Does OSHA Target Small Businesses?

Does OSHA target smaller companies for fines?  Sometimes it may seem like it.  If you just look at penalties, small companies pay the lion’s share of fines for violations.   According to information from the  trade group, the Asbestos Institute, businesses with less than 100 employees received more than 80,000 citations in  2012 compared to only 9,000 for companies with more than 100 employees.   When it comes to fines, the under 100 employee companies paid more than $112 million versus $33 million for the over 100 companies.  Companies with fewer than 20 workers paid a whopping $70,000 in fines in 2012.  The differences come despite OSHA guidance to reduce overall fines to smaller firms. 

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A bank robber named Willie Sutton was asked my he robbed banks.  He answered, “Because that’s where the money is.”

OSHA fines a lot of small businesses because that’s where the injuries happen.

  1. There are so many of them. The Associated General Contractors  did a study recently that found that 80 percent of companies involved in construction had fewer than 10 employees.
  2. They have most of the injury accidents in the country.   The same study found that companies with less than 10 employees accounted for nearly half the fatalities in the construction industry.

But I think there is more to it.  Here are four more reasons:

  1. Small companies often lack the resources to maintain quality safety programs.  Small companies are not inherently unsafe, but economies of scale mean safety makes up a larger chunk out of operating costs.   For a small company to maintain a full-time safety pro, it means splitting the cost of the safety manager’s salary, training, personal protective equipment, drug testing and other programs among the limited number of employees.  That can add up to $10-15,000 per employee in overhead.
  2. It is easy to confuse prevention and luck.  Even without a safety program, a small company may go years without anyone getting hurt.  That’s luck.  Then someone gets killed and regulators discover the basic building blocks of safety were missing.  That’s criminal negligence.
  3. Frankly,  smaller companies make an easy target.  Once an incident happens, OSHA looks for other noncompliance. this includes Failure to provide protective measures, like personal protective equipment, or machine guards.  Another area is safety training, like fall protection or Hazard Communications. Small businesses are also vulnerable for recordkeeping/communications problems, such as proof of orientations or proper signage.  This is the easiest one for investigators to prove because it doesn’t depend on witnesses or direct evidence from the incident.  It is when all of that gets added together that fines multiply and small businesses are particularly at risk.  
  4. Failure to manage post-incident response.  This is a biggie and a small company may lack the know-how or resources to demonstrate to OSHA that it has investigated the incident, addressed weaknesses to keep it from happening again. They also may not have the legal help to aggressively challenge an excessive fine and negotiate a fair settlement.

Despite that, there are a lot of smaller companies that have world-class safety programs.  They have found creative and find cost-effective solutions.  Contact us to discuss options.

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