OSHA Penalties to Increase With Inflation — After 25 Years

We recently wrote about the Occupational Safety and Health Administration’s new rules on inhalable silica, which will take effect in June. By August, another important change in OSHA enforcement will also take place – one that any company regulated by OSHA needs to be aware of. For the first time in more than 25 years, the maximum OSHA fine for a willful violation will increase.

The background here is quite interesting. In 1990, when Congress wrote a statute that related to the effect of inflation on federal civil penalties in general, it specifically prohibited OSHA from adjusting its penalties by increasing them for inflation. But that all changed in the federal budget agreement that was reached last November. In this agreement, Congress removed that longstanding freeze and directed OSHA to issue a “catch-up adjustment” that will go into effect as of August 1, 2016.

The amount of the catch-up adjustment, Congress said, must be derived from the increase in consumer prices between 1990 and today, which is about 80 percent. And in future years, the budget agreement said, OSHA will also be required to increase its civil penalty levels again based on inflation.

This will mean that the maximum penalty for a willful violation of OSHA regulations will increase from the current $70,000 to about $127,000. An ordinary OSHA violation that is considered serious but not willful will go from $7,000 to about $12,700.

In effect, this means that companies that violated OSHA by creating unsafe workplace conditions were paying fines at 1990 levels and will no longer be doing so. In other words, they were getting away with paying less money than today’s economic conditions would dictate.

In the future, companies will need to be aware that not only are the civil penalties catching up for all the inflation we’ve had in the last quarter century, but they will continue to keep pace with the general level of prices. Companies that need help on understanding OSHA and its enforcement priorities should consult experienced counsel on these issues.

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