Seyfarth Synopsis: A new rulemaking is underway at the California Department of Industrial Relations that will allow Cal/OSHA to cite employers for “enterprise-wide and egregious” violations, implementing a 2021 law signed by Governor Newsom. Cal/OSHA will convene an advisory committee on August 19, 2024 to solicit input.

Background

California employers may remember back to 2021, when California Governor Gavin Newsom signed SB 606 into law. Among other things, the bill created new categories of Cal/OSHA violations: “enterprise-wide” and “egregious,” which were incorporated into the Labor Code Sections 6317 and 6317.8. We blogged about it here.

The rulemaking is necessary to incorporate these classifications into the existing regulatory framework for citation classification and penalty calculation, and to provide related definitions and procedures. Notably, these proposed changes are similar to Federal OSHA’s Corporate Wide Settlement Agreements, and Cal/OSHA takes the position that enforcing enterprise-wide and egregious violations is necessary to ensure that California’s enforcement program remains “at least as effective” as the federal program.

What is “Enterprise-Wide”?

The proposed rules establish a “rebuttable presumption” that a violation is enterprise-wide if the employer has multiple worksites and either of the following is true:

• The employer has a non-compliant written policy or procedure; or
• Cal/OSHA has evidence of “a pattern or practice” of the same violation or violations involving more than one of the employer’s worksites.

Employers cited for enterprise-wide serious violations will not be eligible for penalty adjustments except for size. In other words, employer good faith and history of previous violations (or lack thereof) won’t matter.  If the employer fails to abate the alleged hazard at any worksite covered by the citation in a timely manner, a separate penalty of up to $15,000 will be assessed for each failure to abate. The proposed penalty for enterprise-wide violations would be multiplied by the number of worksites covered at inspection, up to $158,727.

What is “Egregious”?

An egregious violation is defined as a willful violation where the employer has a previous egregious violation that remains in effect (there is a five-year lookback window), or one or more of the following:

• The employer, intentionally, through conscious, voluntary action or inaction, made no reasonable effort to eliminate the known violation;
• The employer has a history of one of more serious, repeat or willful violations or more than 20 general or regulatory violations per 100 employees;
• The employer intentionally disregarded their health and safety responsibilities, such as by failing to maintain an effective injury and illness program, ignoring safety and health hazards, or refusing to comply with the Cal/OSHA Act;
• The employer’s conduct, taken as a whole, amounts to clear bad faith in the performance of their duties to comply with occupational safety and health standards;
• Within the five years preceding a citation for an egregious violation, the employer has committed more than five violations of any Title 8 standard” that has become finalized;
• The violations resulted in worker fatalities, a worksite catastrophe, or five or more injuries or illnesses. (Catastrophe means inpatient hospitalization of three or more employees from a workplace hazard);
• Within the 12 months immediately preceding the underlying violation, 10% of all employees at the cited worksite sustained workplace injuries or illnesses.”

The framework for issuance of repeat citations is applicable to egregious citations, in that the underlying conduct must have occurred within the past five years. Significantly, each employee exposed to an egregious violation will be considered a separate violation for purposes of the issuance of fines and penalties. This could result in breathtakingly large penalties for employers subject to alleged egregious violations.

The proposed maximum per instance penalty for egregious violations is expected to be $158,727, adjusted each year according to the consumer price index.

The foregoing proposed regulatory changes are undoubtedly significant for employers in California, and will have the largest impact of companies with multiple locations. It will be more important than ever for California employers to ensure regulatory compliance across all worksites and carefully manage Cal/OSHA inspections.