Beginning August 1st of 2016, OSHA’s maximum penalties will increase by 78% in order to account for inflation between 1990 and 2016. The U.S. Department of Labor has announced an increase to the maximum amount of civil monetary penalties that can be assessed under OSHA. We first heard of this penalty cost increase last year when Congress passed the Federal Civil Penalties Inflation Adjustment Act, which directed all Federal agencies to adjust penalties for inflation each year. Because penalty amounts haven’t been updated since 1990, this year will see the most dramatic increase. Each year after this initial hike, the increases will be tied to the Cost of Living Adjustment and the national inflation rate to ensure the penalties maintain their deterrent capabilities.
The first interim rule will update penalties assessed by the department’s Employee Benefits Security Administration, Mine Safety and Health Administration, Occupational Safety and Health Administration, Office of Workers’ Compensation Programs, and Wage and Hour Division. The second rule, issued jointly with the Department of Homeland Security, will update penalties associated with the H-2B temporary guest worker program.
However, the amount of the initial increase is capped at 150% of the existing penalty amount. The maximum penalty for serious violation will increase from $7,000 per violation to $12,471 per violation and a failure to abate a cited hazard was increased per day beyond abatement date from $7,000 to $12,471. The new maximum civil penalty for willful or repeated violations increased from present max of $70,000 to $124,709 per violation.
For many, this comes as a welcome curb to unsafe practices. Construction firms who place a premium on safety have criticized the low penalties for years. Last year, the average fine for an incident resulting in a worker’s death was $7,000 and then reduced to an average of $5,050 after settlements, according to the AFL-CIO. U.S. Secretary of Labor Thomas E. Perez said in a news release from the U.S. Department of Labor that civil penalties should be “a credible deterrent that influences behavior far and wide. Adjusting our penalties to keep pace with the cost of living can lead to significant benefits for workers and can level the playing field (for) responsible employers who should not have to compete with those who don’t follow the law.”
These new penalties will begin to take effect August 1, 2016. This means that any citations issued by OSHA after this date will be subject to the new penalties if they’re related to violations that occurred after November 2, 2015.
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