The Cost of OSHA Citations — Prevention vs Penalty

The cost of an OSHA citation is published each year. This year they weigh in at a maximum of $13,653 per violation, followed by the same amount per day if you fail to correct the first violation. Then, if you keep at it long enough, qualifying at willful or repeated, the cost is $136,352 on top of the previous penalties. You can find the full details at OSHA 2021 Annual Adjustments to Civil Penalties.

But that’s just the beginning of the impact from an OSHA Citation. There’s more. Oh, so much more. But before we explore all those ramifications, let’s set the groundwork for citations and violations.

Citations vs Violations

OSHA issues a citation when they find a violation. The citation provides a deadline date by which a violation needs to be resolved. There are a few types of violations.

• Serious — The minimum penalty is $975 per violation and then up to the maximum of $13,653 per violation.
• Other-than-Serious — The penalties start at zero and run up to the maximum of $13,653.
• Willful or Repeated — If Serious, the minimum penalty is $9,753 per violation and then up to a maximum of $136,532 per violation. If it is other-than-serious, the first repeated violation is $390. The second repeated violation is $975 and third at $1,950.
• Posting Requirements — Here the penalties start at zero and run up to the maximum of $13,653.
• Failure to Abate — This starts at the maximum penalty of $13,653 per day.
• Di Minimis — These are violations of OSHA technical rules that don’t impact safety. There are no penalties, but it is recorded in your case file.

On top of this, OSHA has established Gravity Based Penalties (GBP), which lower the amount of the penalty. For example, a high gravity violation receives the maximum penalty while a moderate gravity violation ranges from $7,802 to $11,703 and a low gravity violation is at $5,851.

10 Most Frequent OSHA Violations

Each year OSHA publishes the top 10 most frequently cited standards. It can offer support to your own observations of what to watch with your operation. Here’s the list for the year ending September 2020.

1. Fall Protection in Construction
2. Hazard Communication
3. Respiratory Protection
4. Scaffolding, construction
5. Ladders, construction
6. Lockout Tagout
7. Powered Industrial Trucks – forklifts
8. Fall Protection Training
9. Eye and Face Protection
10. Machinery and Machine Guarding

The Rest of the Cost

When an organization collects a citation for a violation followed by penalties, there’s a cascade of follow-on ramifications.

Loss of Business Opportunity. During the bidding process for construction projects, as one example, federal or state agencies typically require bidders to report safety citations. Private organizations can also implement similar requirements for both construction and manufacturing projects. If an organization has safety citations, they could be dropped from the list of qualified bidders. That could mean the loss of hundreds of thousands or even millions of dollars before you even get into the bidding process.

Loss of Reputation with Customers. Safety violations and accidents can come to the attention of your customers. They can easily consider this a reflection on your organization and its ability to keep on top of all aspects of your operation, from delivering products and services to working safely. Note that all OSHA violations are open to the public via an online search through the Establishment Search tool.

Increased Worker’s Compensation Claims and Premiums. As safety issues arise, workers can get injured. That, in turn, leads not only to lost employee time but also to administrative work to address the claims. And all this is followed by fines. Then there’s the increased cost of insurance coverage as the organization becomes more of a risk to the insurer.

Increased Employee Turnover. As employees get injured or see their friends get injured, that will impact their morale and their respect for the organization. All too often, they know more about the operation than supervisors and managers. As you well know, hiring today is a big challenge, keeping your employees perhaps more so as other attractive opportunities appear. You don’t want to give employees any reason for moving on to another employer.

Serious Impact on Performance. All the items above can have a significant impact on your organization’s overall performance. On the other hand, if you’re focused on safety and educating your employees on how to approach their work in a safe manner, that is going to be felt everywhere in your organization. Taking time to improve in one area often leads to improvements throughout including productivity as well as cost and schedule performance.

Return on Investment in Safety — Prevention Pays Off

Given all those costs accumulating on top of citations, it makes investing in workplace safety extremely cost-effective. It’s far better to prevent both violation and employee injuries in the first place.

A widely quoted study by OSHA states that companies implementing effective safety and health programs can reduce injury and illness rates by 20% or more and generate a return of $4 to $6 for every $1 invested.

Learn More About OSHA and How to Handle a Visit

Interested in learning more about OSHA inspections? Attend our upcoming free webinar titled OSHA at the Door in 2021. It may surprise you that OSHA has stepped up its in-person inspections during the pandemic. They are watching not only for the usual safety violation but also COVID-19 measures. Our speakers will take you through how to prepare for and handle an OSHA inspector visit. Learn more and sign up at OSHA at the Door in 2021.

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