Employers are now potentially eligible for another round of Paycheck Protection Program (PPP) loans through the U.S. Small Business Administration (SBA). The SBA PPP loan application requires that they certify that they are, to the best of their knowledge, “in compliance with the applicable OSHA requirements, and will remain in compliance during the life of the [PPP] loan.”
This language suggests that failure to abide by the Occupational Safety and Health Act (OSH Act) requirements could impact a borrower’s eligibility for loan forgiveness. The SBA issued an interim final rule regarding loan forgiveness requirements on Feb. 5, 2021. While there is presently no sign that the SBA will independently investigate compliance with Occupational Safety and Health Administration (OSHA) regulations, the SBA could look to OSHA’s investigative findings and/or citations to determine employers who have not been compliant.
Overview of OSHA Citations
Citations from OSHA are classified as the following: willful, repeat, serious, other-than-serious, and other
As discussed further below, employers should be aware of OSHA’s citations and how they relate to COVID-19. Even though OSHA has not codified a COVID-19-specific OSHA standard, it has still issued citations to employers for failure to meet OSHA standards relating to personal protective equipment (PPE) availability, training, and use, as well as general workplace safety protocols to address COVID-19.
Willful Violations
Under the direct language of the application certification, which requires compliance “to the best of the employer’s knowledge” the most obvious risk area for employers is if OSHA ascertains that an employer engaged in deliberate violations of its policies. A willful violation is one that, by definition, contradicts the obligatory PPP loan attestation. Willful violations could arise in a number of circumstances. For example, if an unsafe and unhealthy workplace circumstance is brought to the attention of the employer by OSHA, an employee or worker, and the employer intentionally overlooks it, then the employer may be cited for a willful violation. Now, employers may run afoul of the PPP certification if they do not promptly correct or remediate unhealthy or unsafe workplace conditions.
Repeat Citations
Employers cited for a repeat offense during the life of a PPP loan would be at greater risk for SBA rejection of their loan forgiveness application. OSHA may issue repeat violations when an employer is cited for “the same” or a “substantially similar condition” to the preceding violation. Importantly, when considering whether a repeat citation is justified, OSHA has a five-year look-back period and in some cases longer, according to certain courts. Consequently, if an employer has a prior citation on its record from OSHA, and receives a citation for a “substantially similar” condition during the life of the PPP loan, the employer’s eligibility for loan forgiveness may be in jeopardy. Employers should review their previous OSHA citations, if any, to ensure that repeat violations do not arise.
COVID-19 Protocols
OSHA has issued substantial guidance for employers to address COVID-19 concerns in the workplace. Failure to implement recommended safety protocols per OSHA guidance exposes employers to OSHA findings based on violations of the General Duty Clause. Therefore, if an employer has no processes in place for social distancing, workplace sanitization and cleaning, respiratory PPE and related training, other personal protective equipment, COVID-19 written policies, and procedures, for example, and it receives a violation from OSHA for those health and safety violations during the life of the PPP loan, then the employer’s ability to obtain loan forgiveness from the SBA may be impacted and possibly denied.
Employers should continue to monitor SBA guidance as well as the guidance from OSHA.
Highlights