U.S. OSHA: Lower Penalties for Small Businesses Support Entrepreneurs Who Drive Economy

The U.S. Department of Labor has adjusted its penalty guidelines in its Field Operations Manual (FOM) to reduce fines for small employers. The move should make it easier for small businesses to invest resources in compliance and hazard abatement, according to the U.S. Occupational Safety and Health Administration (OSHA). For example, the 70% penalty reduction - previously limited to businesses with 10 or fewer employees - will now be extended to include those with up to 25 employees.

The revisions also include new guidelines for a 15% penalty reduction for employers of all sizes who take immediate steps to address or correct a hazard. This “quick fix” option also was outlined in OSHA's previous FOM, requiring employers to remedy the hazardous condition during the inspection or on the same day. The revised FOM expands the definition of “immediately” from the day of the inspection to up to 15 days if the fixes “require more complex abatement actions such as purchase of materials, fabrication of parts, training, etc.” In order to receive the quick fix credit, employers must prevent employee exposure to the hazard until it is abated.

“All employers should be offered the opportunity to comply with regulations that help maintain a safe working environment,” said Deputy Secretary of Labor Keith Sonderling. “Small employers who are working in good faith to comply with complex federal laws should not face the same penalties as large employers with abundant resources. By lowering penalties on small employers, we are supporting the entrepreneurs that drive our economy and giving them the tools they need to keep our workers safe and healthy on the job while keeping them accountable.”

The new policy is outlined in the Penalties and Debt Collection section of OSHA's Field Operations Manual.

Additionally, the updated policy expands the penalty reduction for employers without a history of serious, willful, repeat, or failure-to-abate OSHA violations. Under OSHA's revised policy, employers who have never been inspected by federal OSHA or an OSHA State Plan, as well as employers who have been inspected in the previous five years and had no serious, willful, or failure-to-abate violations, are eligible for a 20% penalty reduction.

Alan Johnson, 3E's managing director, Chemical Management and Workplace Safety, said that for him, the changes represent OSHA altering its approach to workplace safety.

“OSHA's revised penalty guidelines reflect an earnest attempt to balance enforcement with equity,” said Johnson. “By reducing the financial burden on small businesses and rewarding good-faith compliance, the agency is modernizing its approach to workplace safety. However, it is vital that these changes do not dilute the overarching commitment to hazard elimination and worker protection.”

Attorney: Greater Transparency Related to Reductions Needed

Attorney John D. Surma is a shareholder in the Houston, Texas, office of Ogletree Deakins and he's sat across the table from OSHA on many occasions. With a practice focusing on representing employers in workplace safety and health matters, including preventive advice and counseling, regulatory actions, and investigation, Surma represents clients throughout the United States before a variety of regulatory agencies including OSHA, the U.S. Environmental Protection Agency, and the U.S. Chemical Safety Board, among others.

“I think the Department of Labor is truly trying to figure out how to relieve the private sector of the burden associated with regulatory compliance and, while I am encouraged by the proposal to expand the definition of a small employer, I think the redefinition should have gone further and I wish there would be greater transparency related to the penalty reductions.”

He said he wishes the announcement indicated that the penalties proposed with citations are subject to those further reductions or, alternatively, that they will reflect the discounts. “One way or the other, this added layer of clarity would make it easier for employers - particularly the small, targeted employers - to understand what the penalties proposed actually mean to their bottom line.  Currently, we often end up in discussion with OSHA concerning whether penalties actually saw the small employer reduction or not,” he added.

Currently, OSHA is negotiating “incredibly favorable penalty outcomes for employers,” according to Surma.  “I am unsure whether small employers will see much more relief when the resolution of citations and penalties are negotiated with OSHA. In other words, what has been happening may be as good as it will get.”

Will Penalty Reductions Improve Safety Efforts at Small Employers?

In his blog, OSHA Penalties: How Low Can You Go?, Jordan Barab predicted the lowering of penalties for small employers will do anything but improve workplace safety in the long run. “Combined with [President Donald] Trump's plan to significantly reduce the number of OSHA inspections next year, it doesn't take an expert to predict that these changes can only mean more injuries, illnesses and deaths for workers in this country,” wrote Barab.

Barab is a long-time advocate for workers and occupational safety and health, directing and working on workplace safety and health programs and policy for the American Federation of State, County and Municipal Employees, the U.S. Chemical Safety and Hazard Investigation Board, the AFL-CIO, and the House Education and Labor Committee before serving as OSHA's deputy assistant secretary of labor for occupational safety and health for nearly 20 years before leaving in 2017.

While Sonderling says employers should be offered “the opportunity” to provide a safe working environment, employers actually “have the legal obligation to provide a safe working environment,” said Barab.

“They've had that obligation for 54 years. It's the law. Just like I have the 'opportunity' to comply with traffic laws,” he added.

Barab also points out that the new policy allows for fines to be reduced if the employer has never been inspected before. “OSHA is an extremely tiny agency with an enormous mandate. Federal OSHA, with a budget of $632 million and only 738 inspectors, is able to reach every workplace in the country only once every 186 years.”

The budget proposal from the Trump administration includes a 13% cut in OSHA enforcement staff and a 30% cut in OSHA inspectors. “What that means is that the average employer is likely to go many, many years - or decades - before ever seeing an OSHA inspector, unless a worker is killed, seriously injured or files a complaint,” wrote Barab in his blog.

Compliance Should be Accessible

3E's Johnson puts a different spin on the new directive, noting that “compliance should be accessible, not optional.” This recent move by OSHA “creates a clear opportunity to engage smaller businesses” in creating safer workplaces, perhaps allowing them to make a greater investment in their health and safety and risk management efforts.

“Rewarding swift corrective actions aligns with our philosophy of real-time risk management,” Johnson added, praising OSHA's encouragement of an immediate response by employers to abate hazards.

The new policies are effective immediately. Penalties issued before July 14, 2025, will remain under the previous penalty structure. Open investigations in which penalties have not yet been issued are covered by the new guidance, and the agency says it “retains the right to withhold penalty reductions where penalty adjustments do not advance the goals of the Occupational Safety and Health Act.”