Employers Beware: OSHA Fines Are on the Rise for the First Time in Twenty-Five Years

OSHA has been unable to increase the civil penalties it can impose when an employer is cited for a violation since 1990.  But that is all about to change. Hidden within the Bipartisan Budget Act of 2015, signed by President Obama on November 2, 2015, is a provision requiring OSHA to significantly increase its civil penalties. A one-time “Catch Up Adjustment” will be based on the percentage difference between the Consumer Price Index in October 2015 (to be released later this month) and October 1990 – resulting in a penalty increase of approximately 80%.  This means that the $7,000 cap on serious violations would grow to $12,600 and the $70,000 limit on willful and repeat violations would increase to $126,000.  Had OSHA applied this increase to fiscal year 2014 penalties, which totaled $143.6 million, the total would have jumped to $258.5 million.  After this initial adjustment is made, OSHA will be required to adjust penalties every year using the annual percentage increase in the Consumer Price Index.

Although the agency is not required to take the full penalty increase, it probably will.  OSHA has tried for years to convince Congress to increase the civil penalties the agency can impose when an employer is cited for a violation.  Most recently, on October 7, 2015, Assistant Secretary of Labor for OSHA, Dr. David Michaels, told a House subcommittee that the “most serious obstacle to effective OSHA enforcement of the law is the very low level of civil penalties allowed under our law, as well as weak criminal sanctions,” and that “OSHA penalties must be increased to provide a real disincentive for employers accepting injuries and worker deaths as a cost of doing business.”

The budget changes go into effect July 1, 2016 and the increased penalties will take effect by August 1, 2016 in all states regulated by Federal OSHA.  The law does not automatically apply to states regulated by State Plans, but since State Plan programs must be at least as effective as Federal OSHA, State Plans are likely to increase civil penalties as well.

This change adds yet another powerful weapon to OSHA’s growing enforcement arsenal.  OSHA under the Obama administration has made liberal use of the General Duty Clause, weighted inspections, and new reporting requirements – all of which have resulted is OSHA inspections of industries and employers that it has never targeted before.  Now more than ever, employers should be prepared for a potentially costly encounter with OSHA.

Employers are well-advised to:

• Ensure that safety programs are comprehensive and up to date

• Ensure that employees receive all necessary safety training, can demonstrate that they understood the training, and that all training is well-documented

• Assess the workplace for hazards and address any identified hazards as quickly as possible

• Talk with union representatives or employees at non-unionized facilities about their safety concerns and address any bona fide concerns as quickly as possible

Taking these steps will demonstrate the employer’s commitment to safety and help reduce the possibility of receiving what soon will be very costly OSHA citations.