The U.S. Occupational Safety and Health Administration (OSHA) announced another annual inflation based increase in the civil monetary penalties for violations of federal Occupational Safety and Health standards and regulations. The new penalties will be nearly 10% higher than the previous penalty amounts.
On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 was enacted, which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 as previously amended by the 1996 Debt Collection Improvement Act to improve the effectiveness of civil monetary penalties and maintain their deterrent effect.
The OSHA cost-of-living adjustment multiplier for 2023, based on the Consumer Price Index for All Urban Consumers for October 2022 (not seasonally adjusted), is 1.07745. To compute the 2023 annual adjustment, the Department multiplied the most recent penalty amount for each applicable penalty by the multiplier, 1.07745, and rounded to the nearest dollar. The adjustment factor of 1.07745 is consistent across the minimum and maximum penalties set forth in the Occupational Safety and Health Act and the FOM.
The Inflation Adjustment Act required agencies to: (1) adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule and (2) make subsequent annual adjustments for inflation, no later than January 15 of each year.
Using this formula, some examples of the new current maximum penalties for this year are as follows:
– – Serious and Other-Than-Serious Posting Requirements maximum penalty is $15,625 per violation
– – Failure to Abate violation maximum is $15,625 per day beyond the abatement date
– – Willful or Repeated violation is $156,259 per violation
States that operate their own Occupational Safety and Health Plans are required to adopt maximum penalty levels that are at least as effective as Federal OSHA’s. State Plans are not required to impose monetary penalties on state and local government employers. Cal/OSHA penalties are specified in section 336 of its regulations.
And their are some costly new changes to the penalty provisions of Cal/OSHA authority.
On Sept. 28, 2021, California Gov. Gavin Newsom signed into law Senate Bill 606 (SB 606), which, among other things, created two new categories of Cal/OSHA violations: “egregious” and “enterprise-wide.
The new categories of violations carry significant monetary penalties against employers. Under this new law, Section 6317.8 of the California Labor Code provides that Cal/OSHA “shall issue a citation to that employer for each egregious violation, and each instance of an employee exposed to that violation shall be considered a separate violation for purposes of the issuance of fines and penalties.”
Employers face up to $134,334 per egregious and enterprise-wide violation. So if this maximum penalty (increased by the COLA) is issued for “each instance of an employee exposed” the total penalty could theoretically result in hundreds of millions of dollars.
In the definition of “egregious” violation in Labor Code 6317.8 lists 7 criteria for this determination, and any “one or more” of them can be grounds for a finding of an egregious violation. One example is “persistently high rates of worker injuries or illnesses.” Theoretically, industries that are dangerous by the every nature of the work will have “persistently high rates of worker injuries or illnesses.”
And a COLA is now required annually to penalties under this new Cal/OSHA law. Labor Code 6429 (a)(2) provides that “Commencing on January 1, 2018, and each January 1 thereafter, the penalty amounts specified in this section shall be increased based on the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U), not seasonally adjusted, for the month of October immediately preceding the date of the adjustment, as compared to the prior year’s October CPI-U.”
Thus, as employers enter 2023, OSHA penalties and Cal/OSHA penalties increase based upon CPI formulas. And then since each egregious and enterprise-wide violation in California applies the maximum penalty to “each instance of an employee exposed,” 2023 brings in higher OSHA and much higher Cal/OSHA penalties.