November 1, 2015 – With the stroke of a pen, President Barack Obama will sign into law on Monday (11/01/15) the Bipartisan Budget Act of 2015. This means no more squabbling for the next two years about shutting down the government by threatening to withhold passage of the federal budget. Additionally, the White House claims this bill, which increases government spending and debt limits, will stimulate the nation’s economy. But nothing comes for free; passage of this Act also means your OSHA penalties will be going up – significantly!
Many people mistakenly believe that employers pay monetary penalties attached to federal OSHA citations directly to OSHA, making them a self-funded agency. But that is not true. The monies actually go into the general fund, that big black hole that sucks in tax dollars to run our country and pay interest on the national debt. That is why the checks for OSHA penalties are made out to the United States Treasury, and not to OSHA.
The maximum monetary penalties OSHA can levy for citations of their standards are set by Congress, and those limits have not changed since 1990. The maximum penalty allowed for an “Other than Serious” citation or “Serious” citation is currently capped at a $7,000 penalty, and the penalty for a “Willful” citation cannot exceed $70,000.
However, a passage buried deep inside the Bipartisan Budget Act of 2015 changes these by allowing adjustments for inflation on certain civil penalties; specifically, OSHA penalties. And this is not just a year-to-year adjustment; it also includes one big “catch-up” adjustment that goes all the way back to 1996! Read the applicable section of the Act below:
Sec. 701. Civil monetary penalty inflation adjustments.
Section 701(a) establishes the short title for this section as the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.” Section 701(b) amends the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note) to:
1. Require all agencies with civil monetary penalties covered by the statute to update penalties based on their value in the last update prior to 1996 and the change in the CPI between that date and October 2015. The increase in penalties that results from this “catch up” calculation would be capped at 150% (so a penalty now set at $10,000 could not increase to more than $25,000).
2. Require all agencies to adjust their civil monetary penalties annually based on changes in the CPI, using data from October of each year.
3. Replace current rounding rules with a simple rule that penalties be rounded to the nearest dollar.
4. Apply these provisions to the Occupational Safety and Health Act and civil penalties assessed under the Social Security Act.
According to the “CPI Inflation Calculator” provided on the Bureau of Labor Statistics (BLS) website, the maximum allowable penalties for OSHA citations starting next year (2016) will look roughly like this after the initial “catch-up” adjustments are made:
- Other Than Serious (was $7,000) – maximum is now $10,616
- Serious (was $7,000) – maximum is now $10,616
- Willful (was $70,000) – maximum is now $106,158
And these penalty caps will presumably go up even further each year afterwards, based on any increase in the Consumer Price Index (CPI) from the previous year.
Technically, higher penalty caps do not necessarily mean higher penalties across the board, because the Act only addresses higher maximum penalty levels; not minimum. But OSHA has been aggressively pushing Congress for years to allow higher maximum penalties to accompany their citations, claiming that the threat of stiffer penalties would give them a bigger stick that will drive employers towards greater compliance with federal safety and health standards. So I would expect to see OSHA take full advantage of these increased maximum penalty levels.
But here is the interesting part; our President and Congress are NOT counting on this increase in penalty caps resulting in safer workplaces. They are instead counting on employers continuing to receive the same number of OSHA citations, but with these higher penalties attached, so they can raise some of the billions of extra dollars they need to support their uncontrollable spending habits. And what about the supposed economic benefits created by passage of this new Act? I suppose it will help my “personal economy”, because a more “motivated” employer will be more apt to utilize my OSHA compliance services!
Do you really believe these higher penalty caps for OSHA will stimulate employers to “be safer”? Will it make the nation’s economy stronger?? Are you surprised that the burden to help pay for our government’s ever-increasing spending in this new budget falls squarely on the shoulders of businesses through higher monetary penalties???
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ABOUT THE AUTHOR:Curtis Chambers is a Certified Safety Professional (CSP) and holds a Master of Science degree in Occupational Safety and Health. He has held numerous leadership positions managing and evaluating health and safety programs and providing training on workplace safety and health topics at various public organizations and private corporations. Mr. Chambers is currently the President of OSHA Training Services Inc. Visit their website at www.oshatraining.com.