OSHA penalties increased on August 1, 2016, for the first time in 25 years. Here’s what you need to know about the new fees increase.
OSHA penalties increases became effective on August 1, 2016, making it more important than ever for business leaders to maintain compliance and avoid costly mistakes. This action represents the first penalty increase in more than 25 years for the regulatory agency and is in direct response to the 2015 Federal Civil Penalties Inflation Adjustment Act Improvements Act passed by Congress. In this legislation, Congress directs agencies to make adjustments to their penalty structure based on inflation, with 2016 being the “catch up” year and with an evaluation and adjustment every year thereafter.
States that operate their occupational safety and health plans are required to adopt the maximum penalty levels set by Federal OSHA.
How the Penalty Increase Compares to Previous Years
According to the Bureau of Labor and Statistics (BLS) Consumer Price Index (CPI) Inflation Calculator, the new maximum penalties of $12,471 per violation in 2016 compares to $6,773.24 in 1990 dollars — and $124,709 per violation for willful or repeated violation compares to $67,731.85 within the same period. In 1990, the maximum fines were set at $7,000 and $70,000 respectively.
If OSHA strictly followed the CPI calculator published by BLS, the $7,000 and $70,000 maximum penalties in 1990 would be set at $12,888.52 and $128,885.16 respectively today.
The legislation does allow OSHA to impose up to a 150 percent penalty adjustment. This means that OSHA could have raised the maximum penalties from $7,000 in 1990 to $17,500 in 2016 and from $70,000 to $175,000 respectively. Going beyond 2016, OSHA can only adjust the maximum penalty structure based on the percent increase to the CPI.
Are the Penalties Fixed?
When it comes to settling a fine, OSHA does have a policy of reducing penalties for small employers and those who demonstrate good faith. In the case of serious violations, OSHA may also reduce the penalty assessed based on the severity of the offense. An employer who is assessed as a willful violation is not eligible for a good faith penalty adjustment from OSHA. For further specifics, take a look at OSHA’s fact sheet, which details penalty adjustments and considerations.
What Does All of This Mean?
Be prepared—an encounter with OSHA can potentially be very costly for your business. OSHA is making the penalties for noncompliance significant to all employers. The agency is hopeful that the higher penalties will act as a deterrent against noncompliance.
It’s important to note that OSHA can use the employer’s acceptance of prior citations as the basis to issue a willful or a repeated citation; with that comes a potential $124,709 maximum fine per violation. This means that if an employer accepts a lower category citation and fine during negotiations, such as “other than serious,” OSHA may elect to issue a “willful” or “repeated” violation on a subsequent inspection if a “substantially similar condition” exists. Once a citation has become a final order of the Occupational Safety and Health Review Commission, it is a permanent record of your organization’s noncompliance with the law.
Make sure you understand the penalty adjustments and evaluation process to avoid costly mistakes.