On November 2, President Obama signed the Bipartisan Budget Act of 2015. This legislation included a provision calling for the Occupational Safety and Health Administration’s (OSHA’s) citation penalties to increase for the first time since 1990, and to be tied to the Consumer Price Index (CPI) for future annual increases. The Budget Act allows for catch-up adjustments to these penalty amounts, which must be made by August 1, 2016, and will be tied to the CPI increases that have occurred since October 1990—the last time penalties were increased. Thus, increases made in 2016 will reflect CPI increases during the past 26 years.

It is anticipated that these increases will cause OSHA-imposed penalties to escalate approximately 70%. Employers could be looking at citations classified as “Willful” and “Repeat” going from a maximum amount of $70,000 to approximately $125,000 per infraction and “Serious” violations increasing from $7,000 to approximately $12,500.

These increases are part of provisions within the Federal Civil Penalties Inflation Adjustment Act. The Act requires not only OSHA, but all other federal agencies with civil monetary penalties, to update their penalty structure and to increase these penalties each year automatically, without following rule-making procedures.

Critics of this legislation suggest that this is a revenue-raising effort by the federal government, and will be a burden on U.S. businesses trying to compete in the global economy. The legislation came as somewhat of a surprise to business leaders, although OSHA has repeatedly advocated for increases over the years. In recent years, OSHA has implemented several changes to its administrative penalty calculation system in order to increase penalties. The factors OSHA modified in order to impact the payment of penalties included OSHA’s consideration of the employer’s history of violations for the last 5 years instead of 3 when addressing Repeat violations. It also enhanced its gravity-based penalty structure to tack on additional penalties for serious violations.

Some safety experts suggest that higher penalties will serve as a further deterrent that will prevent employers from violating OSHA’s safety standards—but that may not be likely. In any event, employers should ensure that they have strong safety programs and procedures in place that fully comply with all applicable OSHA standards that govern how employers deal with hazards in the workplace. Moreover, employers must have a well-prepared protocol in place for dealing with an OSHA compliance officer when that officer appears at the company’s doors. For a sample protocol, visit http://tinyurl.com/n97h2eh. Remember, the time to start defending against an OSHA surprise inspection is at the time the accident occurs and, at the latest, at the time the compliance officer first appears. Employers should not wait until the investigation concludes and citations are issued to attempt to protect the interests of the company. The onsite inspection and the interaction that follows, including the providing of requested documentation and witness interviews, are the most critical stages in any inspection and should be handled very carefully with the assistance of competent OSHA counsel.

While some employers look upon the payment of penalties as a cost of doing business, it must be remembered that OSHA’s penalty structure makes it more expensive for a non-complying employer each time the safety standard is again violated. Therefore, dealing with OSHA citations requires far more than merely attempting to negotiate a 25% to 30% reduction in the total penalties imposed and accepting all of the citations as written. Instead, employers need to negotiate the vacating of citations for certain standards that are likely to be violated again in the future. For example, an employer performing roofing work may easily get cited again for violation of the fall-protection standard. Contesting these citations may become necessary because of the long-term ramifications of potential future violations—imposition of a $125,000 penalty.

Make sure your safety programs, procedures, and policies are up to date and vigorously enforced. Also, be prepared to deal with OSHA when the compliance officer first appears.