In 2015, Congress passed the Federal Civil Penalties Inflation Adjustment Act. It was passed to improve the effectiveness of civil penalties and to maintain their deterrent effect. The Act requires agencies to adjust their level of monetary penalties and to make subsequent annual adjustments for inflation no later than January 15th of each year.
The Labor Department issued an annual inflation adjustment of civil penalties in 2019. It calculates the annual adjustment based on the Consumer Price Index for all Urban Consumers (CPI-U). The most recent adjustment is based on the percent change between the October 2019 and October 2018 CPI-U.
The Federal Civil Penalties Inflation Adjustment Act provides a cost-of-living formula for the adjustment of civil penalties. The Act increases penalty levels to those assessed after the effective date of the increase. The final rule became effective January 15, 2020, increasing penalty fees. The changes to the Mine Safety and Health Administration (MSHA) and the Occupational Safety and Health Administration (OSHA) penalties take effect immediately and apply to penalties assessed after January 15, 2020.
Penalty Assessment FormulaPenalties for health and safety violations are assessed by MSHA’s Office of Assessments’ formula that considers five factors: the history of previous violations, size of the business, negligence of the operator, gravity of the violation, and the operator’s good faith attempt to correct the violation promptly (if any). The inspector determines these findings from inspections, MSHA records, and information supplied by the operator. The effect of the penalty on the operator’s ability to remain in business is also considered when an operator submits information to the inspector.
OSHA PenaltiesOSHA raised its civil penalties by about 1.8% at the beginning of this year. Some of the changes to the OSHA penalties include the following: willful violations where an employer knowingly failed to comply with OSH standards or demonstrated plain indifference for employee safety now has an increased penalty from $49,472 to 49,639 and the maximum penalty increases from $132,598 to $134,937. Violations that are repeated or substantially similar to previous violations have penalties that increase from $132,598 to $134,937.
MSHA PenaltiesMSHA violations are the most serious and can impose the greatest fees. The most severe MSHA flagrant violation will now cost $266,275. Employers that fail to abate a citation will incur a maximum penalty of $7,867 per day. Failure to report a fatality or serious injury within 15 minutes will incur a minimum penalty of $6,052.
Contesting Health and Safety CitationsThere are multiple options employers can take if OSHA or MSHA cites the company for a violation. If you believe you unfairly received a citation or have evidence to defend your business’ health and safety standards, it may be beneficial to contest the citation. You can contest a citation if you do not believe that your company violated a health and safety order, you believe the violation was improperly classified, you do not believe that the Government gave your company enough time to complete the abatement, or if you believe the assessed penalty was unreasonable.
OSHA Citations must be addressed as soon as possible. Requests to contest OSHA citations must be made within 15 calendar days. Mine operators have 30 days to file a notice of contest with the Secretary of Labor or can wait until a penalty is assessed. After receiving the penalty, the operator has 30 days to file a contest and request a hearing before an administrative law judge of the Federal Mine Safety and Health Review Commission.
There are other factors employers should consider beside the monetary expense of citations. It is also important to consider the consequences of receiving a citation. Workplace safety violations that lead to repeat violations are likely to receive greater fines. Employers are cited for ‘repeated’ violations if they receive ‘substantially similar’ violations anywhere in the nation within the past three years. Employers can also develop poor reputations in the labor community if it consistently receives citations or has employees who continue to get hurt on the job.