On November 2, 2015, President Obama signed the new budget, which requires from OSHA to increase its citation penalties for the first time in 25 years. The Federal Civil Penalties Inflation Adjustment Act of 1990 has prevented OSHA from increasing penalties, but now its updated section of Improvements Act of 2015 allows OSHA to raise the current maximum limit for fines.
The initial penalty catch-up adjustment must be implemented by August 1, 2016, according to the act or sooner if OSHA decides. Based on recent Consumer Price Index (CPI), the percentage difference between the October 2015 and the October 1990 CPI will probably be in the range of 75% to 80% over current penalty amounts.
The new act allows OSHA not to implement the increased financial guidelines if:
- The agency determines increasing penalties by the maximum amount would have a ‘negative economic impact’
- The ‘social costs’ of the increase outweigh the benefits,
- the Office of Management and Budget agrees with the agency’s determination.
The new maximum penalties would be:
- Other than Serious violations: $12,600
- Serious violations: $12,600
- Willful violations: $126,000
- Repeat violations: $126,000
After the initial adjustment, OSHA will be required to annually increase the limit on fines to keep up with inflation. Adjustments need to be imposed by January 15 each subsequent year.
In order to put the penalty increases into effect, OSHA has to go through the rulemaking process. However, the increase will be issued as an interim final rule meaning that OSHA is not required to issue a proposed
rule, which would be subject to a public notice and comment period before finalized. Therefore, the rule will come into force immediately upon
In case the agency chooses not to make changes to the interim rule, it will publish a brief final rule in the Federal Register confirming that decision.
This increase to financial penalty limits didn’t come as a surprise for many industry observers. During the last months and years OSHA wanted to raise fines, and was looking for a way to do so. A typical example is the statement of OSHA head Dr. David Michaels about a gas leak at a DuPont plant that killed four people last May. According to Dr. Michaels congressional testimony just a month ago “limits on financial penalties is the most serious obstacle to effective OSHA enforcement of the law.” In that case, OSHA issued the maximum allowed under the law fines of $99,000.
This is the beginning of a large change for the whole industry, which may affect all American businesses.