As previously reported by AGC, the Bipartisan Budget Act was a two-year budget agreement that Present Obama signed into law on Nov. 2. The bill included a provision that repeals the prohibition against adjusting the Occupational Safety & Health Administration (OSHA) civil penalties for inflation. Unlike other similar federal civil penalties – which are covered by the Federal Civil Penalties Adjustment Act of 1990 – the OSHA civil penalties have been explicitly exempted from inflation since 1990. This means that OSHA penalties will now increase for the first time in 25 years.
Under the new law, OSHA will now have to report on their adjustment in their annual financial statements and via the Government Accountability Office. The law also allows the agency to use a “catch up” formula to make up to 150 percent adjustments in the penalty in the first year to meet current inflation levels. The secretary could limit the increases if it’s determined that a negative economic impact outweighs the benefits, with any proposed increase in penalties required to go through the formal notice and comment process. Despite the secretary’s discretion and rulemaking procedures, it is unlikely that OSHA would increase the penalties to less than the maximum allowed under law in 2016.
The inflation calculation from October 1990 and October 2015 is around 80 percent (the October 2015 inflation rate will be released November 17 and October 2015 is the date that law uses). The law allows OSHA to issue the new penalty rates for 2016 through an interim final rule and without a formal notice and comment period. Using the estimates of inflation and the laws language, it can be reasonably expected that in early 2016 (no later than August 2016) the new penalty structure for OSHA penalties will be:
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OSHA Penalty Schedule |
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Penalty |
Current Law |
New Law Estimates |
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“Willful” and “Repeated” |
Maximum: $70,000 |
Maximum: $126,000 |
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“Serious” |
Maximum: $7,000 |
Maximum: $12,600 |
Many Congressional Democrats and the administration have been advocating for higher penalties for several years. However, the provision included in the budget bill never received Congressional debate and was used as a provision to increase revenue by $1.3 billion over ten years. The revenue from OSHA enforcement does not return to OSHA. Rather, it goes to the U.S. Treasury. AGC will continue to monitor the implementation of the new OSHA penalty schedule and will comment as appropriate during the rulemaking process.
For more information, please contact Jim Young at youngj@agc.org or Kevin Cannon at cannonk@agc.org.