OSHA Fines Set to Climb By As Much As 80% by August, 2016 — Is Your Business At Risk?

1The new federal budget signed into law on November 2, 2015, requires the federal Occupational Safety and Health Administration (OSHA) to increase its penalties for the first time since 1990.

What is OSHA and why is this important?

OSHA is a federal agency (part of the Department of Labor) that ensures safe and healthy working conditions for Americans by enforcing standards and providing workplace safety training. OSHA is empowered to enforce its regulations by imposing penalties that most employers feel are already steep.

From 1990 through 2015, OSHA was one of only three federal agencies that were exempt from a law requiring such agencies to raise fines to keep pace with inflation. A section of the 2015 budget bill–the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (no that’s not a typo!)–eliminated this exemption.

The budget bill further requires OSHA to make a one-time “catch-up” increase, which cannot exceed the inflation rate from 1990 through 2015 as measured by the Consumer Price Index (CPI). Based on the recent CPI, the maximum increase is expected to be in the range of 75-80%. Further, given consistent comments by OSHA leadership about the benefits of imposing stiffer regulatory punishments, it is believed that OSHA will implement most, if not all, of the increase.

To illustrate the impact of this increase, an 80% increase in the current schedule of maximum penalties would result in the following fines:

  • Other than Serious Violations: $12,600
  • Serious Violations: $12,600
  • Willful Violations: $126,000
  • Repeat Violations: $126,000

Cal/OSHA

California is among several states that have a State Plan: an OSHA-approved job safety and health program that is operated by an individual state instead of federal OSHA. Federal OSHA still provides up to 50 percent of the funding for these programs and the State Plan must be “at least as effective” as federal OSHA.

Cal/OSHA has recently hit employers with staggering penalties. Since June, 2015, Cal/OSHA imposed penalties against a meat byproducts processing company, a door manufacturer, a refinery and two construction firms amounting to $1.6 million.

Who is at risk?

Any employer that does not fully comply with OSHA safety standards is at risk for penalties. Unfortunately, many employers in industries that do not typically focus heavily on safety standards are equally at risk, not only for accidents and injuries, but also for stiff OSHA penalties. For example, retail businesses have been heavily penalized for such violations as blocked exits, fire extinguishers and similar non-obvious safety risks. Often ownership and management of such “white collar” businesses are unsophisticated about safety issues.

What should employers do?

Fortunately, employers have several months to take steps to avoid OSHA penalties. These should include making safety and compliance with applicable OSHA standards a priority. Where there is doubt about the specifics of a safety standard, employers should consult with their employment counsel, who may also recommend or involve safety specialists to ensure full compliance.

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