For the second time in six months, the Department of Labor and the Occupational Safety and Health Administration have raised penalties for employment law violations pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Inflation Adjustment Act). These increases were made with the intention of incentivizing companies to comply with the existing regulations.
2016 Civil Penalty Increases:
On November 2, 2015, Congress passed the 2015 Inflation Adjustments Act, with the intention of modernizing monetary penalties that had lost their deterrent impact over time. This regulation directed Federal Government Agencies to review the history of their monetary penalties, determine the last time that such penalties were increased, and publish new interim final rules adjusting their penalties for inflation. Per the new regulation, inflated increases could not exceed more than 150% of the existing penalty. On July 1, 2016, OSHA published an Interim Final Rule that detailed the increased level of civil monetary penalties. Since the consumer price index had 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. All citations issued by OSHA after August 1, 2016, were subject to the new penalties, unless the violation occurred before November 2, 2015.
New 2017 Civil Penalty Increases:
On January 18, 2017, the DOL once again increased its monetary penalties. A few examples of increased penalties include:
OSHA Penalty Increases:
- Willful or repeated violations: In 2016, OSHA’s maximum penalty for repeat violations increased from $70,000 to $124,709. In 2017, OSHA’s maximum penalty for willful or repeat violations increased from $124,709 to $126,749, as reflected in 29 C.F.R. §1903.15(d)(1-2). The minimum penalty for willful or repeat violations was increased from $8,908 to $9,054.
- Citation for serious violation: In 2016, OSHA’s maximum penalty for serious violations increased from $7,000 to $12,471. In 2017, OSHA increased the maximum penalty for serious violations from $12,471 to $12,675, as reflected in C.F.R. §1903.15(d)(3).
- Citation for violation determined not serious: In 2016, OSHA’s maximum penalty for non-serious violations increased from $7,000 to $12,471. In 2017, OSHA’s maximum penalty for non-serious violations increased from $12,471 to $12,675, as reflected in 29 C.F.R. §1903.15(d)(4).
- Failure to correct violation: In 2016, OSHA’s maximum penalty for employers who failed to correct a violation for which a citation had been issued under Section 9(a) of the OSH Act of 1970 (29 U.S.C. 666) within the permitted period, were increased from $7,000 per day to $12,471 per day. In 2017, this penalty increased from $12,471 to $12,675 per day, as reflected in 29 C.F.R. §1903.15(d)(5).
- Failure to follow posting requirements: In 2016, OSHA’s maximum penalty for failing to follow the mandatory posting requirements increased from $7,000 to $12,471. In 2017, OSHA’s maximum penalty for failing to follow the mandatory posting requirements increased from $12,471 to $12,675, as reflected in 29 C.F.R. §1903.15(6).
Other Noteworthy Penalty Increases:
- Fair Labor Standards Act (FLSA) Minimum wage and overtime: In 2016, the DOL increased the penalty for willful or repeated violations from $1,100 to $1,894 per violation. In 2017, this penalty increased from $1,894 per violation to $1,925 per violation, as reflected in 29 C.F.R. §578.3.
- Family Medical Leave Act (FMLA) posting requirement: In 2016, this penalty was increased from $110 to $163 for each separate offense. In 2017, this penalty increased from $163 to $166 for each separate offense, as reflected in 29 C.F.R. §825.300.
- Employee Retirement Income Security Act (ERISA): In 2017, the penalty for failing to provide a summary of benefits and coverage to affected individuals increased from $1,632 per day for each separate recipient to $1,659, as reflected in 29 C.F.R. §2575.2.
- H-1B Visa Program: The penalty where an employer had displaced a U.S. worker in the period beginning 90 days prior to the filing of an H-1B petition and extending until 90 days after the filing of such a petition, in conjunction with certain specified willful violations, has been increased from $35,000 to $50,578 per violation, as reflected in 29 C.F.R. §655.810(b)(3).
The 2017 penalty increases are applicable to civil penalties assessed after January 18, 2017, for violations that occurred after November 2, 2015, the date of the Inflation Adjustment Act’s enactment.
What these Penalty Increases Mean for Businesses:
The days of viewing OSHA and other employment-related fines as a small part of the cost of doing business are over. 2016’s increased penalties had an enormous financial impact on smaller businesses and those businesses that failed to prioritize the implementation of proper procedures. The 2017 increases are indicative of the DOL’s intentions to encourage compliance through increasing monetary penalties, and it is anticipated that these penalties will increase again in 2018.