Construction companies could be hit hard after Congress’s new Bipartisan Budget Act of 2015 passed the Senate on Nov. 2.
The two-year bill allows the Occupational Safety and Health Administration (OSHA) to raise fines annually in line with the Consumer Price Index, something that has not been allowed before now. OSHA is also permitted a one-time “catch-up adjustment” of up to 150 percent to make up for the lack in fine increases since 1990.
OSHA is expected to increase fines by approximately 82 percent to adjust for inflation. At this rate, the current $70,000 maximum penalty for repeat and willful violations would increase to $127,438, while the $7,000 serious violation maximum fine would jump to $12,744.
The new penalty amounts would go into effect by August 2016.
The Bureau of Labor Statistics preliminary 2014 Census of Fatal Occupational Injuries was released last month, reporting a 2 percent increase in fatal work injuries recorded in the U.S. last year over 2013.
A total of 4,679 worker deaths occurred in 2014 – 874 of those in construction – compared to 4,585 in 2013 (828 in construction). OSHA is one of the few federal agencies whose civil penalties did not currently adjust to match inflation.
The Bipartisan Budget Act of 2015 removes a statutory exemption from penalties under certain statutes, including the Occupational Safety and Health Act of 1970, from inflation for civil penalties.
“OSHA is now carrying bigger stick, without a carrot attached to it,” HCSS Senior Safety Consultant Jim Goss said. “This is something they’ve attempted to do in almost every budget negotiated between the White House and congressional leadership in the last 15 years, and they’re doing everything they can to get it done.”
Because the Bipartisan Budget Act is a legislative ruling, rather than a regulatory change, there is no opportunity for appeal. Goss said this change will have implications for the future as well.
“This is not the last year the fines will go up, and we could be seeing increases that are based on specific issues,” he said. “That’s the scary thing. They look at the Consumer Price Index, but there could be larger increases based on perceived inflation as well.”