OSHA adjusts penalties for inflation: 1.6% increase for 2017
By: Travis Rhoden
Publication: Workplace Safety Advisor
Date Posted: 02/16/2017
Last year, Congress passed legislation that required OSHA to raise penalties, including a one-time adjustment of approximately 70 percent that went into effect Aug. 1, 2016. The legislation also included a requirement for an annual adjustment to reflect inflation.
For 2017, OSHA has determined there needs to be an approximate 1.6 percent increase in the minimum and maximum penalties specified in the regulations.
This means that a “serious” violation of an OSHA standard could be assessed a maximum penalty of $12,675, up from $12,471 (Note: Prior to the one-time “catchup” adjustment on Aug. 1, 2016, the penalty amount for a serious violation was $7,000).
While the annual inflation adjustment is minimal, there could be some major impacts. In the discussion of the increase, OSHA made it clear that states with their own approved State OSHA Plans must have maximum and minimum penalties at least as high as the new Federal penalties, and must be adjusted annually.
Several states had argued at the time of the Aug. 1, 2016, change, that they were only required to have penalties that were “at least as effective” as OSHA’s, not identical.
However, OSHA disagrees with this theory, noting that historically, State Plans have matched OSHA’s maximum and minimum penalties identically. (In 1990, when Congress increased OSHA’s maximum and minimum penalty levels, all State Plans adopted identical penalty levels, resulting in the $7,000/$70,000 penalty levels in effect for 25 years for both OSHA and the State Plans.)
OSHA does say that state plans are allowed to have differences in the actual penalties assessed, the way adjustments are made, etc., as long as the maximum and minimum penalties are at least as high as Federal OSHA’s.
But, wait ... there is a bright side
While maximum penalty amounts have been significantly raised, the good news for employers is that these maximum penalties are hardly ever assessed initially, and even more rarely do they stand as the final penalty when they are initially assessed. The maximums are usually reserved for cases where the employer either willfully or repeatedly exposed workers to serious hazards.
As OSHA is required by law to adjust penalties for size and good faith, the average penalty amounts do not end up near the maximum penalty amount.
For FY16, the average Federal OSHA penalty per serious violation was $3,415. As for the states, their average penalties have also historically been much lower than the maximum possible. That’s why employers must always know their rights to contest citations, and take advantage of the informal conference process, which is where many penalty reductions occur.
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