Construction companies could be hit hard if Congress’s new Bipartisan Budget Act of 2015 passes the Senate today.
The two-year bill, which passed the House of Representatives on Wednesday, would allow the Occupational Safety and Health Administration (OSHA) to raise fines annually in line with the Consumer Price Index, something that has not been allowed before now. OSHA would also be permitted a one-time “catch-up adjustment” of up to 150 percent to make up for the lack in fine increases since 1990.
The bill is expected to go through the Senate today and reach President Barack Obama’s desk tomorrow. If it does get signed, OSHA is expected to increase fines by approximately 82 percent to adjust for inflation since 1990.
That means the current $70,000 maximum penalty for repeat and willful violations would increase to $127,438, while the $7,000 serious violation maximum fine would jump to $12,744.
The Bureau of Labor Statistics preliminary 2014 Census of Fatal Occupational Injuries was released last month, reporting a 2 percent increase in fatal work injuries recorded in the U.S. last year over 2013. A total of 4,679 worker deaths occurred in 2014 -- 874 of those in construction -- compared to 4,585 in 2013 (828 in construction).
OSHA is one of the few federal agencies whose civil penalties do not currently adjust to match inflation.
The Bipartisan Budget Act of 2015 removes a statutory exemption from penalties under certain statutes, including the Occupational Safety and Health Act of 1970, from inflation for civil penalties. OSHA will now have to report on their adjustment in their annual financial statements and via the U.S. Government Accountability Office, according to Kevin Cannon, CSP, Associated General Contractors of America (AGC) Senior Director of Safety and Health Services.
“OSHA is now carrying bigger stick, without a carrot attached to it,” HCSS Senior Safety Consultant Jim Goss said. “This is something they’ve attempted to do in almost every budget negotiated between the White House and congressional leadership in the last 15 years, and they’re doing everything they can to get it done.”
Because the Bipartisan Budget Act is a legislative ruling, rather than a regulatory change, there is no opportunity for appeal if the law does get signed.
Goss said this change would have implications for the future as well.
“This is not the last year the fines will go up, and we could be seeing increases that are based on specific issues,” he said. “That’s the scary thing. They look at the Consumer Price Index, but there could be larger increases based on perceived inflation as well.”
OSHA declined to comment to Bloomberg BNA, a network of news sources regarding legal, tax, regulatory, and business information for professionals, when asked for comment earlier this week – although they did say they were studying the proposal.
But Bloomberg BNA reported that raising potential OSHA fines has been a goal of lawmakers who support the agency in recent years.
“Indexing penalties for OSHA violations is a fair, common-sense step toward strengthening worker safety protections,” Sen. Patty Murray (D-Wash.), a senior member of the Budget Committee; Appropriations Committee; and Health, Education, Labor and Pensions Committee, told Bloomberg BNA in an email.
“I’m glad this provision was included in the budget proposal, and I will continue working to do even more to stand up for workers who should be able to go to work confident that their employers are doing their part to provide safe and healthy workplaces,” she said.
Bloomberg BNA reported that there was no information offered on how the unexpected OSHA provision was added during closed-door negotiations between lawmakers and the Obama administration.
The budget deal is meant to suspend the debt ceiling until March 2017 and create a two-year budget plan to provide some relief from across-the-board federal spending cuts. It raises government-wide spending limits that were put in place in 2011, adding $50 billion in 2016 to the $520 billion budget for defense programs and the $493 billion for non-defense programs. It would also add $30 billion to these totals in its second year.
The bill would also provide funding to protect senior citizens from a predicted spike in Medicare premium costs in 2016 and save $168 billion from changes to Social Security.