By Robert G. Chadwick, Jr., Partner, Freeman Mathis & Gary, LLP.

Under the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015, OSHA penalties will undergo annual inflation adjustments beginning on January 15, 2017. A one-time “catch up adjustment”, however, must be announced by the agency by July 1, 2016. This “catch up adjustment” will take effect no later than August 1, 2016.  The purpose of this one-time “catch up adjustment” is to make inflation adjustments since the last increase in OSHA fines in 1990.

Many experts are predicting that the “catch up adjustment” could mean an 80% increase in OSHA penalties effective August 1. The following shows how such an increase would affect the current maximum penalties:

“Other then Serious” and “Serious” Violations:

• $7,000 currently
• $12,600 after August 1, 2016

“Willful” and “Repeat” Violations:

• $70,000 currently
• $126,000 after August 1, 2016

“Failure to Abate” Violations:

• $7,000 per day currently
• $12,600 per day after August 1, 2016

To fully appreciate the full importance of these increases, however, employers must also understand the means by which penalties can be assessed by OSHA.  A single OSHA inspection can result in multiple penalties based upon the number of violations and/or hazards discovered.  On October 29, 2009, for instance, BP Products of North America was assessed a record $81,340,000 in total penalties based upon only two inspections.

OSHA, moreover, generally combines separate violations of a single OSHA standard into one proposed penalty. Similarly, when a single hazard violates more than one OSHA standard, the violations may be grouped into one proposed penalty. There are instances, however, when violations will not be combined or grouped into one proposed penalty:

Multiple Establishments or Worksites:  Violations of an OSHA standard at more than one establishment or worksite of the same employer generally draw a separate penalty for each establishment or worksite.

Multiple Employee Exposures: For egregious violations, a penalty can be assessed for each employee exposed to a single hazard. CPL 02-00-080

Multiple Violations of OSHA Standard: For egregious violations, a penalty can be assessed for each violation of the same OSHA standard. CPL 02-00-080

For most OSHA inspections, therefore, the full impact of the penalty increases will be multiplied by the number of discovered violations and/or hazards. For egregious violators, the full impact of the penalty increases may be multiplied even further.  This much is certain; the number of OSHA inspections resulting in combined penalties exceeding six figures and seven figures will increase dramatically beginning this year.