On July 1, 2016, the US Department of Labor (DOL) issued an interim final rule raising civil penalties by nearly 80 percent in some cases, for occupational and mine safety and health violations, and certain other types of employment law infractions. Although the Federal Register notice indicates that comments will be accepted on the new criteria, through August 15, 2016, it also says that the rule takes effect on August 1, 2016. In other words, it is a done deal.
The notice covers not only penalties issued by OSHA and MSHA, but also those issued by other DOL agencies, including the Employment and Training Administration, the Office of Workers’ Compensation Programs, the Wage and Hour Division (covering overtime, minimum wage, and child labor law violations), the Office of the Secretary (covering the Contract Work Hours and Safety Standards Act and the Walsh-Healey Public Contracts Act) and the Employee Benefits Security Administration. The stated goal for the increase in all agencies was to conform to the Federal Civil Penalties Inflation Adjustment Act, as amended in 2015, and the increases contained in the final rule will continue to be adjusted annually for inflation based on the Consumer Price Index in the future.
However, OSHA penalties had not been adjusted in many years, and last fall (in the debt ceiling legislation), a provision was included directing OSHA to hike its fines by nearly 80 percent—the largest increase of all the affected DOL agencies. Consequently, the maximum OSHA penalty—applicable to citations classified as “willful” or “repeat”—will rise on August 1, 2016, from the current $70,000 ceiling to a new high of $124,709. OSHA has already indicated that the heightened penalties will be applied, retroactively, to inspection events predating August 1st if the penalties and citations were not yet issued by that date. So any inspections not yet assessed that occurred in February 2016 or later can be subject to the new civil penalty structure. OSHA also said that citations issued after the August 1, 2016, effective date of the rule will be subject to the higher maximum penalty for “repeat” violations if the prior violation occurred after November 2, 2015. However, the repeat “lookback” period will still include all citations under the same standard or involving similar hazards that became final within a 5-year period prior to the new alleged violation.
The maximum penalty is not the only change affecting OSHA, as shown on the chart below.
While not mentioned in the final rule, it should be noted that OSHA Section 11(c) actions against employers, for discrimination against safety and health whistleblowers and those engaged in protected activities, are now also subject to OSHA civil penalties (in addition to OSHA prosecuting to obtain “make whole” relief such as reinstatement and back pay) under the new system. OSHA added the ability to issue civil penalties and citations as part of the Electronic Recordkeeping rule (29 CFR 1904.35 and 1904.36) and those provisions take effect on November 1, 2016.
CREDIT FOR QUOTA
In addition, under the revised “Enforcement Weighting” internal criteria released by OSHA last year, OSHA office management personnel at the regional/local levels will get greater credit toward meeting their inspection quotas for certain categories of inspections (e.g., process safety management, fatality investigations, ergonomic inspections, and health inspections involving sampling for noise and dust) than for short-term, more routine inspections. But the highest number of “inspection credits” is given for those inspection events resulting in at least $100,000 in proposed penalties, known as “significant” cases. Given this incentive to be graded higher, the higher the penalties go in a case, it can be expected that OSHA managers will encourage the issuance of more willful citations that can reach the penalty target with a single violation!
On the Mine Safety & Health Administration side, penalties have also changed but some categories actually decreased while others were raised considerably. Contractors of all types (e.g., electrical, mechanical, service personnel for mobile and other equipment used at mines, roofers, pavers, masons, demolition, tunneling, and general construction) fall under MSHA jurisdiction when they perform any type of work at a plant, mine, or quarry regulated by that agency—even if the contractor is not engaged in mining activities per se. In addition to civil penalties against the employer, MSHA can also issue personal fines against “agents of management” under Section 110(c) of the Mine Act, and these cases are reviewed for criminal referral as well, regardless of whether any accident or injuries occurred.
MSHA currently has a $70,000 maximum for regular citations, and a $112 minimum penalty. The maximum will fall slightly, due to the inflation adjustment, to $68,300, while the minimum will go up to $127. MSHA typically provides a 10 percent “good faith reduction” to citations that are promptly abated and where no adverse “operator tactics” are involved (code for “don’t fight with the inspector”) so that can bring penalties down further. MSHA’s daily fine for failure to timely abate an alleged violation, which MSHA requires even if the citation is contested, will rise from $6,500 to $7,399.
However, MSHA has a separate category—analogous to an OSHA “willful”—called a “flagrant” violation. These are issued under Section 104(d) of the Mine Act, and are the types that can lead to personal prosecutions. There are also non-flagrant Section 104(d) citations and orders issued, which are called “unwarrantable failure” violations. The current maximum penalty for flagrant violations is $242,000 but that will rise to $250,433 per citation effective August 1, 2016. In addition, MSHA has increased the minimum penalties for unwarrantable failure citations and orders, from $2,000 to $2,277 for Section 104(d)(1) citations and orders, and from $4,000 to $4,553 for Section 104(d)(2) orders.
The bottom line is that safety and health violations will bring significantly higher consequences for employers, and there may be more resistance, especially from OSHA, in reducing significant cases easily in informal conferences going forward. ■
About the Author: Adele L. Abrams, Esq., CMSP, is an attorney and safety professional who is president of the Law Office of Adele L. Abrams PC, a nine-attorney firm that represents employees in OSHA and MSHA matters nationwide. The firm also provides occupational safety and health consultation, training, and auditing services. For more information, visit www.safety-law.com.
Modern Contractor Solutions – July 2016
Did you enjoy this article?
Subscribe to the FREE Digital Edition of Modern Contractor Solutions magazine.