The budget deal passed by Congress and signed into law by the President on November 2, 2015 contained provisions to raise spending caps and the debt limit as well as delay major budget battles until after the presidential election. Most importantly for our industries, the package also contained an essentially unnoticed provision that allows OSHA to increase fines starting August 1, 2016 for workplace safety violations.
This surprising provision outlines a process that permits the agency to increase penalties for the first time in 25 years. OSHA will be allowed to increase fines to “catch up” with inflation since 1990 by issuing by July 1, 2016, an “interim final rule,” which is typically a rule-making process that does not require an agency to invite public comment before a final decision is made. The rule would become effective by August 1 this year.
Also, starting in 2017, OSHA will be allowed to increase fines to keep up with inflation. The bill, importantly, does allow OSHA to select a lower fine increase if it chooses and the White House agrees. Whether this will occur, of course, remains to be seen.
The new law doesn’t say anything about the 28 states that run their own safety and health programs, and it’s early enough in the process that OSHA has not begun developing any guidance for the states. However, it’s anticipated that the new federal fine structure will be required by states so they will be at least as stringent in their own programs.
If OSHA implements the maximum increase allowed, which is the inflation rate from 1990 to 2015 as measured by the Consumer Price Index, then the penalty for violations would jump by over 80 percent. What that would mean is that fines for serious violations could increase from $7,000 to about $12,000.
The highest penalty amount – for repeat and willful violations – could increase from $70,000 to about $125,000. In the bigger picture, if this maximum increase were applied to OSHA fines for all US violations in fiscal year 2014, then this past year’s total OSHA nationwide penalties of $143.6 million would have increased to $261.4 million instead.
It’s useful to point out that OSHA is not required by the new provision to raise its penalties to the maximum, however, and the agency may use its discretion on amounts for individual citations.
*Allied does not deem this blog entry as a complete and thorough listing or overview of the above topic, and does not recommend it be primarily relied on. It only highlights some common issues and resolutions. For a thorough overview, please contact Allied’s Risk Engineering Division.