OSHA Civil Penalties On the Rise Again

By Dan C. Deacon and Eric J. Conn

As of January 2, 2018, civil penalties for workplace safety and health violations issued by federal OSHA increased again by 2% across the board.  Although a 2% increase does not shock the system, this increase is part of a program that has resulted in OSHA’s civil penalty authority nearly doubling since 2016.

History of Civil Penalty Adjustments

As I sit here this afternoon wondering if the government will shut down over disputes about immigration and healthcare, I am reminded of a time just a couple of years ago, in late 2015, when we were again on the verge of a government shutdown over abortion rights and deficit spending.  That shutdown was averted thanks to a backroom deal between outgoing Speaker of the House John Boehner and President Obama, which ultimately took the form of the Bipartisan Budget Act of 2015.  That “kick the can down the road” measure included a controversial statute that was essentially unknown (including by the folks within OSHA) and saw exactly zero seconds of debate on the floor.  It was called the “Federal Civil Penalties Inflation Adjustment Improvements Act,” and it mandated that executive agencies increase their maximum civil penalty authority by the percent increase to the Consumer Price Index since the last time the agencies had raised their penalties.

On June 30, 2016, the Department of Labor issued its Interim Final Rule to implement the Civil Penalty Inflation directive.  OSHA’s civil penalty authority had been stagnant for as long as any other agency, not having been increased for 25 years (since 1990), so this “catch-up” penalty increase for OSHA was the most significant.  Indeed, following the formula included in the statute, OSHA was required to increase its penalties on August 1, 2016 by the same percentage increase as the growth from the 1990 Consumer Price Index – Urban (CPI-U) to the October 2015 CPI-U, which was nearly 80%:

In addition to the one-time 80% “catch up” increase that went into effect on August 1, 2016, OSHA’s Interim Final Rule, the Federal Civil Penalties Inflation Adjustment Improvements Act also required Continue reading

OSHA Civil Penalties Spike by 80% on August 1st

By Eric J. Conn

On June 30, 2016, the U.S. Department of Labor issued an Interim Final Rule to implement the Federal Civil Penalties Inflation Adjustment Improvements Act passed last Fall as part of the highly publicized “Bipartisan Budget Act of 2015” negotiated between the Republican-controlled Congress Interim Final Ruleand the White House. Employers have a short window – until August 15th – to submit comments on the penalty increase rule.

As described in our November 2015 article here on the OSHA Defense Report, the inclusion in the budget deal of this extraordinary provision requiring immediate penalty increases to “catch up” with inflation was shocking to many, especially in light of the fact that the Republicans who accepted it are the same politicians who, year after year, reject Democrat-led efforts to pass some version of the Protecting America’s Workers Act – OSHA reform legislation that has as its cornerstone a provision to increase OSHA statutory penalties.

Although the Federal Civil Penalties Inflation Adjustment Improvements Act applies to all federal regulatory agencies, its impact will be felt most by employers receiving citations from OSHA. This is because many federal agencies, such as EPA and MSHA, quasi-regularly increase their penalties based on inflation.  OSHA, on the other hand, has been statutorily prohibited from raising penalties for the last 25 years under a budget bill passed in the 1990s.  As a result, OSHA’s August penalty “catch-up” hike will be the most significant of all federal agencies, raising penalties a whopping 78%, and increasing employers’ burden by an estimated $111M in the first year.

Also extraordinary is the fact that the regulation was not Continue reading

Breaking News – OSHA Max Penalties Set to Nearly Double

By Eric J. Conn, Chair of Conn Maciel Carey’s national OSHA Practice Group

For as long as I have been practicing OSHA law (more than 15 years now), four things have remained constant:

  1. The maximum per violation penalty that OSHA has been permitted by the OSH Act to assign to Serious violations has been $7,000, and for Repeat or Willful violations it has remained $70,000;
  2. The Assistant Secretary of Labor for OSHA makes an annual pilgrimage to the Hill where he or she pounds on the table and demands that Congress enact OSHA reform legislation to increase the maximum penalties OSHA can assign (with common refrains like: “employers can be fined more for mistreating cattle on federal lands than for allowing an employee fatality!”);
  3. There has been one iteration or another of such reform legislation (usually dubbed the “Protecting America’s Workers Act”) floating around Congress and stalling before it even gets out of Committee; and
  4. OSHA proposes penalties on average at a level 50% below the maximum penalty level currently authorized.

Yet, here we are in 2015 with a Republican-controlled House and Senate, and through the backdoor comes a Congressionally-mandated increase to maximum OSHA civil penalties of nearly 80%. A bizarre parting gift by now former Speaker of the House John Boehner, no doubt part of his effort toBudget Act “clear the barn” for his successor. Color me shocked.

Here are the details. The much publicized two-year bipartisan budget agreement allowed the federal government to remain open and not default on the U.S. debt, but it also contained lesser known (or completely unknown) provisions, including one that allows for a nearly 80% increase in OSHA penalties in the next year, as well as indefinite periodic increases to match the rise of the cost of living in the future.

Specifically, the “Bipartisan Budget Act of 2015” was passed by both houses of Congress and signed into law by President Obama last week (November 2nd). Section 701 of the Budget Act, entitled “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015,” gives OSHA the green light to increase penalty amounts to catch up with cost of living adjustments since the last time OSHA’s civil penalties were raised (1990).

The Civil Penalties Adjustment section of the 2015 budget bill was hammered out between Speaker Boehner and the White House with apparently no input from House or Senate members. It provides for a one-time “Catch-up Adjustment” that must be implemented by no later than August 1, 2016. The catch-up adjustment is tied to the percentage rise in the Consumer Price Index (CPI) from the time OSHA last increased its civil penalties in 1990 through November 17, 2015. The actual percentage increase will not be known until next week, but based on recent CPI trends,Penalty Inflation Adjustment Act the increase is expected to be approximately 80%.

Assuming a penalty inflation adjustment of approximately 80%, OSHA will be imminently increasing the maximum civil penalty for alleged Serious violations from $7,000 per violation to approximately $12,000, and for alleged willful or repeat violations from $70,000 per violation to approximately $120,000. After the initial catch-up increase, OSHA is also authorized by the law to Continue reading