On December 12, 2008, OSHA published a rule that adopted or amended 34 workplace standards and permitted OSHA to obtain multiple penalties against an employer for providing incorrect personal protective equipment (PPE), no PPE, or incorrect training to employees. The new principle adopted in the rule is that the penalty is to be assessed for each employee, rather than based on the single decision or failure by the employer to use the proper training or PPE for all employees or a group of employees. The rule applies even when the violation is minor, not willful, and causes no harm or injury to employees. A $7,000 penalty for a “serious” violation, for example, could now become a $700,000 penalty if 100 employees are potentially affected, and OSHA could expand the per-employee penalty rule to other cases, not just PPE or training cases.
The NAM, the National Association of Home Builders, and the U.S. Chamber of Commerce joined together in a lawsuit challenging this rule in the D.C. Circuit. We opposed the rule because we believed that Congress did not give OSHA the power to address penalty issues in its standards. Whether “per employee” penalties may be assessed is a question committed solely to the Occupational Safety and Health Review Commission, which may impose penalties on a “per employee” basis when they are warranted on the facts of a specific case. The suit did not challenge OSHA's requirements for training each employee or equipping each with personal protective equipment.
Our briefs argued that Congress did not delegate authority to OSHA to word a standard to change or affect a unit of violation; rather, Congress committed this authority to the OSH Review Commission and the courts.
On April 16, 2010, the D.C. Circuit upheld OSHA's rules. It found that OSHA "stands in the shoes of the legislature" and can both define what constitutes a violation and define the unit of prosecution, or how many times a company can be fined for a single decision that affects many employees.
The decision will result in substantially greater fines and settlement leverage against companies that are alleged to have violated OSHA rules. Although OSHA's Field Operations Manual tells inspectors to issue multiple citations only when the employer's behavior is willful and egregious, the decision gives great discretion to the agency to change its practice in the future.