New Federal Budget Allows Higher Maximum OSHA Penalties

Silica PictureThe budget bill signed into law Nov. 2 by President Obama directs federal agencies, including the Occupational Safety and Health Administration (OSHA), to increase agency civil penalties in accord with inflation. This will allow OSHA to increase its maximum civil penalties for the first time since 1990. The law allows OSHA to make a one-time “catch-up” increase of up to 82 percent to compensate for more than two decades of no increases.

Under the Bipartisan Budget Act, OSHA civil penalties may be increased significantly by the agency as has been called for many times by OSHA Assistant Secretary of Labor David Michaels and many congressional Democrats.

After the one-time catch-up increase is implemented, OSHA will annually increase maximum penalties by the amount of the federal government’s Consumer Price Index (CPI). According to one preliminary analysis, the current maximum penalty for serious fines could increase from $7,000 to $12,744 and maximum fines for willful or repeat penalties could increase from $70,000 to $127,438.

The additional increased funding taken in by the federal government because of increases in OSHA civil penalties will not go to OSHA’s budget but into the general treasury to pay for all government operations.

Before maximum fines increase, the law states the White House’s Office of Management and Budget (OMB) must issue guidance by Jan. 31, 2016, regarding implementing the bill’s provisions. Additionally, OSHA must publish an interim final rule by July 1, 2016, allowing the adjustment to take effect by Aug. 1, 2016.

OSHA also can choose a number lower than 82% if, following a public comment period, the agency determines that increasing the penalty by the full amount allowed will have a “negative economic impact” or the “social costs” of boosting the penalty outweigh the benefits. If OSHA selects an increase lower than the CPI, the OMB director would have to agree with OSHA’s determination for the lower boost to be approved.

NRCA plans to request a reduced increase during the public comment period, which has yet to be scheduled.

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