Forthcoming Enterprise-Wide and Egregious Violations from California’s Division of Occupational Safety and Health

The proposed regulatory amendments follow the signing of Senate Bill 606 (SB 606), which amended Labor Code sections 6317 and 6317.8 in 2021. The definitions of “enterprise-wide” and “egregious” violations will be added to Cal/OSHA’s existing regulatory framework for citation classification and penalty calculation. Because Labor Code sections 6317 and 6317.8 are similar to federal Occupational Safety and Health Administration (Fed OSHA) policies, the proposed amendments are also intended to ensure Cal/OSHA’s enforcement program is at least as effective as Fed OSHA’s program.

SB 606 created “a rebuttable presumption that a violation committed by an employer that has multiple worksites is enterprise-wide if the employer has a written policy or procedure that violates these provisions …, or the division has evidence of a pattern or practice of the same violation committed by that employer involving more than one of the employer’s worksites.” A failure to rebut the presumption would result in an enterprise-wide citation, which is subject to the same penalty as a willful or repeat violation. This is codified in Labor Code section 6317.

SB 606 also authorizes Cal/OSHA to issue egregious and willful violations if one or more of an enumerated list of circumstances is true. The list includes an intentional disregard for safety and health responsibilities, no reasonable effort to eliminate a known violation, high rates of worker injuries or illnesses, and an extensive history of prior violations. SB 606 requires each instance of an employee exposed to an egregious violation “to be considered a separate violation for purposes of the issuance of fines and penalties.” This is codified in Labor Code section 6317.8.

Enterprise-Wide Violations
Below is the proposed regulatory text regarding enterprise-wide violations and penalties.

8 C.C.R. § 334. Classification of Violations and Definitions
(g) Enterprise-wide violation – there shall be a rebuttable presumption that a violation is enterprise-wide if an employer has employees at multiple worksites and either of the following is true:

• The employer has a written policy or procedure that applies to more than one worksite and that violates Section 25910 of the Health and Safety Code or any standard, rule, order, or regulation established pursuant to Chapter 6 (commencing with Section 140) of Division 1, or Division 5 of the Labor Code.
• The Division has evidence of a pattern or practice of the same violation or violations involving more than one of the employer’s worksites.

8 C.C.R. § 336. Assessment of Civil Penalties

(k) Enterprise-wide violations –

(1) The Proposed Penalty is multiplied by the number of worksites covered by the Enterprise-wide citation at the time of the inspection.

(2) When multiplying the Proposed Penalty by the number of worksites covered, only the classification or characterization that applies to each and every violation shall be used for the computation of the Proposed Penalty. Any Repeat, Willful, or Egregious classification, Accident-Related characterization, or any abatement credit, that does not apply to each and every violation, shall not be used to calculate the Proposed Penalty. For example, an employer has three covered worksites. At one worksite, there is a Serious, Accident-Related, violation. At the other two worksites, there are two Serious violations respectively. To calculate the Proposed Penalty, the Serious classification is used for the computation. However, if at all three covered worksites there are Serious, Accident-Related, violations, respectively, the Serious, Accident-Related, classification and characterization are used to calculate the Proposed Penalty.

(3) When multiplying the Proposed Penalty by the number of worksites covered, (1) there will be a presumption that Severity and Extent is Medium and Likelihood is Moderate and (2) the adjustment factors of Good Faith, Size, and History will be assessed based on the worksites covered. The Division may, in its discretion, depart from the preceding criteria based on the facts and information gathered during the investigation.

The resultant penalty shall not exceed $158,727.

Egregious Violations
Below is the proposed regulatory text regarding egregious violations and penalties.

8 C.C.R. § 334. Classification of Violations and Definitions
(f) Egregious Violation - is a willful violation, pursuant to subsection (e), where:

(1) The employer has a prior egregious violation that remains in effect as set forth in subsection (4); or

(2) Within the five years preceding the issuance of a citation for an egregious violation, one or more of the following has been true of the employer or their actions:

(A) The employer, intentionally, through conscious, voluntary action or inaction, made no reasonable effort to eliminate the known violation.

(B) The employer has a history of (1) One or more Repeat or Willful violations; or (2) Five or more Serious violations per 100 employees; or (3) Twenty or more General or Regulatory violations per 100 employees.

(C) The employer intentionally disregarded their health and safety responsibilities, such as by failing to maintain an operative injury and illness program adopted pursuant to Labor Code section 6401.7 and applicable regulations of the California Occupational Safety and Health Standards Board, intentionally disregarding safety and health hazards, or intentionally disregarding the California Occupational Safety and Health Act.

(D) 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.

(E) 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 have become final determinations, based upon: (1) a final order affirming the existence of the previous violation; or (2) the previous citation becoming final by operation of law.

(F) The violations resulted in worker fatalities, a worksite catastrophe, or five or more injuries or illnesses. For purposes of this subsection, “catastrophe” means the inpatient hospitalization, regardless of duration, of three or more employees resulting from an injury, illness, or exposure caused by a workplace hazard or condition.

(G) Within the 12 months immediately preceding the underlying violation, 10% of all employees at the cited worksite sustained workplace injuries or illnesses as defined in section 330, subsection (h).

(3) A citation for an egregious violation shall remain in effect for a period of five years from the latest of the date of the final order affirming the citation, or the date the citation becomes final by operation of law.

8 C.C.R. § 336. Assessment of Civil Penalties
(i) Egregious Violation – If a Willful violation is determined to be egregious (as provided under section 334(f) of this article), the Division shall issue a separate citation with a separate Proposed Penalty calculated pursuant to subsection (h) of this section for each instance of an employee exposed to that violation. For purposes of this section “each instance” means a single employee’s exposure to the violation. For example, if a violation exposes ten (10) employees to the hazard, there are ten (10) instances with ten (10) separate penalties.

The effect of the proposed amendments on employers is multifold. First, for employers who have multiple worksites and companywide policies or procedures, a violation at one worksite could subject that worksite to increased penalties; the proposed penalty would be multiplied by the number of company worksites. For example, a $10,000 penalty at one worksite of a company with 10 worksites would result in a $100,000 penalty. (We note the proposed amendments are unclear as to whether worksites located outside of California will be included in the “count” of company worksites.) Second, a willful violation could be deemed egregious based on an employer’s conduct and citation history within the past five years, which is a considerably long lookback period. And of course, the effect of egregious violations is increased penalties due to the per exposure instance basis. For example, if 10 employees were exposed to a hazard associated with a $10,000 violation, the resulting penalty would now be $100,000.

In sum, California employers should be prepared for increased penalties under the new enforcement scheme promulgated by SB 606. Employers with multiple worksites should closely review companywide safety policies and procedures, as they could subject individual worksites to enterprise-wide violations. Employers of all sizes should review their citation history for the past five years to determine whether it could subject the company to egregious violations.

Contact your regular Pillsbury contact or the authors of this alert for questions regarding Cal/OSHA or Fed OSHA.