Should companies that are cited by OSHA roll over and pay the fine or just say no and contest them? According to a very well researched article in Risk Management Magazine, 90 percent of employers that are cited by OSHA choose not to formally challenge the penalty. Should they?
Clearly many companies feel that taking their lumps is the safest bet. Perhaps they fear that, by challenging the citation, they may open the door to additional inspections and agency action. However, the article’s author, Will Kramer, argues that companies that formally challenge OSHA wind up with lower penalties in the end by a wide margin.
OSHA has an informal consultation process which allows companies to negotiate for a lower penalty without going through a formal legal challenge. The author says that companies that take the informal consultation process manage an average penalty reduction of 49%. However, companies who fight all the way to a formal hearing achieve an average reduction of 58%. Whats more, about 7% of cases that go through the informal process are dismissed, but more than 30% of the cases that go to the full hearing process are dismissed.
However, there is one other consideration that was not covered in the article – legal fees. Let’s look at a company facing a $100,000 fine. Based on the information in the article, the informal consultation process could save the company $49,000 on the fine. Pushing for a formal hearing could save $58,000. That’s $9,000 difference. Companies need to consider whether the legal fees for the challenge would outweigh the $9,000 savings.
The data clearly suggests that every company facing an OSHA fine should at least go through the informal consultation process. And just as clearly, a company that feels it was wronged in an OSHA investigation should fight to clear its name. But companies really should decide whether fighting OSHA to the bitter end saves enough to compensate for the additional legal fees that the fight will accrue.