On November 2 Congress passed and President Obama signed into law a budget agreement that received a substantial amount of media attention (The Bipartisan Budget Act of 2015). What was not so widely reported was an obscure provision within that legislation that authorizes the Occupational Safety and Health Administration (OSHA) to significantly increase its fines for the first time since 1990.
Buried in the text of the budget agreement was the "Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015" (and please do not email me to suggest I have a typo in this post - someone actually came up with that name). This provides that OSHA may increase its current fines to reflect the impact of inflation since 1990. Specifically, using the federal Consumer Price Index (CPI) as it's guide, OSHA may impose a one-time increase in its fines of more than 80% by no later than August 1, 2016. Thereafter, the monetary amount of fines are to keep pace with the CPI.
There is some debate concerning whether the act mandates a single step increase of such magnitude, or grants OSHA discretion to implement a phased-in approach . That debate most likely is academic since OSHA has been seeking this very authority from Congress for several years. Certainly, employers should expect OSHA to implement the full inflationary catch-up as quickly as it can and be pleasantly surprised if something less occurs.
The act provides that OSHA is to commence its rulemaking process in order to implement the change by no later than August 1, 2016. Penalty amounts will become known once final rules are implemented. If OSHA chooses to increase fines by the full 82% growth in the CPI since 1990, the maximum fine for "Repeat" and "Willful" violations will increase from the current amount of $70,000 to over $125,000. The current maximum fine of $7,000 for "Serious" and "Other than Serious" violations will increase to approximately $12,500.
It is important to note that the authorization for these increases only applies to employers in states under federal OSHA jurisdiction. Some states, including Tennessee, have state operated OSHA plans under which the state has entered into an agreement with OSHA to implement and enforce OSHA requirements on its own. Thus, at this point, there has been no authorization for increased fines in Tennessee. Most observers nonetheless expect similar increases to occur within states operating under state plans, as federal and state OSHA penalty provisions have historically been consistent with each other.
Many employers fail to realize that OSHA (or TOSHA in Tennessee) is apt to show up on company property for an inspection even though the employer has not experienced a recent job injury. In fact, in many industries, that is most often the case. Liability for OSHA violations can be imposed for the existence of unsafe conditions without the occurrence of an accident. In many instances, an OSHA/TOSHA investigator will find multiple violations at the workplace of an unprepared employer that lacks a safety program. Since the fines outlined above are levied on a “per violation” basis, multiple 3findings quickly add up to a very significant amount. The cost of that unpreparedness is likely to increase substantially in the near future.
If you are an employer without a safety program, you are at risk. Now is an excellent time to work with your employment counsel and a safety consultant to evaluate your workplace for OSHA compliance and develop a program to ensure continued compliance. If you would like to speak to John Lawhorn on this or any other subject, he may be reached at (865) 546-9321.