OSHA Fines to Increase Significantly for First Time in 25 Years
Posted by LD&B Insurance and Financial Services on
January 26, 2016
A new provision signed into law by President Obama as part of last November’s bipartisan budget deal will allow the Occupational Safety and Health Administration (OSHA) to increase the maximum penalty for employers who are found to have violations with their current safety and health programs. The provision was part of Section 701 of the Bipartisan Budget Act of 2015, titled the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The increase is expected to take effect on August 1, 2016.
OSHA has not adjusted their penalty structure since 1990. The new act allows for a “catch-up adjustment” period to align with the federal consumer price index (CPI). The catch-up increase is capped at 150% of current OSHA penalty levels.
The maximum initial “catch up adjustment” will be based on the difference between the October 2015 CPI and the October 1990 CPI. The October CPI was released in November and came in at 237.838. Based on the October 1990 CPI of 133.500, the maximum catch up adjustment will be approximately 78.16%. This means the new maximum penalties would be as follows:
Current Violation Maximum
Willful or Repeat
While OSHA has the option to select a lower catch-up adjustment than the maximum permitted, most experts in the industry view this as unlikely. However, the act does give OSHA the discretion to increase the current maximum penalty amounts by less than the recommended adjustment if it determines that a full violation increase will have the following:
Have a negative effect on the economy.
Result in social costs that outweigh the benefits of a full increase.
After this initial increase in August, penalty amounts will be adjusted annually for cost of living.
Take Steps to Prepare Now
If your business or organization has had OSHA violations in the past, now would be a good time to review these incidents and make sure that you have processes in place to avoid similar or repeat offenses. The significant increase for violations could have a detrimental impact to your company’s bottom line — even from one incident.
OSHA’s Top 10 Citations
Curious what the most frequent OSHA citations are? Here are top 10 citations from 2014 and links to more details on each applicable regulation: