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SLC 2023 Preview: Don’t Just Settle for Easy

Aug. 16, 2023
Sometimes, it can seem easier to settle with OSHA and move on with your life. But those settlements can have consequences, especially when they leave your company vulnerable for future lawsuits or citations.

Litigation is expensive. That’s why, many times, businesses will opt to settle rather than contest citations from the Occupational Safety and Health Administration (OSHA).

And, many times, it may seem like the smart thing to do: Pay a minor fee and move on rather than spend time, money and resources to contest or litigate those citations. However, those settlements can have unitended long-term consequences, including make your safety record appear worse than it may be.

EHS Today caught up with John Ho, partner and co-chair of OSHA workplace safety practice with the law firm of Cozen O’Connor. He says that even though it may cost more time and money to contest an OSHA citation today, it could help protect your organization in the future. That’s because should there be a serious injury or fatality, OSHA citations and OSHA’s investigative file are often used as evidence in collateral litigation, which almost always exposes businesses to significantly greater damages.

Ho will be speaking about settling OSHA citations at the Safety Leadership Conference from Sept. 18-20 in Orlando, Florida. More information about the conference, including registration, can be found at www.safetyleadershipconference.com.

Below is a preview of what to expect from his presentation.

EHS Today: Litigation is expensive and with OSHA’s new enforcement guidance issued, penalties are expected to become even more costly. Although cost is obviously an important factor for why some companies may choose to settle a citation, it sounds like there may be a number of factors that need to be considered to protect businesses. Can you explain?

Ho: You are right. Often, the cost of litigation—even if you win—will exceed the cost of the OSHA penalties, which drives OSHA settlements. However, there are numerous other factors that, if not considered and properly addressed, could come back and haunt a company in the future.

Some of these issues include:

  1. proper non-admission language so settlements cannot be used in collateral litigation
  2. potential for a repeat or willful violation in the future, particularly for businesses with multiple facilities;
  3. classification of the citation, as this could affect insurance premiums, eligibility for bidding on public and private contracts, and bank loans/lines of credit; and
  4. liability under contract indemnification clauses with vendors/subcontractors and potential breach of contract claims, to name a few.

Are there any other concerns with settling OSHA citations that businesses should be mind of?

Unionization. There are reports that show public support for unions is at an all-time high. In unionization campaigns, safety and health is a common factor that unions rely on to gain traction with employees. Thus, how citations are resolved can be important in such union campaigns.

In addition, as alluded to above, plaintiffs’ lawyers will often use OSHA citations and settlements as evidence in wrongful death, negligence and tort cases, particularly where a serious injury or fatality has occurred. Such litigation always exposes businesses to substantially more damages. This includes, but is not limited to, punitive damages and the alleged violation description in OSHA citations, which can be powerful evidence to support these claims if not addressed properly.

What's something safety professionals need to understand about OSHA fines and settlements, perhaps something you advise your clients?

As the proverb goes, the devil is in the details. It may seem like a good idea to simply pay a relatively modest OSHA penalty and be done with it. However, future issues arising from accepting citations, such as failing to abate, could lead to significantly more penalties than the original citation penalties.

In addition, breaches to an OSHA settlement could lead to contempt proceedings in the future and/or expose businesses to repeat violations, which carry significantly greater penalties. Thus, it is important to carefully review and understand each provision in an OSHA informal settlement agreement and/or stipulated settlement with a focus on abatement.

In a past life, you were a trial attorney for the U.S. Department of Labor (USDOL) who prosecuted OSHA complaints. What's something you saw in the course of your work with USDOL that safety professionals ought to be aware of (or maybe do differently)?

In terms of OSHA settlements, employers should understand there are different strategic points when you can settle an OSHA citation. The first is at an informal conference. If a settlement cannot be reached there, an employer will have an opportunity to settle the matter post contest, i.e., during litigation.

The key difference is that settling during the informal conference is usually done without a DOL attorney involved. Sometimes, there may be discrete legal issues or defenses that may be better addressed with a DOL attorney as opposed to an OSHA area director, or vice versa.

If I'm a safety professional at a plant, but my company has operations in other states and companies, I am likely only aware of what's happening in my neck of the woods. What do safety professionals need to know from a broader perspective with respect to OSHA and fines?

As mentioned above, OSHA citations and settlements can be used as the basis for a repeat or willful citations in the future and it does not have to be at the same work location. There are certain citations that are very common in specific industries, e.g., guarding in manufacturing. In such a case,if one facility gets cited for a guarding violation, that citation has the potential to be used as a repeat for guarding violation in a different facility in the future. As repeat citations carry a maximum penalty of $14,502 per violation, it is critical that information about citations, settlement and abatement be promptly shared with other facilities to avoid repeats.

Moreover, OSHA may insist on enhanced abatement to resolve certain citations, usually ones stemming from serious injuries/illnesses or fatalities. It is important that personnel from different departments such as human resources, safety, operations and finance have input into these settlements because they can often affect these different areas. I have seen situations where companies have agreed to certain enhanced abatement measures, only to realize after the settlement that implementing certain changes have put them at a competitive disadvantage from an operational perspective. Thus, it is important that such issues be considered so appropriate language can be added to help prevent something like this from happening.

When should safety professionals reach out to their legal department or outside counsel?

To be blunt, immediately. Counsel should ideally be involved once OSHA shows up at the door because they can offer guidance on a broad range of issues, from limiting the scope of the inspection to ensuring that documents produced to OSHA are exempt from public disclosure under a Freedom of Information Act (FOIA) request. However, for the reasons we talked about, counsel really needs to be involved in the settlement process.

What's one thing you hope attendees learn from your session at the Safety Leadership Conference?

This goes to your first question. Money is always important but to use another proverb: “Don’t be a penny wise and a pound foolish.” If you resolve an OSHA citation simply because the penalty amount is modest or because the cost of fighting it could be close or even exceed the penalty, it could result in ramifications down the road that will cost a lot more to deal with.

This session is intended to ensure businesses are thinking about all of these potential collateral issues that may not be in plain sight, so that when they are resolving OSHA citations—at whatever stage—they do so with eyes wide open.

About the Author

Nicole Stempak

Nicole Stempak is managing editor of EHS Today and conference content manager of the Safety Leadership Conference.

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