The cost of living has been going up all over; except Federal Civil Penalties over the last 25 years. That changed in November 2015 when Congress passed the Inflation Adjustment Act. The new legislation is an adjustment to the Federal Civil Penalties Inflation Adjustment Act of 1990. Five Department of Labor agencies are affected by the change: Workers’ Compensation, the Wage and Hour Division, Employee Benefits Security, Mine Safety and Health, and of course, OSHA.
These agencies are required to adjust the levels of civil monetary penalties to catch-up with the cost of living and inflation. After the initial adjustment, subsequent annual adjustments will be based on the Consumer Price Index for all urban consumers. The Department published the interim final rule on July 1, 2016, and the new penalty levels went into effect on August 1, 2016.
Penalties for OSHA infractions have increased by 78 percent. It seems quite high, but the 2015 Inflation Adjustment Act is based on an undisclosed formula that determines the proper adjustment for each penalty. The starting baseline is the last increase from the prior version of the Inflation Adjustment Act.
The rationale given for the increase is that civil penalties are less effective when they do not keep pace with the cost of living. Penalties deter violations of the law, which then results in safer, more productive workplaces. Congress has directed agencies in the past to adjust penalties for inflation, but the prior law had numerous flaws, including a hard cap on increases, and complicated rounding rules, that kept many penalties from keeping up with inflation over time. Some penalties, particularly for OSHA, were exempt under the prior law and therefore frozen in time. This is also seen as a way to level the playing field for responsible employers who have to compete with less ethical counterparts who try to save money by evading the law.
Updated OSHA Penalty Structure
|Type of Violation||Current Maximum Penalty||New Maximum Penalty|
|Serious Other-Than-Serious Posting Requirements||$7,000 per violation||$12,471 per violation|
|Failure to Abate||$7,000 per day beyond the abatement date||$12,471 per day beyond the abatement date|
|Willful or Repeated||$70,000 per violation||$124,709 per violation|
States that operate their own OSHA plans must use the maximum penalty levels to be at least as effective as the Federal OSHA plans. Penalty reductions are available to certain business based on the size of the company. Detailed guidance for field staff on the implementation of the new penalties is available in the government’s Field Operations Manual . OSHA offers a variety of options for employers looking for compliance assistance.
Contact Total Medical Compliance for help navigating the changes and staying compliant. TMC’s team of OSHA and HIPAA compliance experts are available Monday through Friday to answer your questions.
For more visit https://www.osha.gov/penalties/