For the first time since 1990, the Occupational Safety and Health Administration (OSHA) has been authorized to increase its civil penalties. The provision was inserted into the expansive Bipartisan Budget Act of 2015, which was signed this month by President Barack Obama.
OSHA is authorized to conduct workplace inspections and investigations to determine whether employers are complying with standards issued by the agency for safe and healthful workplaces. The ten most frequently cited violations involve safety requirements for fall protection, hazard communication, scaffolding, respiratory protection, powered industrial trucks, lockout/tagout, ladders, electrical wiring, machine guarding, and electrical systems design.
Section 701, entitled the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015,” permits OSHA to increase its civil penalties, following a one-time “catch up adjustment” in 2016. The increases, which are expected to be significant, will be calculated based on the Consumer Price Index (CPI) between 1990-2015. While the law provides that the maximum adjustment must be capped at 150 percent, most reports indicate that because the catch up adjustment cannot exceed the rate of inflation from 1990 through 2015, the increase will most likely be approximately 80 percent.
Based upon the “CPI Inflation Calculator” from the Bureau of Labor Statistics website, the maximum allowable OSHA fines beginning next year are estimated to increase as follows:
- “Other Than Serious” citations — where there is a direct relationship to job safety and/or workplace health, but it is unlikely to result in death or serious bodily injury — have a current maximum fine of $7,000, but are expected to increase to approximately $12,500 each;
- “Serious” citations — where there was a death or serious bodily harm and the employer knew or should have reasonably known about the hazard — have a current maximum fine of $7,000, but are expected to increase to approximately $12,500 each;
- “Willful” citations — where an employer knows it is in violation of OSHA standards and is aware of the hazardous condition, and makes no reasonable effort to remedy the condition — have a current maximum fine of $70,000, but are expected to increase to approximately $125,000 each; and
- “Repeat” citations — where an OSHA standard is violated after the initial charge for the same or similar breach — have a current maximum fine of $70,000, but are expected to increase to approximately $125,000 each.
The Act will be adjusted through an interim final rulemaking, and the adjustment will go into effect by August 2016. Additionally, the Act mandates annual inflation increases for OSHA penalties going forward. Starting in January 2017, OSHA will be required to publish these fine increases by January 15th of each year. The annual adjustments will not require formal rule-making.
It is highly recommended that employers implement, review, and update safety and compliance regimens now, so that they are well established prior to the upcoming increases.