OSHA Penalties to Increase Up to 80% in 2016
On Nov. 2, 2015, President Obama signed a two-year budget deal, called the Bipartisan Budget Act of 2015. One provision in the Act will allow OSHA to increase the maximum penalty amounts it imposes on employers that violate occupational safety and health standards, making it the first fine increase in 25 years. These increases will become effective by Aug. 1, 2016.
Justification for Increased Penalties
Many government agencies have the authority to annually adjust their maximum penalty amounts to reflect the cost of inflation, as shown by the consumer price index (CPI).
However, OSHA hasn’t been allowed to adjust its maximum penalty amounts since the penalties were enacted 25 years ago. The Act will allow OSHA to adjust the maximum penalty amounts to keep pace with inflation.
Amount of Increase
The Act requires OSHA to implement the new maximum penalty amounts in two phases:
- An initial catch-up adjustment
- An ongoing subsequent adjustment period
The initial catch-up period will take place in 2016 and will allow OSHA to increase the current maximum penalty amounts by up to 80 percent to account for the previous 25 years of non-adjustment.
However, the Act also gives OSHA the discretion to increase the current maximum amounts by less than 80 percent.
The Act requires OSHA to issue a proposed rule and solicit public comments on it, including:
- Plans to increase the penalty amounts by less than 50 percent
- Determining whether the full increase will have a negative effect on the economy or result in social costs that outweigh the benefits of the increase (the Office of Management and Budget must agree with this determination)
The second phase allows OSHA to annually adjust the maximum penalty amounts for inflation.
What to Expect in 2016
The Act requires OSHA to publish how it will implement the first inflation adjustment by July 1, 2016. The first adjustment must become effective by Aug. 1, 2016.
The first annual inflation adjustment will be allowed for 2017. OSHA will be required to publish annual updates by Jan. 15, 2017 to signal this increase and every year thereafter in the Federal Register.
To get a better understanding of the violation changes, contact a member of our ‘A’ team.
- OSHA Blog Posts
- Workers’ Compensation Videos
- Incident and DART Rate Calculator
- Breaking Down the January 1 OSHA Reporting Changes
- OSHA New Year Reporting Resolutions
- OSHA 300 Log Reporting Webinar Replay
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