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OSHA penalties jump 78% this month

Wednesday, August 17th, 2016

Beginning this month, the Department of Labor (DOL) has increased the maximum penalties associated with violations of The Occupational Safety and Health Administration (OSHA) by 78%, the first such increase since 1990. Any citations issued by OSHA on or after August 1, 2016 will be subject to the new penalties if the related violations occurred after November 2, 2015. In addition, OSHA will adjust penalties to inflation annually, but will have a cap of 150 percent of the existing penalty amount.

Here’s a summary of the old vs the new penalties

The increase in penalties is not limited to OSHA; This is part of a sweeping modernization that passed in 2015: The Federal Civil Penalties Inflation Adjustment Act. Here’s a Fact Sheet for Inflation Adjustment Act Interim Final Rules.

In addition to OSHA, other penalty increases will affect:

Employee Benefits Security Administration (EBSA)
Mine Safety and Health Administration (MSHA)
Office of Workers’ Compensation Programs (OCWP)
Wage and Hour Division (WHD)

The US Department of Labor Blog talks about how the Inflation Adjustment Act was intended to strengthen the deterrent effect of penalties. In The Benefits of Penalties, Sharon Block notes that penalties had not been raised since a gallon of gas was $1.20 and a first class stamp was 25 cents.

“Adjusting our penalties can lead to significant benefits for workers and responsible employers who will have a more level playing field when competing with those who try to gain a competitive advantage by cutting corners on safety and other basic protections for American workers. As always, we at the Labor Department define success as encouraging employers to comply with the law, not by the amount of penalties we assess, so we stand ready to continue to provide technical assistance to all employers who want to do the right thing.”

This is sure to raise some consternation among the nation’s employers, particularly following the OSHA’s controversial new reporting rules. It would appear the the DOL is serious about putting some teeth in enforcement programs designed to protect workers.

Unfortunately, despite the steeper fines, the deterrence factor has historically been mitigated by the all-too-frequent subsequent slashing of fines after they have been levied. See this 2013 NPR Report: Enforcement Of Penalties Weak In Grain Bin Deaths, in which levied fines were negotiated down by 90% or more – a not unusual practice. These fines may be steep to small employers, but to large national, they are a cost of doing business.

BERKES: Employers have the right to challenge and negotiate citations and fines. And OSHA routinely relents. Those major fines – over a hundred grand – they dropped 80 percent of the time, according to an analysis of OSHA enforcement by NPR and the Center for Public Integrity. The agency discount ranged from 40 to 97 percent.

In all the grain deaths we identified, OSHA fines were cut on average more than half. This, Michaels suggests, is part of the process.

MICHAELS: We do everything we can within the current regulatory framework. We look at the individual characteristics of the case, the characteristics of the employer. We don’t think reducing a fine to, you know, $700,000 or $500,000 or $200,000 is going easy on this industry.

BERKES: But given the persistent death toll, it doesn’t seem fines are providing the deterrent effect they’re supposed to. As for criminal prosecutions.

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