by , on November 16, 2015

The Bipartisan Budget Act of 2015 has already been signed – as of Monday, November 2. It has far-reaching implications for companies and employers, as the following article describes. Danny Raines, a top e-Hazard training instructor, made us aware of this last week.

November 1, 2015 – President Barack Obama signed into law the Bipartisan Budget Act of 2015. This act sets a budget for the US government for two years and raises the debt limit to prevent a government shutdown. Passage of the Act has a clause buried inside which means means OSHA penalties will go up to keep up with inflation.

As any employer who has paid an OSHA penalty knows, OSHA does not receive those penalties directly.  OSHA penalties are paid into the general fund. OSHA does not receive any of the OSHA fines and their budget is controlled by Congress.

The maximum monetary penalties OSHA can levy for citations are set by Congress, and the limits have not changed since 1990.

The maximum penalties are as follows:

Other than Serious $1,000,

Serious $7,000,

Willful $70,000.

The Bipartisan Budget Act of 2015 changes these by allowing adjustments for inflation on OSHA penalties. The adjustment also includes a “catch-up” adjustment that goes back to 1996.  As stated:

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.

The “CPI Inflation Calculator” from the Bureau of Labor Statistics (BLS) website, calculates that the maximum allowable penalties for OSHA citations starting next year could be as much as:

    • Other Than Serious (was $1,000) – max around $1,500
    • Serious (was $7,000) – max around $10,600
    • Willful (was $70,000) – max around $106,000

The bill also appears to allow the CPI to be used annually which would mean OSHA fines will go up each year adjusted for inflation.  This is good news for the general fund and bad news for companies receiving fines. This makes compliance more valuable than ever and should help justify proper spending levels in companies who want to do the right thing.

The Act does only addresses maximum penalty levels so OSHA does not have to impose higher penalties. But OSHA can now use stiffer penalties to encourage companies to comply and to run bad actors out of business. Most of us will not have anything to fear, but it could be a gift to those who use risk models in assessing engineering and safety spending.  Happy compliance from the e-Hazard team.

 


Hugh Hoagland
About author:
Hugh Hoagland is the foremost tester of clothing and PPE exposed to electrical arcs and is an arc flash expert. Read more about Hugh.

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