of such citations.  Employers will seek “unclassified” violations, particularly in fatality cases, not only to undermine the potential for criminal prosecution, but to lessen the impact of the violations in any civil litigation and to keep willful or repeat violations off their safety and health record. 

The use of these “unclassified” violations may allow for settlements with higher monetary penalties or additional safety and health requirements. But these “unclassified” violations greatly weaken the deterrent effect of OSHA enforcement to prevent future occurrence of similar violations.

For example, in a fatality investigation of a worker death at McWane Inc. Atlantic States Cast Iron Pipe Company in March 2000, OSHA downgraded four repeat violations to “unclassified” violations, even though the company had been cited previously for serious violations in a fatality that occurred at the same facility the year before. Within 6 months of these citations, 2 more workers were killed at other McWane facilities.  The company was subsequently prosecuted for a series of violations at multiple facilities, with most of the criminal charges being brought under environmental laws due to weaknesses in the OSH Act. 

In another case that involved a planned inspection at the Bayer Cropscience chemical plant in Institute, West Virginia, in 2005 OSHA originally cited the company for 2 willful violations and 8 serious violations of the process safety management (PSM) standard and related requirements and proposed $135,000 in penalties. In a formal settlement the serious violations were deleted, and the 2 willful violations were changed to “unclassified” with a $110,000 final penalty assessed.

In August 2008, there was a powerful explosion and fire at the Bayer facility that killed two plant operators and threatened the community. The explosion occurred when there was a runaway reaction during the restart of a methomyl unit.  Methomyl is a highly toxic substance that is sold as a pesticide.  In the preliminary report on its investigation of the explosion, the Chemical Safety Board found significant deficiencies in process safety management that according to the Board likely contributed to the accident. The CSB also found that the explosion could have been catastrophic.  Within 80 feet of the site of the explosion, there is a 37,000 pound capacity tank of methyl isocyanate (MIC), the same chemical that caused the deaths of thousands in the toxic gas release in Bhopal, India in 1994.  The CSB found explosion debris near the MIC unit, which if compromised could have led to a catastrophic outcome.   

 The OSHA investigation of the 2008 Bayer explosion found extensive violations of the process safety management standard.  OSHA issued 11 serious and 2 repeat violations, but no willful violations, and proposed $143,000 in penalties.  The company  contested all of the citations.

OSHA Criminal Penalties Are Weak and Provide Almost No Deterrence

If the civil penalties under the Occupational Safety and Health Act provide little deterrence or incentive for employers, the criminal penalties are even weaker.  Under the Occupational Safety and Health Act, criminal penalties are limited to those cases where a willful violation of an OSHA standard results in the death of a worker, and to cases of false statements or misrepresentations.  The maximum period of incarceration upon conviction is six months in jail, making these crimes a misdemeanor.

The criminal penalty provisions of the OSH Act have never been updated since the law was enacted in 1970 and are weaker than virtually every other safety and environmental law.  For example, since 1977 the Mine Safety and Health Act has provided for criminal penalties for willful violations of safety and health standards and knowing violations for failure to comply with orders or final decisions issued under the law. Unlike the OSH Act, these criminal penalties are not limited to cases involving a worker’s death. 

Federal environmental laws have also been strengthened over the years to provide for much tougher criminal penalties.  The Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act all provide for criminal prosecution for knowing violations of the law, and for knowing endangerment that places a person in imminent danger of death or serious bodily harm, with penalties of up to 15 years in jail. Again, there is no prerequisite for a death or serious injury to occur.

The weak criminal penalties under the OSH Act result in relatively few prosecutions. With limited resources, federal prosecutors are not willing or able to devote significant time or energy to these cases. According to information provided by the Department of Labor, since the passage of the Act in 1970, only 79 cases have been prosecuted under the Act, with defendants serving a total of 89 months in jail.  During this time, there were more than 360,000 workplace fatalities according to National Safety Council and BLS data, about 20 percent of which were investigated by federal OSHA.  In FY 2009, there were 11 cases referred by DOL for possible criminal prosecution. The Department of Justice (DOJ) has declined to prosecute 2 of these cases; the other 9 are still under review by DOJ.

By comparison, according to EPA in FY 2009 there were 387 criminal enforcement cases initiated under federal environmental laws and 200 defendants charged resulting in 76 years of jail time and $96 million in penalties – more cases, fines and jail time in one year than during OSHA’s entire history.  The aggressive use of criminal penalties for enforcement of environmental laws and the real potential for jail time for corporate officials, serve as a powerful deterrent to environmental violators.

In recent years the Justice Department launched a new Worker Endangerment Initiative that focuses on companies that put workers in danger while violating environmental laws.  The Justice Department prosecutes these employers using the much tougher criminal provisions of environmental statutes. Under the initiative, the Justice Department has prosecuted employers such as McWane, Inc. a major manufacturer of cast iron pipe, responsible for the deaths of several workers; Motiva Enterprises, which negligently endangered workers in an explosion that killed one worker, injured eight others and caused major environmental releases of sulfuric acid; and British Petroleum for a 2005 explosion at a Texas refinery that killed 15 workers.

These prosecutions have led to major criminal penalties for violations of environmental laws, but at the same time underscore the weaknesses in the enforcement provisions of the Occupational Safety and Health Act.  

In the Motiva case, the company pleaded guilty to endangering its workers under the Clean Water Act and was ordered to pay a $10 million fine.  The company also paid more than $12 million in civil penalties for environmental violations.  In contrast, in 2002 following the explosion, OSHA initially cited the company for 3 serious and 2 willful violations with proposed penalties of $161,000.  As a result of a formal settlement, the original serious and willful citations were dropped and replaced with “unclassified” citations carrying $175,000 in penalties, greatly undermining any possibility of criminal enforcement under the OSH Act. 

In the BP Texas City refinery disaster, where 15 workers were killed and another 170 injured in 2005, under a plea agreement, the company pleaded guilty to a felony violation of the Clean Air Act and agreed to pay $50 million in penalties and serve a 3-year probation.  BP also agreed to pay $100 million in criminal penalties for manipulating the propane market.  But BP paid no criminal penalties under the OSH Act, even though 15 workers died and OSHA issued hundreds of civil citations for willful, egregious violations of the law.  And under the OSH Act, even if BP had paid criminal penalties, it would have been a misdemeanor, not a felony.  Instead, BP paid $21 million in civil penalties in a settlement reached with OSHA.  These civil penalties issued by OSHA were not sufficient to change BP’s practices.  In October, 2009, OSHA found that BP had failed to abate the hazardous conditions that caused the 2005 explosion.  OSHA issued 270 notices of failure to abate previous hazards, cited the company for 439 new willful violations and proposed $87.4 million in fines – the largest in OSHA’s history. But under the OSHAct, OSHA has no authority to take criminal action against BP for these latest violations.

OSHA and the Congress Should Act to Strengthen Enforcement and Penalties for Job Safety Violations 

Current OSHA enforcement and penalties are far too weak to provide  meaningful incentives for employers to address job hazards or to deter violations. As a result, workers are exposed to serious hazards that put them in danger, and cause injury and death.

Under the Obama Administration, OSHA is taking action to make enforcement more effective and to enhance penalties for violations that put workers in serious danger and cause death and injury. 

The agency is in the process of overhauling its penalty policy to more fully utilize its the full statutory authority to impose more meaningful penalties for serious, willful and repeat violations of the law, particularly in cases involving worker deaths.

The Enhanced Enforcement Program (EEP) is being changed and strengthened  to provide for enhanced enforcement, stiffer penalties and follow-up for employers who persistently violate the law. The new Severe Violators Enforcement program is expected shortly.

Federal OSHA is also conducting in-depth reviews of the OSHA state plans, including the enforcement and penalty policies and practices in each of the state plan states.

These initiatives will improve and strengthen OSHA enforcement.  But they are not enough and cannot address the deficiencies in the OSH Act itself.  Congressional action is needed.  

The Protecting America’s Workers Act (H.R. 2067) introduced by Rep. Lynn Woolsey and Rep. George Miller would strengthen the enforcement provisions of the Occupational Safety and Health Act.  It would increase civil and criminal penalties to provide more meaningful penalties for those who violate the law and provide a greater deterrent to prevent future violations that put workers in danger.

Specifically the bill would update the base penalties amounts in the OSH Act to adjust for inflationary increases since 1990 when the penalties were last raised. The bill would increase the penalties for serious violations to $12,000 from $7,000 and those for repeat and willful violations to $120,000 from $70,000, and provide for inflationary adjustments in the future.

To ensure that penalties for violations that result in worker deaths are more than a slap on the wrist, the bill sets higher penalties for such violations.  For serious violations that result in a worker death a maximum penalty of $50,000 and a minimum penalty of $20,000 is provided, with a minimum of $10,000 for smaller employers.  For willful and repeat violations related to worker deaths, a maximum penalty of $250,000 and minimum of $50,000 is provided, with a minimum of $25,000 for small employers.

These proposed penalties are modest in comparison to those in other safety and health and environmental statutes.  For example, in 2006 the Congress adopted the MINER Act which set the penalty for serious mine safety violations at $60,000 and penalties for flagrant violations at $220,000.

The bill would prohibit the use of “unclassified” citations for violations of the law to ensure that the nature of a violation is specified, and the employer’s record of past history is clear.

PAWA also properly strengthens the criminal provisions of the Occupational Safety and Health Act, which have not been modified since the Act’s passage in 1970.  The bill would make criminal violations a felony, instead of a misdemeanor as is now the case, making it more worthwhile for prosecutors to pursue these violations.  PAWA also expands the criminal provisions to cases where violations cause serious injury to workers. And it expands the criminal provisions to apply to all responsible corporate officers, not just the top officer or corporation itself.  These enhanced criminal provisions will provide a greater incentive for management officials to exercise management responsibility over job safety and health, and give OSHA and the Department of Justice the tools needed to prosecute corporations and officials who cause the injury or death or workers.  

The Protecting America’s Workers Act is a good, sound bill that should be enacted into law.  The AFL-CIO urges the committee to move quickly to report this legislation.

Four decades after the passage of the Occupational Safety and Health Act, its time for the country and the Congress to keep the promise to workers to protect them death, injury and disease on the job.

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