In the U.S., companies that violate Occupational Safety and Health Administration (OSHA) regulations can end up paying a variety of prices, some that are definite and simple to calculate, and others that are less quantifiable, but real nevertheless.
Within the former category, OSHA defines six types of violations:
- De Minimis – The least serious kind of violation, this is a technical one that has no direct impact on health or safety. OSHA does not issue citations or fines for such infractions.
- Other-than-Serious – A violation for something that is related to health or safety but would not result in serious injury or death. An employer not posting required safety documentation in a work area is an example. Fines of up to $12,934 per violation are possible.
- Serious – Issued when an employer that has knowledge of an existing hazard that could impact employees’ health or safety yet does nothing to correct it. Fines of up to $12,934 per violation are possible.
- Willful – Issued for an intentional violation of OSHA standards. If an employee is killed, the offense becomes a criminal one, with fines of up to $129,336 per violation and possible jail time for individuals.
- Repeat – Issued for a violation that is identical or very similar to one for which an employer has been previously cited.
- Failure to Abate – Issued when an employer has failed to remedy a situation for which it has been cited. Employers are given a set amount of time to make things right. If they fail to do so, a fine of up to $12,934 per day is issued.
Additionally, employers face legal costs to settle claims brought by injured workers, estates of employees killed as a result of an infraction, and other potential penalties beyond any OSHA fines. In an infamous example, the 2010 Deepwater Horizon oil rig explosion in the Gulf of Mexico and the resulting environmental disaster has to date cost operator British Petroleum (BP) more than $13 billion in claims, advances and settlements.
Perhaps the biggest cost, however, comes in the form of reputational damage. When a company is shown to be lacking in its health and safety standards, customers, partners and the general public are given a reason to see it in a negative light. This can result in diminished sales, layoffs, bankruptcy or potentially even going out of business. Reputational damage can be severe, often taking years to recover from, if ever.
A recent survey of executives conducted by the American Society of Safety Engineers found that for every dollar spent on direct costs related to an accident, there are another three to five dollars’ worth of indirect costs – putting the actual cost of an accident (with direct medical and compensation costs of $15,000) at somewhere between $45,000 and $75,000. i
Learn more about OSHA compliance and how technology can simplify the process in our Insight Report, Taking the Headache Out of the Health & Safety Compliance Process.