Does Settling an OSHA Citation Make Good Business Sense?

Does Settling an OSHA Citation Make Good Business Sense?

This article was previously published in the 2023 April issue of American Cranes & Transport Magazine

Shortly after issuing a citation to an employer, OSHA will often agree to reduce the penalty amount provided the employer agrees not to contest it. But could agreeing not to contest your citation invite further trouble? Possibly. At the very least, contractors should give the issue considerable thought before entering into an early settlement with OSHA. And if you do decide to settle, always work to get the citation reduced to an “Other than Serious” status. Many of the companies you work with will overlook “Other than Serious” citations but will frown on “Serious” citations and above. It may even eliminate your company from bidding on projects.

The reality is that settling with OSHA could have all sort of unexpected consequences. It could damage your industry reputation, expose your brand to negative press, lead to decreased competitiveness, trigger the loss and/or disqualification of private and public contracts, force you to refactor your safety plan, affect your experience modification factor, and result in increased insurance costs.

There are times when it still might make sense, but you need to understand exactly what the risks are and act accordingly.

Three options

The first thing to remember when it comes to receiving an OSHA citation is that you should never ignore it—or you may give up critical rights. Once you have the citation, you have 15 business days to appear at an informal conference and/or contest it.

You have three basic options when responding: accept the citation as-issued (this is never the best option); request an informal conference and attempt to settle, or convince OSHA to withdraw the citation; or contest one or more parts of the citation.

Consider the whole picture

In most cases, OSHA will be willing to reduce the penalty amount at the informal conference. While settling a citation for less may be an attractive option – and make financial sense in the short term – it’s important to take a longer view of the future potential harm to your business.

First, all of your sites are fair game for OSHA, meaning an additional citation at a different worksite could result in a “repeat” or “willful” violation—which carry penalties of up to $156,259 per violation.

If the initial citation relates to recurring hazards inherent in your operations (e.g., working at heights), there may be an increased risk of the same, or substantially similar, conduct occurring in the future, despite your best efforts to maintain an OSHA-compliant site at all times.

Second, a citation may also be admissible as evidence of negligence in any subsequent personal injury or wrongful death case. Although state workers’ compensation laws may prevent an injured employee from taking direct action against his or her employer, the employer may nevertheless be impleaded into the case by the direct defendants.

Also, in view of OSHA’s multi-employer citation policy, multiple entities at a construction site can be deemed an employer and cited. As a result, a citation may be admissible as evidence of negligence, or “negligence per se” in some states, against any of these “employers.”

For these reasons, it is critical that any settlement agreement expressly state that the violation is not to be taken as an admission of guilt for the purpose of any proceeding other than one arising under the Occupational Safety and Health Act.

Consider contesting instead of settling

It is important to give an OSHA citation significant attention. Analyze it thoroughly, strategically and through a legal lens. Can OSHA satisfy its burden of proof and establish the four elements necessary to prove a violation? Are any affirmative defenses applicable? Is the citation factually inaccurate, misleading or incomplete? Do witnesses exist who can rebut OSHA’s claims?

If the answer to any of these questions is “yes,“ contesting a citation is often the best option. By doing so, you’ll be given time to fully investigate the situation and present your side of the story – plus surface your evidence – at a future hearing.

Several NBIS policyholders have experienced the benefit of contesting OSHA citations by working with Michael Rubin of Ogletree Deakins. If you find yourself facing an OSHA citation, having an experienced attorney can make all the difference. Call 877-720-RMSS and ask someone from the NBIS Risk Management Team how to qualify for preferred pricing as an NBIS Insured.