Field Operations Manual

Chapter 8

SETTLEMENTS

1. Settlement of Cases by Area Directors.
   Area Directors are granted settlement authority and shall follow these instructions when negotiating settlement agreements:
   1. General.

      1. Except for egregious cases, or cases that affect other jurisdictions, Area Directors can enter into Informal Settlement Agreements with employers prior to the employer filing a written notice of contest.

         NOTE: After the employer has filed a written notice of contest, the Area Director can proceed toward a Formal Settlement Agreement with the concurrence and participation of the RSOL.

      2. Area Directors can amend abatement dates, reclassify violations (e.g., willful to serious, serious to other-than-serious), and modify or withdraw a penalty, a citation, or a citation item where evidence is established during the informal conference to show that the changes are justified.
      3. Area Directors can negotiate the amount of proposed penalties, depending on the circumstances of the case and the particular improvements in employee safety and health that can be obtained.
      4. Employers shall be informed that they are required by §1903.16 to post copies of all amendments or changes to citations resulting from informal conferences. Employee representatives must also be provided with copies of any agreements.
      5. Cases or issues relating to potential Section 17 settlements shall be handled in accordance with established Agency procedures, including approval by the National Office.
   2. Pre-Contest Settlement (Informal Settlement Agreement).
      Pre-contest settlement discussions will generally occur during or immediately following the information conference and prior to the expiration of the 15 working day contest period.
      1. In the event that an employer is bringing an attorney to an informal conference, Area Directors or their designees are encouraged to contact the RSOL and ask for the assistance of counsel.
      2. If a settlement is reached during the informal conference, then an Informal Settlement Agreement (ISA) shall be prepared and the employer will be asked to sign it. It will be effective upon signature of both the employer and the Area Director (who shall sign last), provided that the contest period has not expired. Both parties will date the documents on the day of actual signature.
      3. If the employer is not present to sign the ISA, then the Area Director shall send the agreement to the employer for signature. After signing, the employer must return the agreement to the Area Director by hand delivery or facsimile within the 15-working-day contest period.
         1. In every case, Area Directors shall give employers notice in writing that the citation will become final and unreviewable at the end of the contest period, unless the employer signs the proposed agreement or files a written notice of contest.
         2. If an employer wishes to make any changes to the text of the agreement, then the Area Director must agree to and authorize the proposed changes prior to the expiration of the contest period.
            • If the changes proposed by the employer are acceptable to the Area Director, then the exact language written into the agreement shall be mutually agreed upon. Employers shall be instructed to incorporate the agreed-upon language into the agreement, sign it, and return the agreementto the Area Office by hand delivery or facsimile.
            • Annotations incorporating the exact language of any changes authorized shall be made to the retained copy of the agreement and signed and dated by the Area Director.
         3. Upon receipt of the ISA signed by the employer, the Area Director will ensure, prior to his/her signature, that any modifications to the agreement are consistent with the notations made in the case file.
            • In these cases, the citation record will then be updated in OIS in accordance with current procedures.
            • If an employer's changes substantially alter the original terms, then the agreement signed by the employer will be treated as a notice of contest and handled accordingly. The employer will be informed of this as soon as possible.
         4. A reasonable time will be allowed for return of the agreement from the employer.
            • If an agreement is not received within the 15-working-day contest period, then the Area Director will presume that the employer did not sign the agreement, and the citation will be treated as a final order.
            • The employer will be required to certify that the informal settlement agreement was signed prior to the expiration of the contest period.
      4. If settlement efforts are unsuccessful and the employer contests the citation, then the Area Director will state the terms of the final settlement offer in the case file.
      5. See Informal Conference Guidance Memorandum, dated September 18, 2013, for more information. The following paragraphs are from the Informal Conference Guidance Memo:
         1. Provide the attendee information regarding the purpose of an informal conference. This will include the following:
            • Why the inspection was conducted. Explicitly, the difference between a programmed and un-programmed inspection. For example, "OSHA conducted an un-programmed inspection of your facility because a formal complaint was filed alleging blocked exit routes."
            • The rights of the employer(s). Specifically, the AD will inform the employer(s) of their contest rights. The AD will provide the employer(s) an overview of OSHA's contest procedures. Furthermore, the AD should indicate that if the employer(s) decide to contest the citation(s), any past settlement offer made during the informal conference will no longer be available to the employer(s) at the area office level. Once a case is contested, the AD should explain that the case is transferred to the Regional Solicitor's office.
            • The AD should inform the employer that (for settlement purposes) he/she has the authority to change the citation's classification and adjust the total proposed penalty. However, the AD should clarify that this can only be accomplished if the employer demonstrates development of or will continue to improve on a safety and health program and have, or are in the process of, abating all cited violations. Examples of proactive initiatives should include, but are not limited to, hiring a safety and health consultant or using OSHA's consultation services. A reduction in classification or penalty can only be given if proof of correct abatement has been received or if the employer has committed to correct the violations by the abatement due dates.
            • Potential for settlement of citation(s). The AD should inform the employer that if an agreement is reached, the Informal Settlement Agreement (ISA) must be signed by both parties. Additionally, the AD will inform the employer(s) that by signing the ISA, the employer(s) forfeit their right to contest the citation(s).
         2. Once the employers understand why the inspection was conducted and the procedures of the informal conference are explained, the AD should start a discussion regarding the citations.
         3. As the citation(s) are discussed, the AD must thoroughly document what was stated by all parties (employers, employee representatives, and AD). Furthermore, if the alleged violation was not corrected during the inspection, the AD should ask for both the signed abatement certification and abatement documentation (if required). For example, the employer(s) should provide abatement verification that clearly proves the facilities' exit routes are unobstructed. Abatement verification can include photographs (time/date stamped) of the corrected violative condition. This process should be followed for any additional items and/or citations arising from the inspection.

         4. Once the discussion of the citation(s) is concluded, the AD should determine what are the expectations of the employer(s), (if any).

            Usually, the employer(s) will ask for penalty reductions, citation reclassification, both penalty reduction and reclassification, or possibly vacating the citation(s). Depending upon the extent of safety and health efforts by the employer(s), and any other pertinent information established during the course of the settlement proceedings, the AD should use his/her professional judgment in evaluating a settlement offer.

         5. The AD will abide by OSHA policy and procedures and can grant a penalty reduction and/or citation reclassification to settle the case.
         6. There will be occasions where employers will ask for a payment plan. The AD shall follow the guidelines in the FOM, Chapter 6, pertaining to collecting payments.
         7. Employers can ask for a petition to modify abatement (PMA). The AD will follow procedures outlined in the FOM to ensure PMAs do not adversely affect the safety and health of employees. The AD can amend abatement dates, reclassify violations (e.g., willful to serious, serious to other-than-serious), or modify or withdraw a penalty, a citation, or a citation item, where the evidence establishes that the changes are justified.
         8. Enforceability of ISA. If settlement negotiations change or in any way amend the original citation(s), the agreement shall include language that states: "the parties agree that the underlying citations are amended to include as abatement the full terms of this agreement."
         9. The AD will advise the employer of OSHA's Whistleblower protections programs, which ensures that workers are free to participate in safety and health activities. Section 11(c) of the OSH Act prohibits any person from discharging or in any manner retaliating or discriminating against any worker for exercising rights under the Act.
   3. Procedures for Preparing the Informal Settlement Agreement.
      The ISA shall be prepared and processed in accordance with current OSHA policies and practices. For guidance in determining final dates of settlement agreements and Review Commission orders, see Chapter 15, Section XIII, Citation Final Order Dates.
   4. Post-Contest Settlement (Formal Settlement Agreement).
      Post-contest settlements will normally occur before the complaint is filed with the Review Commission.
      1. Following the filing of a notice of contest, the Area Director shall (unless other procedures have been agreed upon) notify the RSOL when it appears that negotiations with the employer could produce a settlement. This notification shall occur at the time the notice of contest transmittal memorandum is sent to the RSOL.
      2. If a settlement is later requested by the employer, the Area Director will communicate the proposed terms to the RSOL, who will then draft and execute the agreement.
   5. Corporate-Wide Settlement Agreement.
      Corporate-Wide Settlement Agreements (CSAs) can be entered into under special circumstances to obtain formal recognition by the employer of cited hazards and formal acceptance of the obligation to seek out and abate those hazards throughout all workplaces under its control. See CPL 02-00-152, Guidelines for Administering Corporate-Wide Settlement Agreements, June 22, 2011, for additional information.