John M. Williams ([email protected])

Penalties assessed by the Occupational Safety and Health Administration for workplace safety violations will increase sharply in the next few weeks. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires federal agencies to annually adjust their penalty assessments to reflect inflation under a new formulation designed to be simpler and more straightforward than the method currently used. The summer of 2016 has been designated as a "catch up" period during which the agencies are to adjust penalties to catch up with inflation since the last adjustment. This adjustment is based on the difference between the Consumer Price Index in October 2015 and the Consumer Price Index in October of the year in which the agency last adjusted its penalties. OSHA's maximum penalties have not been increased since 1990; thus, OSHA penalties will significantly increase under the new rule. The interim final rule was published on July 1, 2016.

Overall, OSHA will see a 78% increase in penalties. The maximum for a serious violation will increase from $7,000.00 to $12,471.00. Wilful or repeated violations rise from $70,000.00 to $124,709.00. The new penalties apply to any assessment after August 1, 2016 arising from violations occurring after November 2, 2015.

Employers should be aware of these changes and be prepared to see much higher assessments. There is likely to be an increase in the number of contested penalties under the new structure. Alleged violations which may not have been economical to contest in the past will be more likely to end up in litigation.

The public comment period for the new rule runs through August 15, 2016.


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