Companies Avoid OSHA Penalties After Workplace Deaths

The OSHA Waiting Game

Faced with such an employer, OSHA has a standard procedure: The local office issues a letter demanding payment, then waits one month. Then the national office issues a similar letter, then waits.

When the debt has gone unpaid for 180 days, OSHA refers it to the Treasury Department, which issues its own letter, then waits, usually another month.

The department also can try to intercept government payments to the employer, such as tax refunds or payments for contract work.

Ultimately, most OSHA debts end up where Integrity Building Serviceʼs did: a private collection agency.

Four companies have contracts with the Treasury Department, and they do the bulk of the work pursuing debtors, said Ronda Kent, a deputy assistant commissioner in the departmentʼs Financial Management Service.

Under the program, the Treasury Department is charged with collecting anything from debts on government loans to penalties assessed by a host of enforcement agencies.

OSHA debts, however, are typically much smaller than those of other enforcement agencies, and it is one of few federal agencies excluded from a law that allows penalties to rise with inflation, with penalties the agency can impose stuck at 1990 levels.

A violation deemed “serious” — one that, by OSHAʼs definition, “would most likely result in death or serious physical harm” — carries a maximum penalty of $7,000.

“Just because somethingʼs a low dollar amount, it could be a fine that itʼs important to collect it because you certainly donʼt want repeat offenders,” Treasuryʼs Kent said. “You donʼt want to make it cost-beneficial for the businesses to continue to violate the law.”

Thereʼs no requirement, though, that this attitude trickle down to the private collection agencies. When it is assigned a debt, an agency must send a letter demanding payment. Beyond that, the agency can choose which debts are worth pursuing.

“We leave that to them to make those decisions,” Kent said, noting that the agencies are regularly evaluated.

Between the 2006 and 2012 fiscal years, OSHA referred about $131 million in debts to the Treasury Department, but only about $16 million was collected. Data to compare OSHA collections with other agencies was not available.

Likewise, it is relatively rare for an employer to end up in court and be ordered to pay an OSHA debt.

During the seven-year period, the Justice Department collected just over $267,000 in OSHA debts referred to it by Treasury. OSHA can also refer debts directly to the Justice Department. Since 2008, the department has collected about $910,000 in debts sent to it by OSHA.

For all federal agencies, the Justice Department collected about $15.4 billion between the 2008 and 2011 fiscal years.

“Itʼs a problem,” said the AFL-CIOʼs Seminario, “but the government has limitations in terms of what it can do, both in terms of its authority and in terms of its resources. … Itʼs making choices. It isnʼt necessarily that theyʼre ignoring these cases.”

Legislation that would increase both civil and criminal penalties was introduced in both houses of Congress in 2009 and 2011. The bills havenʼt made it out of committee.

In Cotaʼs death, the private collection agency Pioneer Credit Recovery called Wright a few times trying to collect, Wright recalled. He told them he was fighting a private lawsuit, and Wright said a Pioneer employee suggested he write a letter and “ask for forgiveness” of the debt.

Wrightʼs lawyer did so.

“Debtor attorney states is in process of settlement agreement in court,” Pioneer reported back to the government.

The head of OSHAʼs debt collection office replied that getting sued doesnʼt mean an employer can avoid paying a penalty.

Still, an invitation to negotiate stood out in bold, underlined text: “In an effort to assist the debtor in settling this debt, OSHA is willing to review a reasonable compromise offer for this debt.”

On June 13, 2011, OSHAʼs debt collection office said Treasury had deemed the debt “uncollectible.” The case was being closed.

Pioneer refused repeated requests for comment, and the Treasury Department declined to answer questions about the specific debt, citing privacy concerns.

“We are disturbed that no penalties were collected in this case,” OSHA responded to a Center inquiry.

The agencyʼs Mobile, Ala., office “has been on alert,” and, if future violations occur, OSHA “will pursue action to the extent of the law to hold this employer accountable.”

Wright, 57, said he still works in the Birmingham area as a consultant to a construction contractor

Integrity Building Services still exists, he said, though it is not taking jobs and is winding down its legal obligations as it prepares to go out of business. The company doesnʼt have the assets to pay the OSHA fine, he said.

“Even if we had had the money,” he said, “I would have refused to pay.”

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