Any employer in the construction business has heard about or dealt with an Occupational Safety and Health Administration (OSHA) citation. No citation, particularly serious citations, is good news to a company.
In 2016, Congress raised 80% of the penalties. This increase put more pressure on employers to quickly jump to a settlement with the OSHA to minimize their penalty and save thousands of dollars.
Even though a settlement seems like a reasonable, quick option for construction employers, especially with the increase in penalties, can a serious citation on record negatively affect a company's future?
Why construction employers should think twice about a rushed settlement:
A serious citation can result in an employer paying up to $13,260. Fines escalate quickly when more than one component can be a part of any single citation. For companies who are looking to save money everywhere, they can settle for a reduction in a penalty, quickly moving on, and saving money sounds like a great option.
Many employers in the construction and industrial sector forget to contemplate possible scenarios that legally can defend a citation. Michael Evan Salley, a graduate from Clemson University with a Masters in Construction Sciences and Management states that the most common response for an employer upon receiving a citation is an immediate informal meeting with the OSHA.
"It is wise for employers to consider any legal defenses before settling with a large monetary penalty reduction. Moving on quickly from the issue could play poorly for the future," said Michael Evan Salley.
Dissecting the hidden cost of an OSHA citation:
During the bidding process, for agencies hiring construction companies, a serious citation could affect the construction business' job opportunities. Agencies typically ask anticipated companies to report any serious violations. Serious citations that are continuously addressed hastily and settled with OSHA can effortlessly stack over time. An agency can pass a bid on to another company if the number of serious citations a company has received in its lifetime exceeds a confident numerical expectation. A bid passed onto another company can result in losing millions over a job loss.
Construction employers who decide to settle their citation, deduct fees instantly, and remain with a citation on their company's record are in danger of receiving a repeat violation. A repeat violation is if a company gets the same violation in the category or level within three years of the previous citation.
Repeat violations also increase penalties, which can be a $132,590 loss for an employer. For larger companies with many construction jobs at one time, repeat citations coming from more than one project can cause million-dollar damage.
"In the end, it is up to the employer to consider that an OSHA citation can easily be more than a fine. It can affect a company's reputation and bank account for the long-term equation of a company's lasting success," said Michael Evan Salley.
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