On November 2, 2015, President Obama signed the bipartisan budget bill which permits OSHA to institute a “catch-up adjustment” effective August 1, 2016. The increase that starts on August 1, 2016 and the subsequent annual adjustments for which the bill provides are to be based upon the Consumer Price Index (“CPI”).
The big question is what the exact amount of the “catch-up adjustments” will be. Apparently, the CPI is approximately 80% higher than it was back in 1990, which is when OSHA penalties were last increased. However, this first increase in OSHA penalties could be much higher than 80% because the Act sets the “maximum adjustment” at 150% of the current penalty structure. Thus, the potential penalty structure for maximum fines could be as follows:
- Other than serious: $12,600-$17,500. The maximum is currently set at $7,000.
- Serious: $12,600-$17,500. The maximum is currently set at $7,000.
- Repeat: $126,000- $175,000. The maximum is currently set at $70,000.
- Willful: $126,000-$175,000. The maximum is currently set at $70,000.
This first increase is not the end of it. The budget bill also requires OSHA to annually increase the monetary penalties based upon the percentage increase in the CPI from the previous year. As a result, every January 15 OSHA will set new penalty amounts; and thus, employers need to pay attention.
OSHA’s increased penalties are intended to increase employers’ attention to the safety regulations by putting some teeth back into the monetary penalties. Regardless of the penalty increases, employers need to be prepared for OSHA to show up at their door and be prepared to handle an OSHA inspection. It has been easy in the past for employers to accept OSHA citations when the dollar amounts are reduced. However, with the increase in the penalty structure, a repeat violation can be quite devastating to a company. An employer may be cited for a repeat violation if that employer has been cited previously for a substantially similar condition and the citation has become a final order. The new citation has to be issued within 3 years of the final order of the previous citation or 3 years from the final abatement date of the citation, whichever is later.
Look over your safety manuals, make sure your employees are trained and be prepared for a work accident, an employee complaint to OSHA or even a programmed OSHA inspection. Know beforehand how you will handle an OSHA inspection. Also, don’t be too quick to settle an OSHA case even now before the new penalty structure goes into place, since a possible repeat violation will have much more punch to it after August 1, 2016. If you aren’t careful, an OSHA violation that you thought was a “good deal” from OSHA can rear its ugly head again in the next three years and result in a single OSHA citation that could amount up to $175,000.
If you have any questions about the OSHA penalty adjustments, how to handle an OSHA inspection or how to comply with OSHA’s regulations, please do not hesitate to give me a call.