For the very first time in 25 years, the Occupational Safety and Health Administration (OSHA) has received authorization from the Federal Budget Agreement to increase the civil monetary penalties issued for violations of the OSHA health and safety regulations.
President Obama signed the Federal government’s bipartisan budget bill on November 2, 2015, allowing OSHA to issue a “catch-up adjustment” that will go into effect as of August 1, 2016, with a potentiality of annual adjustments based on the Consumer Price Index (CPI).
While the precise amount of the “catch-up adjustment” still remains indefinite, it is anticipated that the initial “catch up” will reflect the estimated 80 percent increase in the CPI from back in 1990, which was the date of the last penalty increase. Based on this assumption of an 80 percent increase, the maximum penalties amount to OSHA violations going into effect August 1, 2016, would be:
- Other Than Serious – $12,600 (increased from $7,000)
- Serious – $12,600 (increased from $7,000)
- Repeat – $126,000 (increased from $70,000)
- Willful – $126,000 (increased from $70,000)
The Act is set with a “maximum adjustment” of up to 150 percent, so the initial “catch-up adjustment” stands a chance of increasing to a percentage higher than the expected 80 percent. Therefore, if OSHA chooses to get creative with their numbers, the penalties can go as high as $17,500 under the “Other Than Serious and Serious” violations, and a whopping $175, 000 for the “Repeat and Willful” violations.
Additionally, the new budget bill mandates that OSHA increase the monetary penalties annually based on a percentage increase reflective of the CPI. So that means that companies will have to monitor OSHA’s policies each year on to examine whether or not an increase has been applied and by how much.
This forceful increase in OSHA’s financial penalties just goes to show that OSHA is set on increasing enforcement and penalizing establishments that have been perceived as “bad employers.” For that reason, organizations should ensure the safety of their employees and should have a solid plan in place should an OSHA inspector arrive at your front door.
Something employers should keep in mind is that if an “Other Than Serious or Serious” citation is accepted at a decreased penalty, the company stands the chance of it coming back to haunt them later on as a premise for a citation on “Repeat and Willful” violation, only this time at a much higher cost.
Although the higher fines can be a major burden on your business, they pale in comparison to the fines levied by other governmental agencies. For example, in 2001, a sulfuric acid filled tank at a Motiva refinery exploded. One of the employees was killed when his body dissolved in the reservoir. The penalty imposed by OSHA was $175,000. However, in the same case, the Environmental Protection Agency violation was set at $10 million for the dead crabs and fish that were discovered.
Given the striking disparity shown in this case, OSHA has been fighting for “swift, certain and meaningful penalties,” and these recent budget changes will help them accomplish their goal.
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