In a move that caught many in the construction industry by surprise, the Occupational Safety and Health Administration (OSHA) was granted power to increase their fines by the 2016 federal budget bill that recently passed Congress and was signed into law. The included provisions will allow OSHA to adjust fine amounts frozen since 1990 in order to reflect rising inflation that has occurred since then.
As you can imagine, tacking on 15 years’ worth of inflation at once can spell quite a significant adjustment. Looking at the Consumer Price Index (CPI) — the measurement Congress and federal agencies use to gauge inflation — costs have increased 82 percent since 1990. Construction businesses that want to remain financially viable will now have a tremendous incentive to stay abreast of OSHA regulations lest they encounter these crippling fines.
What an 82 Percent Increase in OSHA Fines Looks Like
The incremental rise of good prices over time that translates to a slight devaluation in currency across the board — is a major economic force of change.
Most private industries absorb the costs of inflation by increasing the charges for their services. However, government regulations do not always keep pace with inflation. The set-in-stone nature of congressional laws means that specific wording is required for devices like fines to reflect inflation.
Such wording was included in a 1990 bill that was designed to permanently tie the costs of regulatory agency fines to the CPI’s inflation measurements. After much debate, OSHA was given an exemption, which meant that their prices would stay fixed even as other agencies adjusted with the times.
Now, that exemption is over. The cumulative effect of removing it 15 years after the fact means a steep 82 percent increase in fine assessments.
So what does an 82 percent jump look like?
- Maximum fine for failure to meet OSHA posting requirements:
- Before budget bill — $7,000
- After budget bill — $12,740
- Maximum fine for a willful violation:
- Before budget bill — $70,000
- After budget bill — $127,400
Note that these numbers correspond to the maximum penalty, which is only assessed after OSHA determines the weight and severity of the offense. Even for maximum penalties, negotiations and settlements often reduce the final fine amount to 50 percent – 60 percent of its original amount.
These caveats can spell some relief for inadvertent violators, but construction firms in the long-run have a vested interest in educating their workers, providing the needed safety equipment and abiding by regulated procedures and practices to avoid coming under OSHA’s ire.
Keeping Your Money in Your Pocket and Not OSHA’s
Avoiding OSHA fines involves a lot more than merely “getting your act together” in time for an OSHA inspection. A member of your company must be actively tracking developments, such as OSHA’s revised confined space standards, in order to keep up with the latest best practices and workplace safety requirements. Familiarize yourself with OSHA’s lengthy construction safety and health regulations to avoid steep fines as well as the sorrow of having a workplace injury or death occur.
Your company must also be prepared to identify construction risks and take measures to prevent or mitigate them. A comprehensive work safety program that includes worker education, proper clothing, visible signage and the needed equipment will be your second major step after assessing risks.
Finally, carry the needed workers’ compensation, liability and equipment insurance coverage to protect your company from financial risks. You can learn more about purchasing the needed construction policies by clicking on our contractors insurance location services and finding the coverage that is right for your area and industry.