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In another employment related development, OSHA fines are set to increase in 2016 for the first time in 25 years. A provision that allows OSHA to hike maximum penalties for violations by about 78 percent was added by Congress to the budget bill signed by President Obama on November 2. It also indexes fines to the rate of inflation, allowing for future growth. This change will be effective August, 2016.
Penalty money collected by OSHA goes to a general Treasury Department fund, not directly to OSHA, so they have no direct incentive to fine employers. Nevertheless, OSHA has long argued that fines have not been large enough to serve as an incentive for compliance and actually effect change in employer behavior, and that many employers just treated them as a cost of doing business.
OSHA publishes information on fines on their website. As of December 1, 2015, there had been 607 cases year to date nationwide that resulted in total initial penalties of $40,000 or more, with total penalties adding up to more than $55 million all together. For the mathematically inclined, that’s an average penalty of over $90,000, which would increase to over $160,000 with the new legislation. Bear in mind, many of these are initial penalties, not all are final, and employers can choose to contest them.
That could well happen more frequently in the future. Some employment attorneys think businesses may be likely to view higher fines as a change by OSHA to an emphasis on penalizing, rather than cooperating with, employers to abate unsafe working conditions. In any event, with fines being increased so much employers may be more likely to fight a citation rather than go along with a reduced fine, and OSHA could find that it will be spending a lot more time in hearings.