A quiet bombshell: OSHA fines for workplace safety violations to rise for 1st time in 25 years
A "little-noticed" provision in the budget bill signed by President Obama this week raised federal U.S. Occupational Safety and Health Administration fines for workplace safety violations for the first time in 25 years, according to The Wall Street Journal. The measure — which brings penalties in line with inflation increases since 1990 — also requires future OSHA and state agency penalty hikes to continue to rise with inflation.
OSHA has not yet announced the exact increase, which could reach as much as an 80% bump. The agency must decide on the increase percentage by mid-2016. However, The Journal noted that despite the steep increase in fines, OSHA's penalties pale in comparison to those issued by other federal regulatory agencies.
Industry experts told The Journal they were "caught by surprise" by the provision, which would likely raise maximum penalties for the most severe violations from $70,000 to $125,000, and other serious violations from $7,000 to $12,500. They noted, however, that the maximum fines could be lower than the 80% increase after a rule-making process.
OSHA Authorized to Raise Civil Penalties for First Time in 25 Years
Because OSHA was in the past precluded by law from adjusting its civil penalty amounts, the first adjustment—to take effect no later than August 1, 2016—will be significant. Employers can expect OSHA civil penalty amounts to increase by at least 50%.
The Federal Civil Penalties Inflation Adjustment Act of 1990 required most Federal agencies to review and adjust their civil penalties once every five years. OSHA was excluded from this penalty-adjusting authority at the time. Observers of the Consumer Price Index (CPI)—a measure of inflation in the US—estimate that inflation since 1990 amounts to about 82%. OSHA penalties could rise at that rate if OSHA takes the most dramatic action allowed under the new bill.
Budget deal allows OSHA to dramatically increase fines
After 25 years at current levels, OSHA fines stand to jump as much as 82 percent according to provisions of the recently passed Federal Budget Agreement. Under the budget deal, which was passed by Congress and signed by the President on November 2, OSHA would be authorized to increase penalties for the first time since 1990.
According to Howard Mavity, a partner with the labor and employment law firm Fisher & Phillips, LLP, “The agreement requires OSHA to make a one-time ‘catch-up’ increase to compensate for more than two decades of no increases.” He explains that the catch-up increase cannot exceed the rate of inflation from 1990 through 2015, which is expected to be around 82 percent.
If the maximum catch-up increase is applied, the current highest fine of $70,000 for repeat and willful violations would exceed $125,000. And the current $7,000 maximum fine for serious and failure-to-abate violations would jump to $12,744. Once the catch-up is implemented, says Mavity, OSHA will then annually increase maximum penalties according to the rate of inflation for the prior fiscal year. In the past, OSHA fines have not risen with annual inflation.