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Why Amazon's latest labor fines come out to only $60K

Amazon (AMZN) was cited for labor violations by the Occupational Safety and Health Administration (OSHA) this week.

The violations centered on the company's warehouses in three different states – Florida, Illinois, and New York – and OSHA leveled a fine of $60,269, saying that workers are exposed to "ergonomic hazards," which facilitate injuries that affect workers' musculoskeletal systems like sprains and tears.

In December, OSHA also fined Amazon $29,008 for violations that included 14 record-keeping violations like "failing to record injuries and illnesses, misclassifying injuries and illnesses, not recording injuries and illnesses within the required time, and not providing OSHA with timely injury and illness records."

That brings Amazon's OSHA fines of the last month or so to an underwhelming $89,277.

Of course, fines like these are high if you're running a small business, but this is Amazon we're talking about. The e-commerce behemoth reported Q3 2022 revenue of about $127.1 billion and, in 2021, the company's annual net revenue shakes out to $469.82 billion.

So, I don't know about you, but I looked at that number and went, well, why?

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The answer, as it turns out, has nothing to do with Amazon and lies in how OSHA fines are structured, experts say. To start, it all goes back to the Occupational Safety and Health Act of 1970, often called the OSH Act.

"The OSH Act, the federal law that OSHA enforces, only allows OSHA to impose very low penalties for companies like Amazon," said Harvard Law School professor Sharon Block. "The penalties under the OSH Act, like so many worker protection statutes, are woefully inadequate."

Additionally, OSHA fines are calculated per violation, rather than by day – as is the case for Environmental Protection Agency fines – or even by fatality, said Nellie Brown, CIH, Director of Workplace Health and Safety Programs at Cornell University.

An employee works inside Amazon's JFK8 distribution center in Staten Island, New York, U.S. November 25, 2020.  REUTERS/Brendan McDermid.
An employee works inside Amazon's JFK8 distribution center in Staten Island, New York, U.S. November 25, 2020. REUTERS/Brendan McDermid.

"It can be more expensive to have a record-keeping violation than to kill people because those record-keeping violations can be for each missing item and can simply pile up faster," she said. "You can see some pretty nasty things happen and it'll seem like a slap on the wrist. No doubt, there are some who shrug this off as a cost of doing business."

Amazon's relationship to its warehouse workers has been in the spotlight over the last year in more ways than one, as the company's also been in the crosshairs of a labor push that's garnered significant media attention. To that end, the Amazon Labor Union (ALU) recently even won certification for its historic April victory at a Staten Island, N.Y. warehouse, dubbed JFK8, though the company is appealing the decision.

How serious are these violations?

These violations certainly carry weight and aren't exactly run-of-the-mill, said Block.

"What's unusual about these citations is where they came from – they represent a collaboration between OSHA and the Justice Department," she said. "That shows the seriousness of the situation at Amazon."

Brown agrees, citing OSHA's clear focus on Amazon and limited resources.

"You have to realize that OSHA doesn't have a huge number of inspectors," she said. "In other words, they have to manage their time. As a result, you're going to find that most workplaces and companies will never experience an inspection at all."

However, there's a catch – at the center of these violations is OSHA's claim that Amazon's system is "ergonomically hazardous," that employees working in an Amazon facility are especially likely to get sprains, tears, strains, and back injuries. Here's the problem – there's no national regulation in place on these kinds of ergonomic risks, said Brown. That limits the extent to which companies can be held accountable for the frequency or severity of these types of injuries.

So, though the less-than-$90,000 bill Amazon's racked up to date is unimpressive, it's this lack of an ergonomics standard that can limit how OSHA calculates citations. It also means that employers can try to negotiate with OSHA to reduce a fine or challenge its validity.

For its part, Amazon says that it's already taken steps to improve working conditions in its warehouses and will continue to do so.

"Over the last several months we’ve demonstrated the extent to which we work every day to mitigate risk and protect our people, and our publicly available data show we’ve reduced injury rates nearly 15% between 2019 and 2021," Amazon spokesperson Kelly Nantel said in a statement. "What’s more, the vast majority of our employees tell us they feel our workplace is safe. We look forward to sharing more during our appeal about the numerous safety innovations, process improvements, and investments we’re making to further reduce injuries."

Amazon has 15 days from their citation to contest the findings.

Looking ahead, Block expects to see OSHA and other government agencies continue to pursue investigations at Amazon.

"I believe that we will continue to see OSHA and the Justice Department look out for Amazon workers," said Block. "Both OSHA and the Justice Department have put Amazon on notice that they aren’t going away as long as Amazon doesn’t change its treatment of workers. It's great to see that coordination."

Amazon is set to report its Q4 2022 earnings on Feb. 2.

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.

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