Managing the risk of governmental and legal issues is becoming more difficult to business owners all across this country. In addition to compliance with the volumes of Occupational Safety Hazards Rules, the fines associated with violating these rules have now increased 78%. Today’s blog summarizes the background to the increase and the timing of the change.
On July 1, 2016, the Occupational Safety and Health Administration (OSHA) issued an interim final rule that increases the civil penalty amounts the agency may impose on employers that violate workplace safety and health standards.
The increased amounts will apply for penalties proposed by OSHA on or after August 1, 2016. These will include any penalties associated with violations that occurred on or after November 2, 2015.
The increases, which are based on inflation, reflect an initial catch-up adjustment to update penalty levels that have not changed in over 25 years. The adjustment resulted in penalties that are about 78 percent higher than the current levels.
Employers should become familiar with the new penalty amounts and review their health and safety policies to ensure compliance with all OSHA standards.
Employers that have undergone OSHA inspections on or after November 2, 2015, should be aware that the increased penalty amounts will apply to them if OSHA waits until August 1, 2016, or later to propose any applicable penalties.
Under federal law, most agencies are required to account for cost-of-living increases by annually adjusting the monetary amounts they may assess as civil penalties. Because OSHA was excluded from those requirements in 1996, OSHA’s penalty amounts have remained unchanged.
On November 2, 2015, however, OSHA became subject to the adjustment requirements under the Bipartisan Budget Act of 2015 (Act). The Act directed OSHA to make an initial “catch-up” adjustment through an interim final rule by July 1, 2016.
The Act also requires OSHA to make subsequent adjustments to the penalty amounts every year. The Office of Management and Budget must issue guidance for OSHA’s next increase by December 15, 2016.
On July 1, 2016, OSHA issued its interim final rule to implement the initial catch-up increases. The increased penalty amounts will become effective August 1, 2016, and may apply for any violations found by OSHA since November 2, 2015. For instance, the current maximum penalty for a violation other than a willful violation increases from $7,000 to $12,471. Willful and repeated violations will increase from $70,000 to $124,709.
The interim final rule also clarifies that OSHA-approved state plans must provide penalty amounts that are equal to or higher than those under the federal OSH Act. State plans must make the initial increased amounts effective within six months after publication of the interim final rule (Jan. 1, 2017).
After the initial catch-up amounts become effective on August 1, 2016, OSHA must update its maximum penalty amounts based on the Consumer Price Index each year. The first annual inflation adjustment will be allowed for 2017. OSHA is required to publish annual updates reflecting the annual increases. These updates must be published in the Federal Register by January 15 of each year.