Chapter 8 – Settlements

I. Settlement of Cases by Branch Managers.

Branch Managers are granted settlement authority and shall follow these instructions when negotiating settlement agreements.

A. General.

1. Except for egregious cases, or cases that affect other jurisdictions, Branch Managers may 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 DAG may proceed toward a Formal Settlement Agreement with the concurrence and participation of the Branch Manager.
2. Branch Managers should review the case as well as the employer’s inspection history prior to the informal conference, identifying potential issues of concern as well as possible areas of settlement.
3. Branch Managers may 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, within limits established by the Administrator, where evidence establishes during the informal conference that the changes are justified.
4. Branch Managers may actively negotiate the amount of proposed penalties, within limits established by the Administrator, depending on the circumstances of the case and the particular improvements in employee safety and health that can be obtained.
5. Employers shall be informed that they are required by §396-6, HRS 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.

B. Pre-Contest Settlement (Informal Settlement Agreement).

Pre-contest settlement discussions will generally occur during or immediately following the informal conference and prior to the expiration of the 20 calendar day contest period.

1. In the event that an employer is bringing an attorney to an informal conference, Branch Managers or their designees are encouraged to contact the DAG and ask for the assistance of counsel.
2. Informal Conference Guidance:
   1. Provide the attendee information regarding the purpose of an informal conference, why the inspection was conducted, and a brief summary of what the attendee can expect during the conference. This will include the following:
      • That the purpose of an informal conference is to answer any questions the employer(s) may have regarding the inspection and citation process, discuss how individual cited items may be abated, provide information on resources available to the employer on preventing future citations and reducing workers’ injury and illness rates and costs, and potentially arrive at a settlement agreement on any issues concerning the employer.
      • Why the inspection was conducted. Explicitly, the reason why establishment was selected under a programmed inspection, e.g., “your establishment was randomly selected for inspection because the industry you belong to has higher than average rates of worker injury and illnesses”; or if un-programmed, what circumstances triggered the inspection, e.g. complaint, referral, accident, etc. For example, “HIOSH conducted an un-programmed inspection of your facility because one of your employees filed a formal complaint alleging blocked exit routes.”
      • The rights of the employer(s). Specifically, the Branch Manager will inform the employer(s) of their contest rights. The Branch Manager will provide the employer(s) an overview of the contest procedures. Furthermore, the Branch Manager 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. Once a case is contested, the Branch Manager should explain that the case is transferred to the Hawaii Labor Relations Board for adjudication.
      • The Branch Manager 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 Branch Manager should clarify that this can only be accomplished if employers show that they have abated all cited violations, or have or are in the process of exceeding the HIOSH requirements for an effective safety and health program. Examples of proactive initiatives may include implementation of a behavior based safety program involving all levels of employees, implementing work rules that exceed HIOSH standards, e.g. guardrails for scaffolds at less than 10 feet.
      • Potential for settlement of citation(s). The Branch Manager should inform the employer that if an agreement is reached, 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 Branch Manager should ask the employer(s) (or the employee/employee representative if they requested the informal conference) how they want to proceed, e.g. specific citation items, or item by item?
   3. As the citation(s) are discussed, the Branch Manager must thoroughly document what was stated by all parties (employers, employee representatives, and the Branch Manager). Photos supporting the violation should be shared with the conference participants as appropriate. Furthermore, if the alleged violation was not corrected during the inspection and the abatement certification has not been received, the Branch Manager 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 under discussion.
   4. Often the employer will offer explanations as to why the hazardous condition had existed, e.g. employee misconduct, abatement is not feasible. The Branch Manager shall explain the OSHA/HIOSH position (often based on the law and/or case law). For example, that the employer has the burden of proof with regard to affirmative defenses of employee misconduct or infeasibility and explain the conditions under which that burden is met.
   5. Once the discussion of the citation(s)/item(s) is concluded, the Branch Manager shall evaluate all the information provided for potential settlement. Information to be considered would include the extent of the safety and health efforts by the employer(s), giving more weight to programmatic changes that substantially improve workplace conditions for workers, as well as efforts to correct and/or prevent hazards. If warranted, the Branch Manager shall offer a penalty reduction and/or re-classification, as well as possibly vacating the citation where the evidence is clear that the citation was not warranted.
   6. There will be occasions where employers will ask for a payment plan. The Branch Manager shall follow the guidelines in the FOM, Chapter 6, pertaining to collecting payments.
   7. Employers may ask for additional time to correct a specific violation. The Branch Manager will ask specific questions in accordance with procedures on petition to modify abatement (PMA) to ensure that granting additional time will not adversely affect the safety and health of employees. Such amending of abatement dates may be included in the ISA, or if the only change resulting from the informal conference is amending the abatement date(s), the employer will be asked to submit a petition to modify abatement (PMA), which must adhere to the posting requirements for all items affecting the Citation and Notification of Penalty.
   8. The Branch Manager will advise the employer of the HIOSH Law on whistleblower protections prohibiting the employer from discharging or in any manner retaliating or discriminating against any employee who files a complaint or participates in any right under the Law.
3. If a settlement is reached during the informal conference, 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 Branch Manager, provided the contest period has not expired. Both parties will date the documents on the day of actual signature.
4. If the employer is not present to sign the ISA, the Branch Manager shall send the agreement to the employer for signature. After signing, the employer must return the agreement to the Branch Manager by and delivery or via facsimile within the 20-day contest period.
   1. One of the items of the ISA shall state 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. The employer may not amend or modify the Informal Settlement Agreement on his/her own. Any changes to the text of the agreement, must be agreed to by the Branch Manager:
      • If the changes proposed by the employer are acceptable to the Branch Manager, the exact language written into the agreement shall be mutually agreed upon. HIOSH shall amend the original agreement, send the Employer the original to sign, along with a facsimile copy to review and shall instruct the Employer to return the signed agreement by hand delivery or the signed facsimile prior to the expiration of the 20-day contest period.
      • Employers should be advised that failure to submit the signed agreement within the contest period will invalidate the agreement and the original citation and penalties will become a final order.
   3. Upon receipt of the ISA signed by the employer, the Branch Manager will ensure that there were no alterations or modifications to the agreement.
      • The citation record will then be updated in OIS in accordance with current procedures.
      • If changes made by the employer substantially alter the original terms, the agreement signed by the employer, if an original and not a facsimile or electronic copy, will be treated as a notice of contest and handled accordingly. The employer will be informed of this as soon as possible.
      • If the substantially altered ISA is a facsimile or an electronic copy, the employer shall be notified that the changes are unacceptable, and that if he/she wishes to file a contest, the letter must be a signed original.
   4. A reasonable time will be allowed for return of the agreement from the employer.
      If an agreement is not received within the 20-day contest period, the Branch Manager will presume the employer did not sign the agreement, and the citation will be treated as a final order.
5. If settlement efforts are unsuccessful and the employer contests the citation, the Branch Manager will state the terms of the final settlement offer as part of the Informal Conference Summary.

C. Procedures for Preparing the Informal Settlement Agreement.

The ISA shall be prepared and processed in accordance with current HIOSH policies and practices. Once an informal conference is scheduled, the ATS Branch shall have a draft ISA prepared and saved in the shared file. Using the document as a template, the final ISA shall be prepared as agreed upon during the informal conference. If an installment payment agreement is also agreed upon, it shall be attached to the ISA.

II. Post Contest Settlement (Formal Settlement Agreement)

Formal settlement agreements will normally occur after the contest is filed with HIOSH and before the Hawaii Labor Relations Board (HLRB).

1. The Hawaii Labor Relations Board (“the Board”) encourages parties to settle contested cases as expeditiously as possible. The Board normally schedules an initial/settlement conference within 75 days after receipt and docketing of the contested case. The Board assumes that both parties have met to discuss terms of settlement before the Board conference. Therefore, if there appears to be room for settlement, the Branch Manager should convey the terms of the potential settlement in the transmittal memo to the DAG so that the assigned DAG can contact the employer as soon as possible. Possible cases in this category would be when discussions regarding potential settlement were ongoing but could not be completed before the 20th calendar day for filing a notice of contest.
2. If the employer requests a settlement after the case has been contested, the Branch Manager will instruct the employer to contact the assigned DAG.
3. After discussion and concurrence with HIOSH, the DAG will then draft and execute the agreement in accordance with current DLIR procedures.