WASHINGTON – By the time Congress passed the Federal Civil Penalties Inflation Adjustment Act (FCPIA) in 2015, OSHA’s penalty fees hadn’t budged since Madonna’s “Vogue” was a radio hit; yes, distant 1990. Which is to say, workplace rule violators in 2014 were being softly tapped with antique 90s-era penalty fees.
The deterrent effect was wanting, to say the least. In order for future monetary penalties to accurately reflect the real-time value of the dollars that comprise them, the 2015 act pegged future penalty figures to the national inflation rate and the Cost of Living Adjustment (COLA). 2015’s FCPIA also directed agencies to adjust their penalties for inflation each year going forward, and to publish interim rules this summer (2016) to keep pace with COLA.
As a result, the U.S. Department of Labor announced today those two interim rules, which affected penalties to accommodate the “inflation creep” in certain penalty fees since the passage of the 2015 act.
The first interim rule will update penalties assessed by the department’s Employee Benefits Security Administration, Mine Safety and Health Administration, Occupational Safety and Health Administration, Office of Workers’ Compensation Programs, and Wage and Hour Division. The second rule, issued jointly with the Department of Homeland Security, will update penalties associated with the H-2B temporary guest worker program.
Under the 2015 law, agencies were directed to publish these two interim final rules by July 1, 2016.
Although the two new adjustments are based on inflation, the amount of the increase is capped at 150 percent of the existing penalty amount. The baseline figure for that cap is the most recent increase other than for inflation. The new adjusted civil penalty amounts are applicable only to civil penalties assessed after Aug. 1, 2016, whose associated violations occurred after Nov. 2, 2015.
The rules published under the 2015 law will update and adjust certain penalties that have long been out of step with inflation.
* OSHA’s maximum penalties, which have not been raised since 1990, will increase by 78 percent. The top penalty for serious violations will rise from $7,000 to $12,471. The maximum penalty for willful or repeated violations will increase from $70,000 to $124,709.
* OWCP’s penalty for failure to report termination of payments made under the Longshore and Harbor Workers’ Compensation Act, has only increased $10 since 1927, and will rise from $110 to $275.
* WHD’s penalty for willful violations of the minimum wage and overtime provisions of the Fair Labor Standards Act will increase from $1,100 to $1,894.
A list of each agency’s individual penalty adjustments can be found here.