Cease-Fire in War Between OSHA and Dollar Tree

OSHA has reached an agreement with one of the country’s leading health and safety violators. For the second time in less than a decade. Will it work this time?

All-out warfare between OSHA and one the country’s largest corporations doesn’t benefit anyone — especially the workers who continue to be exposed to hazards while the company refuses to comply with its legal obligation to ensure a safe workplace.

Such has been the story of OSHA vs. Dollar Tree. Hopefully until yesterday

Dollar Inc. is a huge company that operates more than 16,000 Dollar Tree and Family Dollar locations in 48 states and five Canadian provinces, employing more than 193,000 employees. The company is also infamous for ignoring OSHA standards and endangering its workers with blocked aisles and emergency exits, blocked electrical panels, unsafe walking/working surfaces, dangerously stacked shelves and blocked or locked fire escapes — bringing back memories of the fatalities caused by locked and inaccessible exit doors in the 1911 Triangle Shirtwaist fire and the 1991 fire in the Imperial chicken processing plant in Hamlet, N.C. which  killed 25 workers.

OSHA has cited the company over 300 times since 2000, amounting to almost $22 million in penalties. Yet those penalties seemed to have little impact.

The resulting pattern: Dollar Tree violates, OSHA inspects, OSHA cites, Dollar Tree pays (or contests), Dollar Tree violates. Rinse and Repeat.

Dollar Tree reported a gross profit of $7.7 billion in 2021 — almost 13 times OSHA’s annual budget. So OSHA penalties — even those reaching into the hundreds of thousands of dollars — don’t have much of an impact on their bottom line. And there is no way that OSHA can inspect more than a handful of the company’s 16,000 locations in any given year.

The health and safety problems in the stores seems integral to the company’s business plan, according to Time Magazine’s Alana Semuels:

In some ways, the business model of dollar stores makes it difficult to comply with OSHA regulations. Stores are relatively small, compared to a Walmart or Target, and are low on both storage space and workers to save money. When new goods come in, there’s nowhere to put them and no one to unpack them, leading to tall stacks that endanger workers.

Cry me a river. But such problems aren’t limited to companies with small stores. In recent years OSHA has also signed CSA’s with Target and Walmart addressing similar issues.

The resulting pattern: Dollar Tree violates, OSHA inspects, OSHA cites, Dollar Tree pays (or contests), Dollar Tree violates. Rinse and Repeat.

OSHA’s frustration with Dollar Tree has been clear in the agency’s press releases over the last several years. This from a 2022 press release:

Since 2017, the U.S. Department of Labor’s Occupational Safety and Health Administration and state OSHA programs have conducted more than 500 inspections at Family Dollar and Dollar Tree – operated by their parent company, Dollar Tree Inc. – and found more than 300 violations. During these inspections, OSHA routinely find exit routes, fire extinguishers and electrical panels dangerously obstructed or blocked; unsafe walking-working surfaces; and unstable stacks of merchandise.

Following the Ohio inspections, OSHA proposed penalties of $1,233,364 for multiple violations.

“Family Dollar and Dollar Tree stores have a long and disturbing history of putting profits above employee safety,” said Assistant Secretary for Occupational Safety and Health Doug Parker. “Time and time again, we find the same violations – blocked or obstructed emergency exits and aisles, boxes of merchandise stacked high or in front of electrical panels and fire extinguishers. Each hazard can lead to a tragedy.”

And a more recent, 2023 press release announcing a $294,000 penalty against Dollar Tree in Rhode Island:

For the third time in three months, the U.S. Department of Labor’s Occupational Safety and Health Administration has cited one of the nation’s largest discount retail chains, Dollar Tree Inc. for allowing hazardous conditions at one of its Rhode Island stores, this one in Coventry.

Unfortunately, a small, underfunded agency like OSHA has few tools to deter a large company with thousands of locations across the country from wantonly breaking the law. Criminal penalties under the Occupational Safety and Health Act can’t be used in these situations (unless a willful violation causes a worker’s death.)  And, as former OSHA head Dr. David Michaels observed: “These fines are among the highest in OSHA’s history, and they are still not having the desired impact. If employers can look at a fine and say, ‘that’s not going to impact us,’ they have little incentive to make a change.”

Truce

But the stigma of constant OSHA citations, if not the actual amount of penalties, seems to be having an effect on Dollar Tree.

Yesterday, OSHA and Dollar Tree signed off on a corporate-wide settlement agreement that

requires Dollar Tree and Family Dollar to conduct a comprehensive, nationwide assessment of the root causes of the violations OSHA has repeatedly cited at multiple stores, with a plan to identify causes and make operational changes to correct them within a two-year period. In the meantime, to ensure prompt abatement of any future violations related to blocked exits, access to fire extinguishers and electrical panels, and improper material storage at stores nationwide, the companies must correct hazards — within 48 hours of OSHA notifying them — and later submit proof the hazards were corrected. Failure to do so subjects the companies to monetary assessments of $100,000 per day of violation, up to $500,000, as well as OSHA inspection and enforcement actions.

Dollar Tree has also agreed to pay $1.35 million in penalties to settle existing contested as well as open inspections of similar alleged violations.

“These fines are among the highest in OSHA’s history, and they are still not having the desired impact. If employers can look at a fine and say, ‘that’s not going to impact us,’ they have little incentive to make a change.” — Dr. David Michaels

Corporate Wide Settlements (CSAs) are legal agreements reached between OSHA and employers that have shown a pattern of non-compliance or have similar OSH Act violations at multiple establishments or worksites.  They come in especially handy in situations like this, where OSHA doesn’t have the capacity or resources to address problems in all of a company’s facilities, and the company seems interested in addressing their health and safety issues.  In return for companies offering measures that go above and beyond OSHA requirements, OSHA agrees to a somewhat modified enforcement procedure and resolution of outstanding enforcement actions.  (A list of all OSHA CSAs can be found here.)

You can read the details of this agreement here. But basically, if OSHA receives a report of a violation of any of the “covered standards” (fire exits, housekeeping, fire extinguishers, emergency access, walking working surfaces or access to electrical panels), OSHA notifies the company which then has 48 hours to fix the problem and send photographic or video proof to OSHA. Failure to abate can result in penalties of $100,000 per day of violation, up to $500,000. OSHA can conduct “monitoring inspections” of the covered hazards without issuing violations, but any other hazards (e.g. chemical spills) that are “in plain view” would be treated as normal violations subject to regular inspections and penalties.

The theory is that the stores find and fix their problems with fewer OSHA resources going into oversight of the company.

Dollar Tree will also form safety advisory groups with extensive employee representation (although Dollar Tree is not unionized), enhance hazard identification and control programs, develop an audit program, create a new employee training program, hire additional safety professionals and set up a 24-hour safety hotline.

In addition,

• OSHA can choose to bypass the special enforcement procedures if there is a death, hospitalization, amputation, loss of an eye, imminent danger, or if they get a referral from a fire or law enforcement officials.
• The recommendations laid out in the root cause assessment and selected by Dollar Tree to address the problems must be completed within two years.
• If there is a report of a violation of one of the covered standards, Dollar Tree must also investigate all other stores in the same District to determine whether any similar conditions identified
• The agreement with a summary of its contents, including the actions they have agreed to take must be posted in the stores.
• Dollar Tree must implement a policy “prohibiting adverse actions, discrimination, and retaliation” against any employee who makes a complain or raises concerns about non-compliance with the agreement, or who exercises their rights under the agreement or the OSHAct, or files a complaint.

A Few Problems

So far, so good.

There are a few problems with the agreement, however.

• OSHA also signed a corporate-wide settlement agreement with Dollar Tree in 2015 that included third-party monitor to audit 50 company stores, internal inspections of  a cross section of its stores, a toll-free number for employees to  anonymously report safety and health issues, and periodic progress reports and monitoring inspections to ensure terms were being met. The improvements were temporary. The number of Dollar Tree violations in federal OSHA states dropped by about half during the two years of the agreement, but then rose to five times that number during the two years following expiration of the CSA. Will the current CSA result in long term improvements?
• The CSA covers only the 10,000 Dollar Tree and Family Dollar stores within federal OSHA jurisdiction, but doesn’t cover Dollar Tree operations in the 21 state plan states. Over the past two years, 244 out of 431 total Dollar Tree inspections took place in state plan states. Washington State alone conducted 44 inspections, Oregon 36, California 26 and Virginia 21 inspections.  The agreement states only that “OSHA will notify State Plan States of this Agreement.” The 2015 Dollar Tree CSA, on the other hand, stated that “OSHA will notify and encourage these State Plan States to honor or agree to the terms of this SA.” [Emphasis added]  While federal violations dropped during the 2-year period of the 2015 CSA, the number of state plan violations against Dollar Tree doubled during that time, despite federal “encouragement.”
• Dollar Tree must provide a copy or summary of the comprehensive, nationwide assessment of the root causes of the violations to OSHA, but the report may otherwise be kept confidential.
• There is no provision ensuring that callers to the 24-hour safety hotline will remain anonymous.
• The agreement provides for an Enhanced Corrective Action Program for “safety violations that includes “identification of safety violations that will, if warranted by investigation, result in immediate termination” and a “new discipline policy.”  Provisions like this always make me nervous, despite the above-mentioned anti-retaliation protections.  Managers already have the ability to discipline employees for safety violations, so I’m not sure why this language is necessary.  It seems to give managers an excuse to use safety and this CSA as a pretext to fire troublesome employees and then claim “OSHA made me do it.” No such language appeared in the 2015 Dollar Tree CSA nor any other recent CSAs listed on OSHA’s website.

The CSA doesn’t cover Dollar Tree operations in the 21 state plan states

What’s With This Industry?

This agreement only applies to Dollar Store (and Family Dollar), which is a different company than Dollar General which is not part of this settlement. Dollar General has had the same problems — and OSHA has the same frustrations.

“Years of OSHA inspections that have identified systemic hazards makes it clear that Dollar General values profits more than the safety of the people who work in their stores,” OSHA regional administrator Kurt Petermeyer said, in a statement. “They are well aware of federal requirements, but they continue to ignore their legal responsibilities to protect their employees at stores throughout the nation.”

 Just from from Feb. 1, 2022, through March 13, 2023, 27 Dollar General store OSHA inspections in Alabama, Florida and Georgia resulted in a total of nearly $8.5 million in penalties. Dollar General has been assessed $21 million in OSHA penalties since 2017 for workplace safety problems.

In addition to unsafe conditions, employees are at Dollar Store and Dollar General on the low end of the nation’s pay scale:

The stores typically operate with lean staffing, and their employees, by some measures, are paid at the bottom of the retail industry’s scale. According to a survey by the Economic Policy Institute, a liberal think tank, 92 percent of Dollar General workers earn less than $15 an hour, lower than many other companies surveyed, including Burger King, Walmart and Dunkin’. About 20 percent of Dollar General workers earn less than $10 an hour.

But that’s good news for the companies’ shareholders:

At the same time, the company is highly profitable. In December, Dollar General said its quarterly operating profit had increased about 10 percent from a year earlier while net sales had increased 11 percent, to $9.5 billion. Dollar Tree, which also owns the Family Dollar chain, is posting strong results as well. On Wednesday, Dollar Tree said its profit in fiscal year 2022 increased 23 percent to $2.2 billion and net sales rose 7.6 percent to $28.3 billion.

More than one-third of all stores that opened in the United States in 2021 and 2022 were dollar stores.

Time Magazine’s Semuels reported on a few other problems at Dollar Tree earlier this year.

In 2021, FDA inspectors found 1,100 dead rodents “in various states of decay” in a Family Dollar distribution center in Arkansas, prompting recalls in stores across six states. Or that Dollar Tree has run aggressive anti-union campaigns in stores that have tried to organize, closing a Missouri location where workers voted to join a union and shelling out tens of thousands of dollars to convince a handful of workers at a Connecticut location to vote no in a union drive.

The company has also paid $114,638,768 in employment-related offenses since 2000. These include wage and hour violations and violations of employment discrimination laws.

OSHA Assistant Secretary Doug Parker stated that “These are entirely preventable violations and hazards. And it’s the employer’s … responsibility, to keep these workers safe. These improvements will not happen overnight, but this agreement will create a pathway for significant investment by the company to put in place controls that we believe will make workers safer.”

Let’s hope that this time around, that pathway becomes a superhighway.