Employers Should Be Cautious In Entering OSHA Corporate-Wide Settlements
June 29, 2011
When an OSHA citation goes to the very heart of a business--such as requiring delivery-company employees never to place boxes on the floor while sorting them for shipment--it is sometimes best to enter into a corporate-wide settlement agreement (CSA), so both OSHA and the company have clearly defined expectations of what methods and workplace conditions will or will not lead to a citation. But companies must be careful. Failure to follow the terms of a CSA can create even greater liability. The largest OSHA citation in history--over $50 million dollars--was not a new citation, but rather a citation issued to BP in 2009 for failure to adhere to a CSA it had entered into in 2005. BP eventually agreed to pay the entire amount of the citation, and also agreed to spend $500 million more on a comprehensive safety and health program.
Why bring this up now? Last week, OSHA--without announcement or fanfare--issued a new directive regarding CSAs that are both national and regional in scope. The directive states that CSAs may "go ... beyond the subject of the citations to include additional safety and health program enhancements" that were not the reason for the inspection or citation. CSAs may require employers to hire additional safety and health employees, or hire safety and health independent consultants to provide recommendations--but when a company does so, it may cede control to such consultants, as it generally must implement the recommendations or be subject to a failure-to-abate citation. The new directive also sets a firm two-year time limit for CSAs. This firm time limit gives employers less time to make the agreed-upon changes before being subject to failure-to-abate citations.
A CSA may be the best outcome for both the employer and OSHA following a citation, but employers should be aware of the risks associated with CSAs before suggesting it as an alternative to litigation.
