For the first time in 25 years, the Occupational Safety and Health Administration (OSHA) is poised to increase the civil monetary penalties issued for violations of OSHA's health and safety regulations. On November 2, 2015, President Obama signed the Federal government's bipartisan budget bill, permitting OSHA to issue a "catch up adjustment" to be effective August 1, 2016, and subsequent annual adjustments based on the Consumer Price Index (CPI).1
While the exact amount of the "catch up adjustment" remains unknown, it is believed that the initial "catch up" will reflect the approximate 80 percent increase in the CPI from 1990 (the date of the last penalty increase) to the present. As such, assuming an 80 percent increase, the maximum monetary penalties for OSHA violations effective August 1, 2016 will be:
- Other Than Serious – $12,600 (increased from $7,000);
- Serious – $12,600 (increased from $7,000);
- Repeat – $126,000 (increased from $70,000); and
- Willful – $126,000 (increased from $70,000).
However, the initial "catch up adjustment" could be much more than the expected 80 percent, because the Act sets the "maximum adjustment" at 150 percent of the current penalty structure. Thus, if OSHA were to get "creative" with its math, the penalties could increase to $17,500 for Other Than Serious and Serious violations and $175,000 for Repeat and Willful violations.
Moreover, OSHA will not be finished after the initial "catch up adjustment." Rather, the budget bill requires OSHA to annually increase the monetary penalties based on the percentage increase to the CPI. In other words, employers will have to monitor OSHA every January 15 to determine whether an increase has been implemented and, if so, by how much.
The dramatic increase in OSHA's monetary penalties is further evidence of OSHA's intent to increase enforcement and punish perceived "bad employers." Accordingly, employers should reconsider how they handle OSHA inspections and citations. Moreover, should an employer accept an Other Than Serious or Serious citation at a reduced penalty, the employer must also be aware that any citation accepted by an employer can be used as a basis for a Repeat or Willful citation in the future, but at a much higher cost.