Get your ducks in a row before the feds callBiz Spotlight – Manufacturing
For many small and medium-sized manufacturers and other businesses, the arrival of an inspector from the federal department of Occupational Safety and Health Administration (OSHA) sets off alarms. ItÂs a response that Joseph A. Paranac Jr., a partner at the Newark law firm of St. John & Wayne and co-chair of its labor and employment department, would like to change.
A division of the U.S. Department of Labor, OSHA sets and enforces workplace safety and health standards. Its activities focus on a range of issues, including construction-site safety and and the use of proper equipment to minimize worker injuries.
ÂThereÂs a very real possibility that an OSHA inspector will appear at your site, unannounced, to look for violations,Â he says. ÂItÂs a lot better to be prepared, instead of waiting until an inspection to draw up a written safety and health plan, an enforcement plan and appointing an on-site safety officer. Either way though, a company should call its OSHA counsel or representative as soon as it hears from OSHA.Â
Depending on the level of citationsÂwhich are rated as Âother than serious,Â Âserious,Â or, worst, ÂwillfulÂÂa company may be hit with fines. Construction firms may find themselves barred from bidding on many contracts.
As a cautionary example, Paranac points to a small manufacturing plant in northern New Jersey that did it all wrong . ÂThree OSHA inspectors came to the factory with a video camera and started to look around,Â says Paranac. ÂThat should have put the owners on alert immediately, but they waited till the inspectors were there for six months before calling me.Â During a six-month period, OSHA inspectors armed with video cameras spent up to five days a week at the facility, taping operations and speaking with managers, with no lawyer or other advocate present.
OSHA cited the company for three willful violationsÂclaims that the recipient intentionally ignored or was indifferent to regulationsÂand about 30 serious violations that claim the company knew or should have known of the hazardous condition. Each willful violation can carry a penalty of up to $70,000; a serious violation can lead to a $7,000 fine.
ÂAfter a 30-day court fight we were able to get two of the willful violations dismissedÂone because we demonstrated that OSHA misunderstood some of the ownerÂs comments, and the other was dismissed after showing that the alleged hazard had already been remediatedÂand struck about 20 of the serious ones,Â says Paranac. ÂBut things would probably have been a lot easier if the company had been more diligent to begin with, and had called us in as soon as the OSHA inspector showed up.Â
Smaller firms can be especially vulnerable: They may not be up-to-date on OSHA requirements, or may feel like they donÂt have the money for protective gear or other requirements, says Franklin W. Boenning, a counsel with Lowenstein Sandler in Roseland.
ÂYou wouldnÂt wait for a fire to develop an escape route,Â he notes. ÂCompanies should take a similar attitude and be prepared beforehand when it comes to being compliant with OSHA documentation and other requirements.Â
An effective response to an OSHA visit can make a big difference, too. In some cases, a firm may be able to force the government to cover its legal costs. ThatÂs what happened when ParanacÂs firm defended Scafar Contracting, a Newark-based excavation company, in a marathon court battle with the agency that ran from 1996 to 2002.
The controversy was over a trench on a Newark street that the company was digging for a sewer line. Paranac says an OSHA inspector happened to drive by the worksite, and shortly after issued a serious citation and a willful violation for alleged safety problems.
ÂAt the trial we focused on the credibility of the OSHA inspector and ultimately the willful citation was dismissed,Â says Paranac. ÂWe also represented Scafar in a successful attempt, through the federal Equal Access to Justice Act, to get the government to pick up the companyÂs tab for about $147,000 in attorneys fees.Â
That act offers smaller companies, generally ones with a net worth of $7,000,000 or less, the opportunity to recover legal and other fees if they can prove that a government action should never have been filed in the first place.
Justified or not, facing the possibility of an OSHA inspection is part of doing business. According to the most recent detailed data for fiscal 2004, manufacturers accounted for a little more than 22% of OSHA inspections.
The officials may pick a site at random, as part of a periodic industry sweep, or in response to an employeeÂs complaint. Common concerns include electrical hazards, protection against falls, and the lack of machine and equipment guards that help prevent operator injuries.
Local OSHA offices can help a company wade through regulations, and there are plenty of lawyers and other consultants who specialize in getting firms OSHA-ready.
Many times, a surprise visit from OSHA inspectors represents nothing more than a fishing expedition, says Edward A. Hogan, a partner with Norris, McLaughlin & Marcus in Somerville, and a company can refuse to let them past the entrance without a warrant. But that can backfire, he warns, saying, ÂIn most cases itÂs prudent to cooperate.Â
ÂBut by the time youÂre going through an inspection, itÂs really too late to worry about compliance,Â says Hogan. ÂItÂs better to have a pro-active program in place.Â
Integrating OSHA compliance into a companyÂs normal routine can do more than save trouble during an audit, he adds. ÂIt can actually cut down on workplace incidents, add efficiency to operations and improve worker morale,Â Hogan says. ÂI advise my clients to anticipate workplace health and safety challenges, review, document and update their policies and procedures, and respond to any potential situations.Â
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