The Occupational Safety and Health Administration is placing an additional incentive on employers to follow safety regulations as fines for violations are about to go up.
Under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, part of the Bipartisan Budget Act of 2015, federal agencies were directed to adjust their civil monetary penalties to compensate for annual inflation rates. The act, passed last November, was designed to compensate for what Congress saw as ineffective federal penalties that were not economically severe enough to have an impact.
"A low cap on these increases together with complicated rounding rules kept many penalties from accomplishing Congress's stated goal of keeping up with inflation over time," the U.S. Department of Labor said in a statement. "Furthermore, some agencies, such as OSHA, were exempt from the 1990 law, so the agency's penalties have not increased since 1990."
"The Labor Department has issued two new interim final rules that will adjust its penalties for inflation."
To comply with the new law, the Labor Department has issued two new interim final rules that will adjust its penalties – including those from OSHA – for inflation. The first covers most civil penalties, including those assessed by OSHA as well as the Department's Employee Benefits Security Administration, Mine Safety & Health Administration, Office of Workers' Compensation Programs and Wage and Hour Division.
The second rule, issued jointly with the Department of Homeland Security, covers penalties associated with the H-2B temporary guest worker program.
What this means for employers
As Safety + Health magazine reported, the main take away for many employers is workplace safety penalties will be going up effective Aug. 1. The maximum penalty for both serious and other-than-serious violations will increase from $7,000 to $12,471. The cap for fees on willful and repeated violations, the agency's most severe penalties, will increase from $70,000 to $124,709.
"Civil penalties should be a credible deterrent that influences behavior far and wide," Secretary of Labor Thomas E. Perez said in a press release. Perez added penalties should keep pace with the cost of living. Fines that are too forgiving give an unfair advantage to employers who can afford to simply pay the fine and ignore safety regulations and are unfair to responsible employers, he stated.
According to The National Law Review, state OSHA agencies will also be raising their fines soon. State agencies are required to have penalties matching or exceeding the increased federal penalties in order to be in compliance with the rule that OSHA-approved State Plans must have penalties "at least as effective" as the federal penalties.
In addition to OSHA fee increases, employers in some industries could also be affected by fine increases and modernization efforts from the Office of Workers' Compensation Programs and Wage and Hour Division. OWCP has long had a penalty for failing to report termination of payments made under the Longshore and Harbor Worker' Compensation Act. However, the fee had only increased $10 since 1927. The new fee will go from $110 to $275.
WHD's penalty for willful violations of the minimum wage and overtime provisions of the Fair Labor Standards Act will increase from $1,100 to $1,894.
The new regulations will be applicable to any fines issued Labor Department agencies after Aug. 1, 2016, as long as the cited violations occurred after Nov. 2, 2015, when the Inflation Adjustment Act was passed.