Since 1990, penalties for violations of the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651-678 (OSH Act) have remained the same. However, two important developments in the winter of 2015 have put a spotlight on OSH Act enforcement. Due to these developments, all construction industry employers, whether developers, contractors, subcontractors, materialman or otherwise, should review their worker safety policies and procedures to place a renewed emphasis on worker safety. Otherwise, the risks have increased to a level that could be disastrous.
Statutory Framework for Enforcement of Recent Changes
On November 2, 2015, President Obama signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114– 74, 701. The Act requires federal agencies to adjust their civil money penalties to reflect the increase in inflation and cost-of-living beginning August 1, 2016. The Act rescinded an exemption that previously disallowed inflationary adjustments for violations of the OSH Act. As of August 1, 2016, OSHA has adjusted the level of civil money penalties through an initial “catch-up adjustment.” OSHA is further mandated to adjust its penalties annually for inflation. States that have assumed responsibility for development and enforcement of their own occupational safety and health standards must increase their penalties so that they are at least as effective as federal penalties.
On July 1, 2016, OSHA published an Interim Final Rule, which details the increased level of civil money penalties. Since the consumer price index has risen roughly 80 percent since 1990, the last time OSH Act penalties were adjusted, OSHA has increased the civil penalties for OSH Act violations by 78 percent. Any citations issued by OSHA after August 1, 2016 will be subject to the new penalties, unless the violation occurred before November 2, 2015. All employers should be aware of the following adjustments to the civil penalties for OSH Act violations that became effective on August 1, 2016:
- Willful or Repeated Violations – The maximum penalty for willful or repeated violations has increased from $70,000 per violation to $124,709 per violation. The minimum penalty has increased from $5,000 to $8,908.
- Serious and Other-than-Serious Violations – The maximum penalty for serious violations and violations that are determined not to be serious has increased from $7,000 per violation to $12,741 per violation.
- Failure to Abate – The maximum penalty for failure to correct a violation(s) for which a citation has been issued has increased from $7,000 per day beyond the abatement date to $12,471 per day beyond the abatement date.
A New Focus on Criminal Prosecution
On December 17, 2015, the U.S. Department of Justice (DOJ) and U.S. Department of Labor (DOL) issued a memorandum of understanding for criminal prosecutions of worker safety laws, including the OSH Act. The memorandum of understanding is the most recent initiative by the DOJ and DOL intended to increase the frequency and effectiveness of criminal prosecutions under the OSH Act. The goal is to increase sanctions that corporate executives may face for violations of OSHA. As the Assistant Secretary for Occupational Safety and Health, Dr. David Michaels, noted, “strong sanctions are the best tool to ensure that low-road employers comply with the law and protect workers lives. More frequent and effective prosecution of these crimes will send a strong message to those employers who fail to provide a safe workplace for their employees.”
Under the new memorandum of understanding, the DOJ’s Environment and Natural Resources Division and U.S. Attorneys’ offices will work with OSHA to investigate and prosecute worker endangerment violations. While worker safety statutes generally provide for only misdemeanor penalties, the memorandum of understanding encourages prosecutors to charge employers with federal crimes under Title 18, such as obstruction of justice, conspiracy, false statements, and witness tampering, and environmental offenses, such as Clean Air Act violations, Clean Water Act violations, and Resource Conservation and Recovery Act violations. The memorandum of understanding tasks OSHA to cross train, coordinate, and share information with various other federal agencies, including the EPA. This initiative clearly allows for the government to turn a workplace safety investigation into a much broader examination of a company’s compliance with Federal laws and regulations.
What These Developments Mean for Employers
On September 17, 2015, the Bureau of Labor Statistics released its census of Fatal Occupational Injuries for 2014 and the results showed that the rate of fatal workplace injuries in 2014 was 3.3 per 100,000 full-time workers, the same as the final rate for 2013. These statistics, coupled with the developments regarding workplace safety enforcement, make it clear that the Federal government has a renewed interest on workplace safety.
The increased focus by the government on workplace safety necessarily means that there will likely be more OSH Act criminal prosecutions in 2016 and beyond. Employers should be additionally wary because, based upon the memorandum of understanding, the Federal government will be investigating more than just OSH Act violations, under certain circumstances. This brings into question not just employers OSH Act compliance but also its compliance with other environmental and workplace safety laws and regulations.
It also means an increased amount of money that employers will pay in civil penalties for OSH Act violations. In FY 2015, OSHA issued approximately $142 million in civil penalties. States issued an additional $73,000,000. Based on the increases in penalties, the amount of civil penalties will rise to $253 million and $130,000, unless the higher penalties have a significant deterrent effect.
With these new developments, employers should be extra diligent in ensuring that they remain in full compliance with all applicable OSH Act regulations. Further, to the extent an employer’s policies and procedures have not been updated recently, the employer should consider updating sooner rather than later.