Biodiesel companies face substantial financial exposure if they fail to provide a safe working environment. Personal injuries to employees result in expensive and time-consuming workers compensation claims. Additionally, several states allow an injured employee to also bring a lawsuit against a third party who contributed to the injury, and that third party may be able to seek financial contribution from the employer if it was also negligent. Another area of exposure arises when nonemployees visit the biodiesel plant for business or personal reasons and are injured as a result of an unsafe or hazardous condition at the plant.

The financial impact of such injuries is substantial, especially if the biodiesel company is self-insured, if it is insured but has a large self-retention on its policy, or if the liability limits are inadequate. Even if fully insured, a history of claims affects experience ratings and leads to increased premiums. Injury claims also place demands on the company, requiring substantial time from management and other personnel to defend the claims. 

A biodiesel company can also face large workplace penalties not covered by insurance. The federal Occupational Safety and Health Act requires employers to comply with numerous safety and health standards. OSHA plant inspections invariably follow a serious injury, and OSHA has statutory authority to perform unannounced or surprise inspections. Penalties for violations of health or safety regulations anywhere in the plant can be assessed even though there has never been an injury. These penalties are based on the categories of violations as follows:

  Other-than-serious: This violation is one where death or serious physical harm cannot be expected; the penalty is up to $7,000 for each violation.

Serious: A serious violation is one that could result in death or serious physical harm; the penalty is up to $7,000 for each violation.

Willful: A willful violation is one in which the employer knew that a hazardous condition existed, the condition violated a standard or regulation, and the employer made no reasonable effort to eliminate the hazard. The penalty is up to $70,000 for each violation.

Repeated:  A repeated violation is imposed if the employer has been cited for a “substantially similar” violation anywhere in the nation within the past five years, even if the person in charge of plant safety is unaware of the earlier violation. A repeated violation carries a penalty of up to $70,000 for each violation.   

Other penalties include a $7,000 per day penalty for failure to timely abate a violation, and a $7,000 penalty per violation for failing to post information required by OSHA.

Experienced companies recognize that once there has been a serious accident or injury involving its operations, it is too late to avoid the adverse affects. The same may be said of OSHA violations. Prevention is the only real way to avoid this loss. And being proactive need not be overly expensive, nor require extensive administrative time by the company. It has been estimated by OSHA that an effective safety and health program can save $4 to $6 for every $1 invested. Not only is it the right thing to do, but it pays off in lower costs, increased productivity and higher employee morale.

Reducing work place losses is a goal the biodiesel company shares with OSHA. In this respect, OSHA offers numerous programs and areas of assistance. The OSHA Consultation Service helps employers identify potential hazards and improve their occupational safety and health management. The consultation is a free service largely funded by OSHA and operated by state agencies using trained safety and health staff. The OSHA training institute also provides basic and advanced training and education in safety and health. Compliance assistance specialists are available in each OSHA area office to provide general information about OSHA standards and compliance assistance resources.

Other employer assistance programs are available through the OSHA area office. OSHA also has an extensive publications program. For a list of items, visit OSHA’s website at www.osha.gov or contact OSHA’s publications office, U.S. Department of Labor, 200 Constitution Avenue, NW, N-3101, Washington D.C., 20210.

Author: Kurtis A. Greenley
Attorney, Linquist & Vennum PLLP
kgreenley@lindquist.com