President Obama’s recent approval of the federal budget on November 2, 2015 enacted a provision that will increase Occupational Safety and Health Administration (OSHA) civil penalties by as much as 75-80% over current amounts starting next year. This has the potential to significantly impact some employers, especially those in construction and manufacturing.
A section of the federal budget bill entitled the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015” (yes, that is the actual name) requires OSHA to begin indexing its civil penalties to inflation. Until now, OSHA was exempt from legislation requiring other federal agencies to adopt inflation-adjusted penalty increases. That exemption has now been lifted, and as a result, employers can expect a substantial increase in OSHA penalty amounts. Here’s a brief look at the current penalties, and expected increases:
- Other Then Serious Violation (discretionary penalty) – $7,000 to $12,500
- Serious Violation – $7,000 to $12,500
- Willful Violation – $70,000 to $125,000
- Repeat Violation – $70,000 to $125,000
These are only estimates, and it is possible that OSHA will implement smaller increases, but the Act does require the agency to go through the formal rulemaking process to do so - which is a purposeful disincentive to keep the agency from taking that route.
Importantly, because OSHA’s penalties have been stagnant since the ‘90’s, the provision includes a “catch-up adjustment” procedure allowing OSHA to implement the penalty increase through an interim final rule. OSHA thus could bypass the formal rulemaking process, which otherwise would subject the adjustments to public notice and comment before finalization. The bypass would also significantly speed up the process for implementing the revised penalty amounts. Instead, the rule would be immediately effective upon publication. Further, the procedure requires the increase to take place by August 2016, so employers can expect the change to occur at that time.