Workplace Safety Violations: More Costly and With More Criminal Penalties in 2016

Congress’s recently passed budget agreement includes a provision that permits the Occupational Safety and Health Administration (OSHA) to increase fines consistent with inflation. This “catch-up” provision means that OSHA fines could increase up to 82% to account for inflation between 1990 and 2015. The law also authorizes increases in OSHA penalties to keep pace with inflation each year. 

Additionally, a new U.S. Department of Justice (DOJ) initiative will encourage the Offices of the United States Attorneys to consider charging employers with environmental offenses, including felony charges, in conjunction with “willful” violations that result in an employee death. After seeing OSHA ramp up the reporting requirements for safety-related incidents in 2015, employers should prepare to manage even more potentially serious OSHA risks in 2016.

Mandatory Reporting and OSHA Investigations

In 2015, OSHA implemented new mandatory reporting requirements under which employers must report to the agency within 24 hours if a single employee is hospitalized overnight as the result of a work-related incident. Before this change in the regulations, employers were required to report to OSHA only if three or more employees were hospitalized overnight. The new regulations also require you to report to OSHA within 24 hours if an employee suffers an amputation or the loss of an eye. You are still required to report workplace fatalities within eight hours.

The new regulations became effective January 1, 2015. For employers, the changes mean that a larger percentage of workplace accidents need to be reported to OSHA. Mandatory reporting frequently leads to on-site OSHA inspections.

OSHA Fines Will Increase Approximately 80%

OSHA fines will increase for the first time since 1990 under a provision in the recently signed congressional budget deal. Previously, OSHA wasn’t allowed to increase its penalties to account for inflation under the Federal Civil Penalties Inflation Adjustment Act of 1990. The last time Congress increased OSHA penalty levels was in the Omnibus Budget Reconciliation Act of 1990.

The new budget deal, passed by Congress and signed into law by President Barack Obama on November 2, 2015, contains an amendment that eliminates the restriction on inflation-related penalty increases for OSHA and allows a one-time “catch-up” in penalties from the 1990 level based on inflation. Under the amendment, OSHA is no longer excluded from the agencies that can adjust their penalties for inflation.

OSHA now has the authority to issue a single penalty increase to account for inflation since 1990, which would raise the current penalty levels approximately 80%. The increases will be based on the Consumer Price Index (CPI) reports released in October 1990 and October 2015.

In 2016, the catch-up provision will likely have the following effect:

OSHA is required to make any adjustment to its penalties before August 1, 2016. Although there’s no requirement that the agency adopt the highest catch-up increase, it seems likely that OSHA will increase its maximum penalties to the highest possible amounts. Also included in the 2015 Adjustment Act is the authority for OSHA to increase penalties every year to account for inflation, as opposed to the every-four-years standard applicable to other federal agencies.

DOJ Plans to Ramp Up Prosecution

On December 17, 2015, the DOJ announced that “in an effort to prevent and deter crimes that put the lives and the health of workers at risk,” it would be working with OSHA, the Mine Safety and Health Administration (MSHA), and the Wage and Hour Division (WHD) “to investigate and prosecute worker endangerment violations.” As part of this initiative, the DOJ is directing the Offices of the United States Attorneys to use their Environmental Crimes Sections to prosecute worker safety violations referred by OSHA.

The DOJ currently has the authority under the Occupational Safety and Health Act (OSH Act) to punish a willful violation that results in the death of an employee by bringing a misdemeanor charge against the employer. The new DOJ initiative shows an increased willingness by the government to bring and prosecute charges under the OSH Act.

In addition to focusing attention on OSH Act violations, the initiative encourages federal prosecutors “to consider Title 18 and environmental offenses, which often occur in conjunction with worker safety crimes to enhance penalties and increase deterrence.” The DOJ has expressed concern “that employers who are willing to cut corners on worker safety laws to maximize production and profit will also turn a blind eye to environmental laws.”

Criminal environmental crimes are felonies that carry penalties ranging from five to 20 years of incarceration in addition to substantial fines. Based on the high number of investigations resulting from mandatory reporting to OSHA and the DOJ’s increased focus on prosecuting worker safety violations, OSHA violations that could potentially be classified as willful now carry an even greater risk to employers.

Bottom Line

OSHA violations will be subject to higher penalties, increased scrutiny, and more criminal liability in 2016. Employers should be aware that all OSHA penalties will increase by 80% sometime before August 2016. You should also be aware that mandatory reports may result in an on-site inspection by OSHA.

Finally, willful OSHA violations that result in an employee’s death may now result in felony environmental criminal charges in addition to criminal prosecution under the OSH Act. If you haven’t recently reviewed and updated your OSHA procedures, you should be proactive in making sure your OSHA policies and training are compliant before a workplace incident or OSHA inspection occurs.

This article, slightly modified to note recent updates, was featured in the March 2016 issue of the Wisconsin Employment Law Letter, which is edited by Axley Brynelson Attorney Saul Glazer and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.