Legal Update: OSHA Penalties Increase by 78%
In 1970 the Occupational Safety & Health Administration (OSHA) was created to assure safe and healthy working conditions by providing education and training to employers and employees, setting and enforcing workplace safety standards, and issuing citations and penalties to employers who don’t comply with those standards.
Since 1996, most federal agencies have been allowed to make inflation adjustments to their statutory penalties at least once every four years. But OSHA did not have that authorization. Its penalties were last increased in 1990, when the maximum penalty for willful violations was increased from $10,000 to $70,000 and the maximum penalty for other violations was increased from $1,000 to $7,000.
In 2015, as part of the federal budget act, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 authorized federal agencies to make yearly inflation adjustments and also allowed OSHA to adjust its penalties. In addition to authorizing yearly inflation adjustments, the 2015 Act allows federal agencies to increase penalties with an initial “catch-up” adjustment through interim final rulemaking. An Executive Office of the President OMB memorandum explains that catch-up adjustments are based on the percentage change between the Consumer Price Index for all Urban Consumers (CPI-U) in October of 2015 and the CPI-U in October of the year that the civil penalty was last adjusted. For OSHA, the increase percentage was based on the October 1990 CPI-U.
As its catch-up adjustment, OSHA has raised its maximum penalties for willful or repeat violations, which currently range from $5,000 to $70,000, to a range of $8,908 to $124,709. The maximum penalties for other violations increase from $7,000 to $12,471 per violation. The new penalties are effective August 1, 2016.
OSHA’s Penalty Adjustments news release states that “OSHA recognizes that the increased penalties may impact smaller businesses disproportionately, and will continue to provide penalty reductions based on the size of the employer and other factors.”
In testimony before a US Senate subcommittee in 2016, Deputy Assistant Secretary of Labor Jordan Barab noted that 13 people a day die in the United States from workplace fatalities, while 150 a day die from hazardous workplace conditions such as job-related injuries, illnesses, and occupational diseases.
“OSHA recognizes that most employers want to keep their employees safe and protect them from workplace hazards,” said Mr. Barab. “But there are still far too many employers that knowingly cut corners on safety and neglect well recognized OSHA standards and common sense safety measures. For these employers, avoiding OSHA penalties remains an effective incentive to comply with the law and protect their employees.”
In a Department of Labor (DOL) news release about the new penalty adjustments, US Secretary of Labor Thomas E. Perez said that “Civil penalties should be a credible deterrent that influences behavior far and wide. Adjusting our penalties to keep pace with the cost of living can lead to significant benefits for workers and can level the playing field [for] responsible employers who should not have to compete with those who don’t follow the law.”
The DOL noted that the Inflation Adjustment Act provides a clear formula for adjustment of the civil penalties, leaving little room for discretion. However, the DOL will accept public comments on the rule until August 15, 2016 .
Past Attempts to Raise Penalties
Since 2004, various Protecting America’s Workers Act (PAWA) bills were proposed in Congress to increase OSHA’s penalties and to expand OSHA’s coverage to include federal, state, and local employees, but the bills weren’t passed.
Dr. David Michaels, Assistant Secretary of Labor for Occupational Safety and Health, speaking to a Senate committee in support of the 2009 PAWA legislation, said that “Congress has increased monetary penalties for violations of the OSH Act only once in 40 years despite inflation during that period. As a result, unscrupulous employers often consider it more cost effective to pay the minimal OSHA penalty and continue to operate an unsafe workplace than to correct the underlying health and safety problem. ”
Five years later, Dr. Michaels was still pressing for increases. Testifying before a House subcommittee in 2015 in support of another PAWA bill, Dr. Michaels compared OSHA penalties to penalties under other statutes, saying that “the Environmental Protection Agency can impose a penalty of $270,000 for violations of the Clean Air Act and a penalty of $1 million for attempting to tamper with a public water system. Yet, the maximum civil penalty OSHA may impose when a hard-working man or woman is killed on the job—even when the death is caused by a willful violation of an OSHA requirement—is $70,000.”
Effect on Ongoing Investigations
OSHA’s Penalty Adjustments Release and the US Department of Labor’s Fact Sheet on Inflation Adjustment Act Interim Final Rules state that the higher penalty amounts apply to penalties imposed after August 1, 2016, for violations that occurred after November 2, 2015.
State OSHA Penalties
OSHA’s adjustment under the 2015 Act applies to states regulated by the federal Occupational Safety and Health Act. OSHA’s Penalty Adjustments Release notes that states with their own plans are required to adopt maximum penalty levels that are at least as effective as federal OSHA’s.
The DOL Provides Assistance to Employers and Workers
OSHA’s compliance assistance specialists provide information to employers and workers about OSHA standards and resources. In addition, OSHA’s on-site Consultation Program offers free, confidential advice to small and medium-sized businesses. On-site consultation services are separate from enforcement and don’t result in penalties or citations.
Other Penalties Increased
The DOL increased other penalties in addition to the OSHA penalties. For instance, the Wage and Hour Division’s penalty for willful violations of the minimum wage and overtime provisions of the Fair Labor Standards Act increased from $1,100 to $1,894.
Other federal agencies have also increased penalties as a result of the 2015 Act. The Equal Employment Opportunity Commission recently raised the penalty it imposes on employers who fail to post the Equal Employment Opportunity is the Law poster. The Department of Justice raised its penalties for violations of, among other laws, the False Claims Act, the Americans with Disabilities Act, and the Immigration Reform and Control Act.