For the first time in 25 years, the Occupational Safety and Health Administration (OSHA) is poised to increase the civil monetary penalties issued for violations of OSHA’s health and safety regulations.
On November 2, 2015, President Obama signed the Federal government’s bipartisan budget bill, permitting OSHA to issue a “catch-up adjustment” to be effective August 1, 2016, and subsequent annual adjustments based on the Consumer Price Index (CPI).
While the exact amount of the “catch-up adjustment” remains unknown, it is believed that the initial “catch up” will reflect the approximate 80 percent increase in the CPI from 1990 (the date of the last penalty increase) to the present.
The Office of Management and Budget’s memorandum, Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, provides details about the mandated penalty increase.
However, the initial “catch-up adjustment” could be much more than the expected 80 percent because the Act sets the “maximum adjustment” at 150 percent of the current penalty structure. Thus, if OSHA were to get “creative” with its math, the penalties could increase to $17,500 for Other Than Serious and Serious violations and $175,000 for Repeat and Willful violations.
The budget bill requires OSHA to annually increase the penalties based on the percentage increase of the CPI. In other words, employers will have to monitor OSHA every January 15th to determine whether there has been an increase.
The dramatic increase in OSHA’s monetary penalties is further evidence of OSHA’s intent to increase enforcement and punish perceived “bad employers.” Accordingly, employers should reconsider how they handle OSHA inspections and citations.
Additionally, should an employer accept an “Other Than Serious or Serious” citation at a reduced penalty, the employer must also be aware that any citation accepted by an employer can be used as a basis for a Repeat or Willful citation in the future, but at a much higher cost.