The U.S. Department of Labor, which oversees OSHA, recently announced two interim final rules to adjust penalties for inflation for the first time since 1990.
Occupational Safety and Health Administration (OSHA) penalties will increase by 78 percent, with its top penalty for serious violations rising from $7,000 to $12,471 and its top penalty for wilful or repeated violations increasing from $70,000 to $124,709.
“Civil penalties should be a credible deterrent that influences behaviour far and wide,” said U.S. Secretary of Labor Thomas E. Perez. “Adjusting our penalties to keep pace with the cost of living can lead to significant benefits for workers and can level the playing field for responsible employers who should not have to compete with those who don’t follow the law.”
The 2015 Federal Civil Penalties Inflation Adjustment Act Improvements Act is the driving force behind the increases. The legislation aims to make civil monetary penalties more effective and to maintain their deterrent effect. The new law directs agencies to adjust their penalties for inflation each year using a much more straightforward method than previously available, and requires agencies to publish “catch up” rules this summer to make up for lost time since the last adjustments.
Congress initially passed a law in 1990 directing agencies to adjust civil penalties to keep up with inflation. But a low cap on increases, along with complicated rounding rules, prevented that from happening. Furthermore, some agencies, such as OSHA, were exempt from the 1990 law, which is why the agency’s penalties have not gone up since that time.
In 2015, Congress passed the Inflation Adjustment Act to annually adjust penalties using a more straightforward method than the 1990 law. The new law directs each agency to determine the last time their penalties were increased and to publish interim final rules to adjust penalties for inflation from that date. The increase may not exceed 150 percent of the existing penalty.
The new civil penalty amounts only apply to civil penalties assessed by the department after August 1, 2016 if the violations occurred after November 2, 2015, the date the Inflation Adjustment Act went into effect.