STATE OF CALIFORNIA
OCCUPATIONAL SAFETY AND HEALTH
In the Matter of the Appeal of:
The Occupational Safety and Health Appeals Board (Board), acting pursuant to authority vested in it by the California Labor Code and having granted the petition for reconsideration filed in the above-entitled matter by Francisco Fernandez (Employer), makes the following decision after reconsideration.
On March 22, 2000, a representative of the Division of Occupational Safety and Health (the Division) conducted a high hazard industry inspection at a place of employment maintained by Employer at 1515 Compton Avenue, Los Angeles, California (the site).
On July 18, 2000, the Division cited Employer for general violations of section 2500.8 [flexible cord uses]; 2500.10 [strain relief]; 3203(a) [Injury Illness Prevention Program]; 2540.2 [conduit broken]; 4310(a) [band saw not guarded]; 6151(c)(4) [portable fire extinguishers]; 6151(e)(2) [portable fire extinguishers]; and 3364(b) [toilet not clean and repaired]; regulatory violations of section 461(a) [no permit for air tank]; and 14307 [log 200]; and for serious violations of section 2340.23 [electrical openings]; 2500.9(a) [splices]; 2530.43 [automatic starting]; 2540.2(a) [equipment not approved]; 3314(g) [cleaning and adjusting]; 3577(b) [protection devices]; 3578(g) [permissible wheel exposure]; 4070(a) [guarding pulley drives]; 4075(a) [chain drive not guarded]; 4186(b) [planer not guarded]; 4300(a) [lack of hood guard]; 4300(d) [anti-kickback]; 4300(e) [lack of a spreader]; 4312 [belt sander not guarded]; 3228(b) [number of exits]; 3362(b) [dry sweeping sawdust]; 4302(b) [saw could not adjust]; 3943(c) [fans not guarded]; 4309(a) [radial arm saw not guarded]; 4309(b) [lack of limit chain]; 4309(d) [no automatic return]; 5141(a) [engineering controls]; 5155(e)(1) [workplace monitoring]; 5155(c)(1) [airborne contaminants] and 3382(a) [eye and face protection] of the occupational safety and health standards and orders found in Title 8, California Code of Regulations.1 Penalties totaling $166,970 were proposed for the violations.
Employer filed a timely appeal contesting the abatement requirements and the reasonableness of the proposed penalties.
On April 17, 2001, an Administrative Law Judge (ALJ) of the Board heard the appeal in West Covina, California, and on May 17, 2001 issued a decision reducing the total penalties from $166,970 to $16,700. Janet Dillon, Attorney, represented Employer. Kim Knudsen, Industrial Hygienist and Barry Burgess, Engineer, represented the Division.
On June 20, 2001 Employer filed a timely petition for reconsideration. The Division did not file an answer. The Board issued an order taking Employers petition under submission on August 9, 2001.
Employer is 84 years old and at the time of the hearing he was in the hospital as a result of heart problems. His attorney and his daughter appeared on his behalf, accepting the citations as written and asking for relief from the proposed civil penalties.
Barry Burgess, and Kim Knudsen, the inspecting officers for the Division, conducted a programmed inspection at the site. They both testified that Employer was cooperative and when they returned two weeks later Employer had abated all violations. The abatement process included installation of a new ventilation system at significant cost to Employer. The Division did not object to the Appeals Board reducing the penalties under the circumstances of this case.
Rosa Vongchanglos testified that she is Employers daughter. She helps Employer with his business and is familiar with his financial situation. Employer manufactures wood products. At one time he employed nine workers but now employs four or five workers because there are no orders to process. His heart problems have made it increasingly difficult for him to run the business. He has sold property and has taken out two loans to keep the business going. He owes the Bank of America $47,000 and Wells Fargo $35,000. Employer rents the site on a month-to-month basis, was quick to abate all hazards, and hopes to sell the business. In addition to his responsibilities running the business, Ms. Vongchangloss father takes care of three grandchildren and her mothers sister. She stated that her father could not pay the proposed civil penalties and keep the business going. In support of her position a financial statement and her fathers income tax return for 2000 were entered into evidence. Employers income statement showed that the company earned total income of $375,184.04, with a gross profit of $250,745.47. Because of various operating expenses Employer suffered a net loss of $9,476.85 for the year. According to Employers income statement, operating expenses for the year were as follows:
|Year to Date|
|01-01 to 12-31-01|
|Total Goods Available||124,438.57|
|Total Cost of Goods Sold||124,438.57|
|Accounting and Legal||$ 4,259.00|
|Car and Truck Expense||5,550.25|
|Penalties and Fines||4,109.03|
|Total Operating Expenses||260,222.32|
According to Employers 2000 tax returns Employer had an adjusted gross income of $39,090 for the year and taxable income of $9,241.60. Among the itemized deductions for the year were repairs and maintenance of $1,576.
Is Employer entitled to additional penalty relief based on financial hardship?
FINDINGS AND REASONS
DECISION AFTER RECONSIDERATION
Employer petitions for reconsideration to have the civil penalties set aside in their entirety. As grounds, Employer asserts that he has quit his business and is no longer an employer within the meaning of Labor Code section 6304 and that he is unable to pay the assessed penalties because of financial hardship.
The citations and penalties were issued to Francisco Fernandez for violations committed by him when he was an employer. For purposes of Labor Code section 6304, his status as an employer is determined at the time the violations were committed. Changes in status that occur thereafter do not alter that fact and invalidate the citations.
Going out of business alone is not a ground for reducing or setting aside civil penalties, but depending on the circumstances, may be considered as some evidence of financial hardship (Eagle Environmental, Inc. Cal/OSHA App. 98-1640, Decision After Reconsideration (Oct. 19, 2001)).
Employer was cited for numerous serious violations exposing employees to the risk of serious physical harm or death and the penalties proposed by the Division have already been reduced by 90%. Penalties are assessed to encourage the cited employer and all others to be mindful of their duty to protect workers in accordance with the safety orders and to deter violations. The primacy of the employee protection purpose of the California Occupational Safety and Health Act of 1973, the number and severity of the violations and the extraordinary 90% penalty reduction already granted by the ALJ, demonstrate that further relief could be justified only by clear and convincing evidence satisfying the criteria for hardship relief set forth in Dye & Wash Technology, Cal/OSHA App. 00-2327, Denial of Petition for Reconsideration (July 11, 2001); The Bumper Shop, Inc., Cal/OSHA App. 98-3578 Denial of Petition for Reconsideration (Jan. 29, 2001) and Eagle Environmental, Inc., supra.
One of the criteria is that the claimed financial hardship must be related, both in time and costs incurred to correcting [the cited] violations. (The Bumper Shop, Inc., supra at p. 6.; Eagle Environmental, Inc., supra, at p. 6.) Employers financial records indicate that only $1,576.03 was spent on repairs during the year in which Employer was cited and no other evidence was presented to establish that correction of the violations caused the claimed financial hardship. Accordingly, we find that Employer failed to prove a financial hardship justifying further reductions2.
The Board affirms the decision of the ALJ.
DECISION AFTER RECONSIDERATION
The Board affirms the ALJs decision and assessment of civil penalties totaling $16,700.
MARCY V. SAUNDERS, Member
GERALD P. OHARA, Member
OCCUPATIONAL SAFETY AND HEALTH APPEALS BOARD
FILED ON: September 25, 2002
1 Unless otherwise specified
all references are to sections of Title 8, California Code of Regulations.
2 The issue of the propriety of the initial penalty reductions set forth in the ALJs decision was not raised by any party. Because the ALJs decision was rendered before our decisions in Dye & Wash, Bumper Shop and Eagle Environmental, supra, we elect not to address the appropriateness of the penalty reductions at this time. It should be noted, however, that the penalty reductions granted by the ALJ are inconsistent with the directions given by the Board in Dye & Wash, Bumper Shop and Eagle Environmental.