Workplace Safety: Employer Obligations and Penalties

We can all agree that a safe workplace is good for the bottom line. Fewer worker injuries and fatalities lead to fewer families picking up the pieces after a safety incident. From a business perspective, that means fewer workers’ compensation or third-party liability claims, which lead to fewer legal bills, fewer insurance premium hikes and a better reputation among workers, the industry and the local community.

In other words, chemical companies have much to gain when they maintain safe working conditions at their U.S. facilities.

Legal Rights of Workers Injured on the Job

Ordinarily, when someone in the U.S. claims they were injured because of the actions of another person or entity, they must prove that person or entity was at fault to prevail in a lawsuit. If they do so, they could recover various damages, including pain and suffering, economic and punitive damages.

But things are different when a worker is injured while on the job. The U.S. workers’ compensation system came about in the early 20th century. As part of a compromise known as the “Grand Bargain,” workers, in exchange for foregoing their constitutional due process rights to sue their employers for injuries they suffered on the job, agreed to subject themselves to an administrative regime that pays them benefits covering the wages lost and medical expenses they incurred because of their injuries.

Under this system, an injured worker need not prove their employer did anything wrong in order to receive benefits. They simply must prove that they were injured “in the course and scope” of employment. However, injured workers ordinarily will not qualify for workers’ compensation if they intentionally injured themselves, were “horsing around” or were under the influence of drugs or alcohol when they were injured. Workers’ compensation benefits can include payment of reasonable and necessary medical treatment related to the work injury, lost wages (in the form of a weekly disability rate for the period they cannot perform the tasks they performed at their job) and additional compensation if a worker suffers permanent loss of a body part.

All 50 states have workers’ compensation laws, but only one state does not require employers to carry workers’ compensation insurance: Texas. Texas employers gamble whenever they decline to carry the insurance. If they do not have workers’ compensation insurance, they can be sued directly by an injured worker for negligence.

In certain cases, injured workers could sue other parties who were partially or fully at fault for their injuries. A worker injured because a storage tank exploded could sue the manufacturer of the tank and the companies that installed it, inspected it, and maintained it. Likewise, a worker injured by a mixer’s blade could do the same. If they recover damages in a lawsuit against a third party, their workers’ compensation benefits will likely be offset by the amount of money they recovered.

Obligations and Penalties

Generally speaking, employers are required by the U.S. Occupational Safety and Health (OSH) Act to maintain workplaces that are “free from recognized hazards that are causing or are likely to cause death or serious physical harm.” The OSH Act creates additional legal obligations for employers, including ones concerning identifying and controlling hazards, providing safety training, communicating with workers about hazards and emergency action plans, ensuring tools and equipment are safe and maintaining reports and record-keeping about injuries and serious incidents. If employers operate in states that have their own occupational safety and health administration agencies, such as Arizona, California, Maryland, and Virginia, those state agencies may require employers to comply with additional obligations.

When employers violate the OSH Act, the U.S. Occupational Safety and Health Administration (OSHA) can issue citations and levy fines. For “serious” and “other-than-serious” violations, OSHA can levy fines of no more than $16,550 per violation. For “willful” violations, it can levy fines of between $11,823 and $165,514 per violation. When employers have repeated violations, particularly serious ones, OSHA could increase the frequency of its inspections or go to court seeking an order requiring an employer to cease operations until it corrects the hazards causing violations.

Unfortunately, over the course of my four decades practicing workers’ compensation law, OSHA’s penalties and fines have rarely been a deterrent to large employers. They are not large enough to make a dent in employers’ bottom lines, even when a worker loses their life because of an OSHA violation. Plus, OSHA does not have the personnel to adequately monitor anything close to a reasonable number of active worksites. Even if it did, it is doubtful every OSHA inspector would be well-trained enough to find all violations and to see through employers’ attempts to cover up violations. If OSHA’s penalties and fines were true deterrents, there would likely be half as many workplace injuries across the U.S. because of the strong financial motivation employers would have to avoid them.

OSHA’s penalties may not deter employers from creating unsafe work environments, but other ramifications may. As I mentioned above, even though employers generally need not worry about their injured workers suing them directly, there are costs they will face if their workers are frequently injured on the job. They can expect increased workers’ compensation insurance premiums, including the loss of discounts for having safety policies in place and for safe operations. They may also incur higher legal bills based on having to defend more workers’ compensation claims.

But beyond those costs, employers could receive negative publicity in the form of news reports about workplace accidents or OSHA violations, which would damage their reputation. In addition, workers could quit, and prospective workers could decline job offers, because of that reputation or the first-hand knowledge they have from friends and family about unsafe work conditions. And, clients and other organizations may cancel contracts or otherwise end business relationships because they see the unsafe work conditions as indicative of a poorly managed company.

Investing in Safety is Good for Business

To avoid the direct and indirect costs of unsafe workplaces, chemical companies should invest time, effort and money into building cultures around worker safety. These cultures will be driven by a safety director who’s empowered to build safety programs that educate workers while also holding themselves and the workers accountable. The money invested in a safety director and their program is the smartest money a chemical company can spend. 

A safety director would create and/or improve a safety culture by assessing potential risks and identifying hazards workers are likely to face; creating and updating safety policies, procedures and protocols; building training and education programs to support the emerging culture of safety; creating site audit and inspection procedures, developing and implementing emergency response plans and creating procedures for investigating safety violations and taking corrective actions when they occur; and developing a way for safety performance to be factored into workers’ evaluations.

Chemical companies, as for-profit operations, are often motivated by monetary outcomes. There’s nothing wrong with that, but that motivation should lead them to strive to build a culture of worker safety. Doing so will benefit both their workers and their bottom lines.