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Employers Face Big Jump in OSHA Penalties

Human Resources

Employers now face significantly higher health and safety violation penalties, following new inflation adjustments outlined by the Department of Labor.

The Occupational Safety and Health Administration (OSHA) has raised its maximum penalties by 78 percent—the first adjustment since 1990—under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 that President Barack Obama signed last November.

The new law has a host of federal agencies adjusting fines. But at OSHA, the adjustments that went into effect August 1 under an "interim final rule" are especially large because previous law had kept the agency from raising fines to keep up with inflation. For example, the penalty for serious OSHA violations is now capped at $12,741, up from $7,000 previously. The penalty for "willful" or repeated violations ranges from $8,908 to $124,709, up from a previous $5,000 to $70,000. (Take a look at this in-depth chart to learn how fines have changed.)

OSHA has raised its maximum penalties by 78 percent the first adjustment since 1990.


Across-the-Board Increases

Though the law doesn't dictate how OSHA must adjust all of its penalties beyond the new minimums and maximums set, legal experts expect the agency to increase fines of all sizes by 78 percent. So, for example, a violation that previously resulted in a $10,000 penalty might now produce a $17,800 penalty.

August 1 was just the beginning, too. OSHA will continue to adjust for inflation each year based on the U.S. Consumer Price Index, with each adjustment taking place by January 15.

Any employer cited by OSHA has to pay the higher fine amount if the violation related to the citation took place after November 2, 2015.

States that run their own health and safety programs will need to have maximum fines that are at least as large as the federal fines. The increased fines at OSHA and other U.S. Department of Labor agencies are expected to bring in up to $140 million in additional revenue from penalties, according to a Labor Department FAQ sheet.


Discouraging Non-Compliance

Some worker-advocacy organizations have long argued that OSHA penalties have not been high enough to discourage employers from violating OSHA rules, attorney Bradford Hammock told the Society for Human Resources Management (SHRM). But the jump in penalties will likely cause employers to be more cautious, he says—especially the now-six-figure willful or repeated OSHA violation penalty.

"The penalty that immediately catches the attention of most stakeholders is the increase for repeat and willful violations," Hammock told SHRM Online.

U.S. Secretary of Labor Thomas E. Perez seemed to agree that the new higher penalty limits would do a better job discouraging employers from ignoring rules in OSHA and other parts of the department.

"Civil penalties should be a credible deterrent that influences behavior far and wide," Perez said in a news release. "Adjusting our penalties to keep pace with the cost of living can lead to significant benefits for workers and can level the playing field responsible employers who should not have to compete with those who don't follow the law."

Civil penalties should be a credible deterrent that influences behavior far and wide. Quote from Thomas Perez, U.S. Labor Secretary.


Preventing Violations

For employers, the much-higher penalties should indeed create caution. Companies that may have potential health and safety risks will want to investigate and try to identify and correct any potential violations before an OSHA inspector drops by and discovers it. (Each year, OSHA releases a list of the top 10 OSHA violations from the previous 12 months.) As a proactive measure for reducing the risk of violation, companies should consider having a designated workplace environment health and safety expert on hand who stays up-to-date on the latest rules and assists with the organization's OSHA compliance.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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