In the Matter of the Appeal of:


dba Drain Patrol

1543 East Washington Boulevard

Los Angeles, CA 90021

����������������������������� Employer



Docket No.

00-R4D1-2327 and 2328



The Occupational Safety and Health Appeals Board (Appeals Board), acting pursuant to authority vested in it by the California Labor Code, hereby denies the petition for reconsideration filed in the above-entitled proceeding by Dye and Wash Technology (Employer).


From March 28 to June 30, 2000, the Division of Occupational Safety and Health (the Division) through Industrial Hygienist Jeff Logan, conducted an inspection at a place of employment maintained by Employer at 1543 East Washington Boulevard, Los Angeles, California (the site). On June 30, 2000, the Division cited Employer for general violations of section 3202(a) [elements of Injury and Illness Prevention Program (IIPP) missing], section 2340.23 [electrical openings], section 2340.16(a) [work space], section 5194(e)(1) [hazard communication] section 5194(g)(8) [failure to have MSDS’s], section 3212(a)(1) [floor openings], and a serious violation of 5162(c) [emergency eye wash] of the occupational safety and health standards and orders found in Title 8, California Code of Regulations.

Employer filed timely appeals contesting the existence and classification of the violations and the reasonableness of each proposed civil penalty.

A telephonic pre-hearing conference was held on February 13, 2001, before Jack L. Hesson, an Administrative Law Judge (ALJ) of the Board. Employer was represented by Ellen Choi. The Division was represented by Jose Cedro. The matter was submitted that day.
At the prehearing conference, the Division moved, without objection, to amend Citation No. 2 to allege a general violation, with a proposed civil penalty of $600 on the ground that it had insufficient evidence to establish the violation as serious. Good cause having been established, the motion was granted.

Employer moved to withdraw its appeals of Citation No. 1, and Citation No. 2 as amended. The motion was granted.

On April 26, 2001, the ALJ issued an order reflecting the agreement of the parties.

On May 23, 2001, Employer filed a timely petition for reconsideration alleging in relevant part that, “I previously … agreed to … the settlement because I was told it is a very good deal .… But, because … many … costs have … raised, I will have difficulties (paying) … the settlement.”


Is financial hardship a valid reason to set aside a settlement and to grant a petition for reconsideration?

Reasons For Denial
Petition For Reconsideration

Pursuant to Labor Code section 6616, a petition for reconsideration must “set forth specifically and in full detail the grounds upon which the petitioner considers the final order or decision made and filed by the appeals board or a hearing officer to be unjust or unlawful...." And, the petition must be based on one or more of the following grounds, specified in Labor Code section 6617:

(a)That by such order or decision made and filed by the appeals board or hearing officer, the appeals board acted without or in excess of its powers.
(b)That the order or decision was procured by fraud.
(c) That the evidence does not justify the findings of fact.
(d) That the petitioner has discovered new evidence material to him, which he could not, with reasonable diligence, have discovered and produced at the hearing.
(e) That the findings of fact do not support the order or decision.

Employer does not allege in its petition that the Appeals Board acted in excess of its powers in granting the motions that disposed of the case or that the order was procured by fraud. Nor does Employer contend that the factual grounds asserted by the parties at the pre-hearing conference did not justify the findings or that the findings do not support the order.

Based upon our review, we conclude that Employer's petition does not establish a ground for reconsidering the Board’s order. The petition is predicated on the vague assertion that Employer "will have difficulties" paying the penalties ordered and that assertion does not state a ground "specifically" and in "full detail" as required by Labor Code section 6616. Employer has not shown how the new evidence is material to the case. Employer seeks relief from the ordered penalties for reasons of financial hardship and evidence proving only that penalties are difficult to pay does not justify further reduction of the penalties already imposed.

The penalties in this case have already been reduced by the disposition order granting the motions of the parties. Hence, it is doubtful that increases in the cost of doing business that occurred in the month after the order was issued could justify further penalty relief, even if Employer had established grounds for reconsidering the order.

Penalties may be eliminated for financial hardship only if an employer can show that the assessment of any penalty will force it out of business or "will create a substantial likelihood" of doing that.

Penalty reductions may only be granted in instances where an employer can show that:

(1)Assessment of the full amount of the total proposed penalty would jeopardize its ability to continue operating while maintaining and improving employee safety and health at its place(s) of employment;

(2)The employer has abated all of the violations upon which the penalties are based and has otherwise demonstrated a sincere commitment to employee safety and health; and,

(3) The employer is unable to pay the proposed penalty in installments spread over a period of time reasonable to the circumstances.

Even if financial hardship is established, it will only act as an inducement to the reduction of penalties if an employer can establish that it has a long history of providing safe employment and a dedicated commitment to employee safety and health. If an employer can demonstrate that it cannot pay the proposed penalties without jeopardizing its ability to continue to operate, reduction of the proposed penalties may be warranted.

If an employer shows that penalty reduction is warranted under the above criteria, several factors must be considered in determining the extent of the reduction. They include the gravity and duration of the financial hardship shown, the size of the proposed penalty, the employer's demonstrated commitment to employee safety and health, whether assessment of the penalty will jeopardize an employer's ability to maintain and improve its safety and health programs while continuing to operate, and the possibility of using installment payments to moderate the reduction. And, any penalty reduction must take into account the deterrent purposes of the penalty assessed as a primary purpose of the Act.

A final and foremost consideration in all penalty reduction matters is the effect that improvidently granted penalty reductions may have upon achievement of the central purpose of the Act, which is to induce California employers to provide their employees with safe and healthful employment through the means of education, compliance inspections, civil penalties and, if necessary, criminal prosecution.

The granting of inappropriate reductions of civil penalties creates the appearance that filing an appeal based upon financial hardship will automatically result in penalty relief. The Appeals Board will not grant unjustified, preferential treatment to employers because such treatment decreases the confidence of employees, their representatives, in-compliance employers, and the public, in the integrity of the Cal-OSHA program. It also decreases employers’ moral responsibility and commitment to protect employee health and safety, diminishing the purposes of the Act. It also lessens employers’ efforts to become informed of safety and health standards and orders applicable to their operations and to comply with and enforce those standards and orders through their own Injury and Illness Prevention Programs. Decreased compliance increases employee exposure to safety and health hazards, producing, as an end result, more work-related employee injuries and illnesses; the exact opposite result that the Cal-OSHA Act and program are intended to produce.

The Appeals Board is firmly committed to ensuring that its processes are used to help rather than hinder achievement of the Act's purposes. To this end, as reflected in Specific Plating Co., Inc., OSHAB 95-1607, Decision After Reconsideration (Oct. 15, 1997) and Linsey Fashion, OSHAB 96-2695, Decision After Reconsideration (April 18, 2001) the Appeals Board will not grant penalty relief in a financial hardship case unless the employer demonstrates convincingly that the relief is justified under the criteria discussed above.

It is well settled that employers alleging that they are excepted from generally applicable standards have the burden of proving that they are excepted by a preponderance of the evidence. (See Barnard Engineering Co., Inc., OSHAB 81-0241, Decision After Reconsideration (May 28, 1982) and Kaiser Steel Corporation, OSHAB 75-1135, Decision After Reconsideration (June 21, 1982).) By asserting financial hardship, an employer seeks to be excepted from what the Appeals Board considers presumptively reasonable penalties calculated in accordance with the penalty setting regulations promulgated by the Director of Industrial Relations (§§333-336) as directed in the Act. (Labor Code §6319(c)). It follows that, in contested cases that go to hearing, an employer claiming financial hardship must prove by a preponderance of the evidence presented that relief is justified under the considerations discussed above. Similarly, when an employer seeks financial hardship relief by an uncontested motion at a prehearing conference or in a written stipulation, the motion must be supported by documented evidence that fully provides the details of the financial distress that is the basis of the motion. The granting of the motion must be based upon a clear and reliable showing of comparable persuasive force. Without that solid foundation having been laid in each case, the Board's appeal process can be misused to gain approval of unjustified reductions that are detrimental to fair and effective enforcement of the civil penalty provisions of the Act and to the Act's ultimate goal of ensuring employee safety and health in California.

In light of this analysis, we conclude that Employer has not shown that it has new, material evidence warranting the reopening of the proceeding or otherwise established grounds for granting its petition for reconsideration. The petition is denied.


The Order of the ALJ dated April 26, 2001 is affirmed and civil penalties of $1,110 are assessed.


ACTED ON: July 11, 2001