The free-market argument against OSHA goes something like this:

Employers offering jobs that involve some risk of injury usually don’t have trouble finding workers to fill them.

If a company with risky work had difficulty hiring employees, it could either offer higher wages or spend money to reduce the risks.

Why should the government interfere in this relationship between employer and employee?

In a recent article, economist Ed Lotterman offers one reason: an information gap.

Lotterman says many employees don’t have accurate information about the risks. He suggests that, without proper information, the employee is at a disadvantage. That’s where government regulation comes in.

Is Lotterman making a case for government regulation at any cost? Not at all. He says some regulation is good, but it must be cost effective.

He uses an OSHA construction regulation as an example of a good regulation. Requiring walls or boxes in trenches of a certain depth at construction sites has saved hundreds of lives a year, at a cost that doesn’t cripple the regulated employers.

His example of bad regulation: Requiring dairy farms to post notices that manure may make floors slippery.

A federal court says the government can fine the company 11 times.

The decision comes in the case of employer Erik Ho. He hired 11 workers to renovate a building containing asbestos.

The Occupational Safety and Health Administration (OSHA) found Ho failed to train them about asbestos removal or provide them with respirators, two violations of federal safety regulations.

OSHA issued 22 citations to Ho. On appeal, the Occupational Safety and Health Review Commission, an independent appeals board, found that the existing regulations didn’t allow OSHA to issue 22 separate citations. Instead, Ho faced just two fines.

In response, OSHA changed its regulations in late 2008 to allow for per-employee fines for lack of safety training and personal protective equipment.

That regulation was challenged by the National Association of Home Builders and other groups. They argued that OSHA had no authority to specify whether citations could be issued on a per-employee basis.

Now a federal court has ruled that OSHA is allowed to make such changes to federal workplace safety regulations.

What does that mean for employers? The maximum OSHA fine for one serious violation is $70,000. Multiply that fine by 11 employees, and it becomes $770,000.

Cite: National Association of Home Builders v. OSHA, U.S. Court of Appeals, District of Columbia Circuit, No. 09-1053, 4/16/10.

After being issued the largest fine in OSHA’s history — $87 million — BP once again faces a multi-million dollar penalty from the workplace safety and health agency.

It wasn’t a death, injuries or explosion that brought OSHA to this BP plant. It was inspected just because it was a refinery.

OSHA often reacts to catastrophic workplace accidents by starting National Emphasis Programs (NEPs) to inspect businesses with similar hazards.

Example: After the Imperial Sugar plant explosion near Savannah, GA, in 2008, OSHA initiated an NEP for combustible dust hazards.

As part of an NEP targeting refineries, BP’s plant near Toledo, OH, has been hit with just over $3 million in citations.

OSHA used per-instance citations and classified many of them as willful, a categorization that carries larger fines.

More than half of the fine — $1.82 million — stemmed from 26 per-instance, willful violations.

A list of OSHA’s current NEPs is here. A list of regional emphasis programs is here.

Example: C.A. Franc Construction, based in Valencia, PA. OSHA has fined the company $539,000 in connection with a roofer’s fatal fall.

The company owner, Christopher Franc, also faces up to $250,000 in criminal fines and six years in jail after he pleaded guilty in court to violating safety regulations.

Last year, a roofer employed by Franc fell 42 feet while laying shingles. He was pronounced dead at a hospital about an hour later.

OSHA found Franc failed to provide any fall protection to its employees working on a pitched roof 40 feet above the ground.

How did the OSHA fine add up to more than a half-million dollars? The agency cited Franc for 10 per-instance willful violations, one for each employee working unprotected on the roof. OSHA defines a willful violation as one committed with intentional, knowing or voluntary disregard for safety regulations.

OSHA has also promised to use criminal prosecution more often to punish companies than it has previously.

But a recent investigation shows some construction companies have received millions of dollars in stimulus contracts even though they had serious pollution or workplace safety fines levied against them in recent years.

In Massachusetts, 13 companies were awarded nearly $54 million in contracts this year even though they have a history of EPA or OSHA fines, according to a report by the New England Center for Investigative Reporting at Boston University.

Example: Aggregate Industries Northeast failed to disclose more than $606,000 in environmental and safety penalties against it since 2006. Aggregate also pleaded guilty to providing inferior concrete to the Boston tunnel project and agreed to pay $50 million in penalties.

However, the company has been awarded two stimulus contracts worth $8.8 million for resurfacing roadways.

In a statement, the company claimed confusion about what did and didn’t have to be disclosed to qualify as a bidder for federal contracts.

General counsel for the state’s Highway Division has sent letters to several contractors, threatening to refer them to the state attorney general’s office for making false claims to the state on their bidding prequalification applications.

Highway Division administrator Luisa Paiewonsky said the agency doesn’t verify the accuracy of the information provided by contractors because of a lack of staff.

Talk about spreading the wealth. Several fed agencies have rather large to-do lists for 2010 … that will quickly get passed on to your business.

We grouped the changes according to the area in your organization that will be most heavily impacted.

Benefits

A few of the biggest changes go to the perpetually hot topic of employee benefits:

1. New clarification of what makes someone a “fiduciary” when providing investment advice. Lots of confusion on this issue, so the Employee Benefits Security Administration revisited its five-part test of fiduciary status.

Expect it: May 22, 2010 is the effective date for the rule.

2. New regs requiring your company disclose all retirement plan fees and and expenses to participants. These regs are in the “final rule” stage, meaning it’s almost a done deal.

Expect it: September 2010.

3. More Family Medical Leave Act (FMLA) changes. Yes, your firm just had to account for new changes to the FMLA when it comes to military personnel. But the Feds aren’t done yet – they’ve vowed to review both those changes and the FMLA overhaul from Jan. ’09.

No timetable yet.

4. Changes to the Health Insurance Portability and Accountability Act (HIPAA). This major (and costly to comply-with) rule isn’t immune from new scrutiny, either. Expect to make changes in HIPAA provisions covering: access, portability and renewability.

Expect it: September 2010.

Payroll and HR

Your “people people” certainly won’t get left out, either, in the new year:

5. Updated recordkeeping regs for the Fair Labor Standards Act (FLSA). Plan on having to keep more thorough records in how you pay your people – you guessed it – in the name of “greater transparency.”

No timetable yet.

6. An increase in wage-hour audits. Be sure your entire payroll paper trail is in order. DOL just hired 250 new investigators to enforce wage-hour laws.

Expect it: Early 2010.

7. A spotlight on foreign workers. Firms that use workers with H-2B visas can expect more scrutiny – the Employment and Training Administration is proposing rules regarding labor certification for these folks.

Expect it: After a February rule on agricultural workers.

8. A new definition of “temporary” workers. Along the same lines, the DOL wants to ensure people who are hired as temporary actually are.

No timetable yet.

9. Greater accountability on affirmative action. Current regs will be revised to ensure your company complies with affirmative action requirements, particularly as it concerns veterans.

Expect it: November 2010.

10. New rules for union info disclosure. Companies with unionized employees will soon have to go to greater lengths to report on the arrangements they make to persuade folks to join or not join a union.

Expect it: November 2010.

Safety

OSHA also has an aggressive game plan for the new year that will change how your company protects its employees. Two of the biggest:

11. A new standard on slip, trip and fall hazards. Beware: OSHA promises the rule will cover “every non-construction worker in the U.S.”

Expect it: March 2010.

12. The return of an old recordkeeping task. Prepare to resurrect those logs your company had to check when recording musculoskeletal disorders. OSHA’s bringing it back.

Expect it: January 2010.

As H1N1 sweeps through schools and workplaces, the handshake is going the way of the dinosaur. Old niceties have flown out the door to be replaced by some, ahem, swinish behavior.

Schools and workplaces are being urged to take measures to curb the spread of H1N1.

OSHA’s guidelines on how to deal with a pandemic indicate that a handshake is bad form these days. In fact, it is surprising that there isn’t a federal ban.

For example, OSHA urges business people:

• Avoid close contact (within 6 feet) with coworkers and customers. (Wow, you’d need long arms to bridge that gap).
• Avoid shaking hands and always wash your hands after physical contact with others. (But what do you do instead?)
• If wearing gloves, always wash your hands after removing them. (”Sorry, Jack, I’ll just put my gloves on to seal the deal!”)
• Minimize group meetings; use e-mails, phones and text messaging. If meetings are unavoidable, avoid close contact (within 6 feet) with others and ensure that the meeting room is properly ventilated.

Can you imagine how Kathie Lee’s butt bumping would go down at your next business meeting?

“Mary, please meet our president, Jack Gifford … ”

“Delighted to bump you, Jack!”

That’ll work. NOT.

How are you replacing the handshake?

Are you nodding your head and mumbling something about how you’d love to shake his hand but you’re really worried he’s the Typhoid Mary of 2009?

You can get more info on business planning for swine flu and recommended behavior at Flu.gov.

Julie Power is editor in chief of the print publication, Internet &  Marketing Report and the companion blog, eIMR.blogspot.com.

She twitters @JuliePower.

Two companies and two executives now face federal criminal charges in connection with the deaths of five workers at an electric utility in Colorado.

Xcel Energy Inc., and two executives with RPI Coatings, Inc., are accused in the deaths of the five men in a 2007 fire inside a tunnel at an Xcel Energy hydroelectric plant in Cabin Creek.

“This catastrophe could have been avoided if the companies had followed safety procedures,” said Greg Baxter, the Occupational Safety and Health Administration’s regional director in Denver.

OSHA claims the men, all employed by RPI Coatings, were inside a large, empty water pipe when a fire erupted. The fire blocked their exit and the men died.

However, before the fire, there had been reports of several safety incidents that posed a direct threat to the employees. OSHA alleges the two executives knew about the safety shortcomings but failed to take appropriate actions to correct the problems.

Xcel has called the deaths a “tragic accident,” and said it rejects “any attempts to characterize the events in any other way” other than an accident.

Each company is charged with five counts of violating OSHA regulations and causing death, which could bring fines of $500,000 per charge.

The two executives, who face the same charges, also face up to six months in prison and a $250,000 fine for each of the five counts against them.

RPI Coatings also faces one count of obstruction for allegedly altering or destroying records and documents. The company denied that charge and says it plans to fight it in court.

Congress and safety officials are considering  increased fines and even jail time for owners in an effort to increase workplace safety. But some business leaders say stiffer fines won’t reduce accidents.

U.S. Senate Majority Leader Harry Reid (D-NV) has introduced legislation that seeks to increase fines and criminal penalties for safety violations. Reid’s bill parallels one introduced in the House.

If the bill is passed:

• Fines for willful and repeat violations would increase, with the minimum increasing from $5,000 to $8,000 and the maximum from $70,000 to $120,000.
• The maximum fine for serious, failure-to-abate and other-than-serious violations would increase from $7,000 to $12,000.
• If a violation causes an employee’s death, civil penalties could range from $50,000 to $250,000, with $25,000 the minimum for companies with 25 or fewer workers, and
• The federal Occupational Health and Safety Administration could also pursue criminal charges against a company for an employee’s death, including fines and up to 10 years in prison for owners and managers. Criminal penalties for serious bodily injury to an employee could include up to 5 years in prison.

Meanwhile, Oregon’s OSHA administrator, Michael Wood, is considering raising fines for safety violations and basing them on a sliding scale by number of employees.

Oregon made the news recently for workplace safety when it fined ConAgra $65,000 in connection with a February incident in which a welder was killed in a potato processing plant.

Wood says he realizes a $65,000 fine won’t have a great effect on a giant company such as ConAgra.

Oregon business leaders interviewed by the Daily Journal of Commerce agree that high OSHA fines won’t make companies any safer.

“Money is not the motivator,” said Dan Kavanaugh, vice president of Turner Construction Co. “A fine doesn’t mean anything to us.”

Do you think higher OSHA fines would cause companies to improve their safety? Let us know in the Comments Box below.

It’s a question upper managers find themselves facing after being hit with an OSHA violation.  And with increased enforcement on the way,  even more executives will be facing the issue soon.

So how best do you make that decision? What are the factors to be considered when deciding whether to fight an OSHA fine?

First things first, experts say, is that the final decision goes far beyond the actual cost of the fine.  Some citations start out at only a couple thousand dollars and, if the firm is cooperative, OSHA routinely knocks those down to just a couple hundred bucks without even being asked.

So, for a few hundred dollars, shouldn’t you just write the check and let it go?

Not without first talking to an attorney experienced in OSHA issues. The amount of the proposed fine really shouldn’t be among the first considerations.

Instead, a key question to ask is, “How much will it cost to fix the problem?” OSHA calls it abatement, and almost every paid citation with a pledge from the company to address a workplace “hazard” so that it can’t happen again.

In many instances, that’s simple enough. But not all! Sometimes the costs of correcting a hazardous condition can be substantially more expensive than the proposed penalty.

What else goes into deciding whether to pay an OSHA fine?

Here are five key things to consider.

1. What is the cost of abatement and the techological feasability of doing it? In some cases and in some industries, those costs can be substantial.

2. Could the situation occur again? Repeat citations can get very expensive. So, if you agree to pay an OSHA citation and then the offense somehow re-occurs (which is quite possible given the renewed OSHA emphasis from the Obama administration) then where are you?

3.  Could the safety offense also be a crime? In truly egregious situations, managers and executives have received jail sentences following a workplace accident.

4. Is there other pending litigation your firm is involved with that could be affected by your essentially “pleading guilty” to an OSHA violation? If so, how might that litigation be affected?

5. Lastly, is there a good defense to the citation? For instance, an often used defense is “unexpected or unpreventable employee misconduct.” And OSHA fines can be dismissed on a number of technicalities, for instance it wasn’t filed in timely manner or the citation is too vague.

Example: Wal-Mart faces a $7,000 OSHA fine after a crowd of 2,000 excited shoppers trampled a worker to death at a Long Island, NY, store on the day after Thanksgiving.

Does OSHA have a standard on retail crowd control? No, and it doesn’t need one.

It used its General Duty Clause (GDC) to issue the fine.

The GDC requires employers to maintain safe workplaces, free of recognized hazards that are likely to cause death or serious physical harm.

OSHA called holiday shoppers a recognized hazard, saying previous experiences with day-after-Thanksgiving crowds should have tipped off Wal-Mart managers about potential dangers.

Some other examples of the newly aggressive OSHA:

• 37 days into the Obama administration, OSHA proposed more than $1.2 million in penalties against G.S. Robbins & Co. of East St. Louis, MO. It used a new regulation that allows fines to be multiplied by the number of employees affected by a violation.
• In another speech, Barab said the agency would work harder to give workers the “tools” they need to ensure their workplaces are safe. That’s a reference to OSHA’s efforts to get workers to turn in their own companies for alleged safety violations.