OSHA’s Steep Penalty Increases Take Effect

A single willful or repeat violation can now cost employers over $120,000

OSHA’s Steep Penalty Increases Take Effect

The Occupational Safety and Health Administration (OSHA) is increasing its maximum penalties for workplace safety violations by over 78 percent.

Effective Aug. 1, the maximum penalty for serious violations will increase from $7,000 per violation to $12,471. More notably, however, businesses should be aware that the ceiling for each willful or repeat violation will rise from $70,000 to $124,709.

For a number of years, a variety of groups have argued that OSHA's penalties haven't been high enough to effectively deter violations, said Bradford Hammock, an attorney with Jackson Lewis in Washington, D.C., in an interview with SHRM Online. Hammock is a co-leader of the firm's workplace safety and health practice group.

"The penalty increase was put into the Bipartisan Budget Act of 2015 and was passed and signed into law without much discussion or debate about the levels," he said.

The maximum penalties were last adjusted in 1990, so this is the initial catch-up increase to reflect inflation over the past 25 years, explained Thomas Benjamin Huggett, an attorney with Littler in Philadelphia. In the future, OSHA will make annual adjustments to the penalties based on the consumer price index.

Employers should focus on avoiding these high penalties by being compliant with OSHA standards and committed to having an effective safety program, according to Edwin Foulke. Foulke is an attorney with Fisher Phillips in Atlanta and Washington, D.C., and was the head of OSHA from April 2006 to November 2008.

Penalties Adjusted for Inflation

President Barack Obama signed the bipartisan budget act on Nov. 2, 2015. The budget included a section that required federal agencies to adjust civil monetary penalties based on inflation by Aug. 1.

As a result, it isn't just OSHA penalties that are increasing. The U.S. Department of Labor also announced penalty adjustments under the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Family and Medical Leave Act.

Although the penalty increases under these acts take effect on Aug. 1, the higher penalties may be imposed in ongoing investigations if the violation occurred after Nov. 2, 2015.

Huggett noted, however, that OSHA must issue citations within six months of the violation, so violations that occurred as far back as February could be subject to the new penalties.

More OSHA Activity

In addition to increasing penalties, OSHA issued a new injury and illness tracking rule that will take effect on Jan. 1, 2017. The rule will require employers that are covered by the agency's record-keeping regulations to electronically submit workplace incident reports. Some of that information will be available to the public on the agency's website.

The rule includes anti-retaliation provisions, which the agency will begin enforcing in November.

[Update: Enforcement of the rule's anti-retaliation provisions was delayed until Dec. 1, 2016.]

OSHA has been very active recently in both the regulatory and enforcement spheres, so the penalty increase is yet another tool in its toolbox, Hammock said.    

"The penalty that immediately catches the attention of most stakeholders is the increase for repeat and willful violations," Hammock said. Employers certainly want to avoid these violations, anyway, for obvious reasons, he said, but they should be aware that a single willful or repeat violation could now cost them six figures.

It's really going to be a big change on the low end, too, because it may only take one or two citations for the penalties to be over $10,000, Huggett said. That will be significant for many businesses.

Hammock noted that just because OSHA has the ability to impose these maximum penalties, that doesn't mean it will. OSHA often evaluates a variety of discount factors, he explained.

For example, the agency said that in order to "address the impact of these penalty increases on smaller businesses, OSHA will continue to provide penalty reductions based on the size of the employer and other factors."

Tips for Compliance

Employers should take steps to ensure they have strong safety and health programs, and they should follow up on any potential safety hazards, Hammock recommended. Foulke said there are a few things employers can do that are not too expensive or time-consuming but that can greatly enhance safety programs and reduce injuries.

Employers should look at what OSHA standards are applicable to their worksite and address them, he said. They can go to OSHA's website and see what the agency most frequently cites in their industries.

Employers should look at that list and make sure they are in full compliance, Foulke said, which can greatly reduce costs.

Foulke recommends doing an overall job safety analysis of the workplace. Employers should identify any safety issues and determine how to address them, he said.

Employers should also conduct accident investigations based on first-aid logs and OSHA 300 logs, he said. "Some employers think first-aid injuries are no big deal, but they can lead to serious injuries."

"If you have a workforce that feels it has a safe worksite, you are less likely to have a complaint," he said.



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