On Tuesday, November 10th Congress officially passed a budget agreement containing a provision allowing OSHA to increase fines by over 80% starting August 2016. The law permits an increase of up to 82% because fines have not been raised since 1990. The raise in fines is being described as a “catch up” amount in order to account for the inflation rate from 1990 to 2015. The catch up adjustment is tied to the percentage difference between the October 2015 Consumer Price Index (CPI) and the October 1990 CPI.
Raising the Fines
OSHA chief, David Michaels, has said that “Unscrupulous employers often consider it more cost effective to pay the minimal OSHA penalty and continue to operate an unsafe workplace than to correct the underlying health and safety problem”. Raising the fines would put OSHA in the same category of other federal agencies that have also increased fines due to inflation. FDA, EPA, and the FCC all have the discretion to raise their penalty dollar amounts.
With the fines in place, serious citations would increase from their current standing of $7,000 up to $12,740, and repeat and willful citations from $5,000-$70,000 increasing to $9,100-$127,400. Based on the federal increases to take place, state plans will also be rising in accordance as well.
After the new adjustments for federal fines are in place, OSHA will be required to implement annual cost of living increases with the adjustment tied to the year over year percentage increase in the CPI. Adjustments are to be put in place by mid-January each subsequent year. OSHA does however have the option to implement a “catch up” adjustment that would be less than the maximum fine if the Agency decides that an increase of a maximum penalty would (a) Have a negative economic effect or the social implications would outweigh the benefits of the raise, and (b) the Office of Management and Budget agrees. David Michaels has, however, been advocating for a substantial increase in penalties for quite some time, so it may be incorrect to assume anything other than the maximum increase would take place.
Compliance for employers encompasses both health and safety standards for its employees. To be fully compliant, businesses and organizations must reach certain requirements laid out by the United States Department of Labor. These include standards of housekeeping, marking appropriate passageways or aisles, loading protection, lighting standards, railing standards, and proper personal protective equipment (PPE) for employees, and more.
Being non-compliant is already costly for businesses, so with the 2016 “catch up” increase on its way, employers should be implementing compliance and auditing their safety processes to insure the applicable OSHA regulations are up to code.