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Ka-ching! OSHA May Raise Penalties Starting in 2016


Employers, watch out: Violating federal workplace safety standards could get a lot more expensive. For the first time in 25 years, the Occupational Safety and Health Administration (OSHA) may increase penalties. The new budget that President Obama signed into law on Nov. 2, 2015, contains an amendment overturning a 1990 ruling that prohibited OSHA from boosting its fines in accordance with inflation. The action overcomes decades of failed legislative efforts to strengthen punishment for employers that endanger their workers.

Now, businesses that disregard workplace safety laws could face fines up to 80 percent higher than before.

"Catch-Up" Penalty Adjustment Precedes Annual Cost-of-Living Hikes

The new budget allows for an initial penalty "catch-up" adjustment, which OSHA must establish by Aug. 1, 2016. The catch-up adjustment is tied to the percentage difference between the October 2015 Consumer Price Index (CPI) and the October 1990 CPI. After the initial catch-up adjustment, the agency will be required to implement annual cost-of-living increases by mid-January each subsequent year.

By gaining the ability to raise penalties in accordance with inflation, OSHA joins many other federal agencies, such as the Food and Drug Administration and the Environmental Protection Agency. If OSHA accepts the full penalty increase, it would mean that OSHA fines for:

  • Maximum repeat or willful violations—knowing about a hazard but not doing anything about it—will rise from $70,000 to $124,768; and
  • Maximum serious violations—those resulting in serious injury or death—will increase from $7,000 to $12,477.

State OSHAs May Take Lead From Federal Program

The 26 states (as well as Puerto Rico and the Virgin Islands) that have their own OSHA-approved plans set their own penalties, but the federal increase may well drive state-plan escalations. The OSH Act of 1970 which created OSHA notes that state plans must be "at least as effective" as those of the federal OSHA.

How to Avoid Penalties of Any Size

Every business should keep up to date on OSHA standards. They should know the broad categories of violations and penalties as well as basic safety and health precautions, and understand and maintain safety fundamentals in the workplace. To stay in compliance with federal safety laws:

  • Fix any existing violations immediately;
  • Keep accurate records of all workplace-related injuries, illnesses, and deaths;
  • Maintain all equipment for optimal operation;
  • Train all employees in safety practices;
  • Stay apprised of current OSHA requirements.

As the vast majority of U.S. employers put workplace safety and well-being at the forefront, compliance with OSHA standards should come as a matter of course. But companies with slipshod, inattentive, or callous workplace policies may feel a much bigger bite in the pocketbook if they're caught by an OHSA inspector.

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.