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OSHA Penalty Changes

A series of changes to the penalty calculation process used by OSHA will take effect next week.  These changes appear to be designed to increase the penalty amount assessed against employers.  OSHA is accomplishing this overall penalty increase by modifying the administration of the penalty structure currently in place.  These changes include increasing threshold for employer eligibility to receive a penalty reduction, by modifying the application of any discounts, and by increasing the penalty amounts. 

Modified Penalty Structure

  • The minimum possible penalty was increased to $500 for any serious violation.
  • A new penalty modifier of an additional 10% is now added for employers with a prior serious, willful, or repeat violation in the prior five year period.
  • A violation can now be the basis for a repeat citation for five years instead of three years.
  • OSHA will increase the penalty thresholds under its gravity based penalty model to range from $3,000 to $7,000 instead of the current $2,000 to $5,000.

Increased Eligibility Threshold

  • The good history reduction for employers will now require a clean history of five years to qualify for the discount as opposed to the prior rule of three years.
  • The discount for employer size will be reduced to a maximum discount of 40% as opposed to the prior maximum discount of 60%.
  • OSHA eliminated some of the elements of the good faith reduction.

Changes to Application of Discounts

  • OSHA is modifying the method by which discounts are applied to the total proposed penalty.  Under the current method, OSHA adds up the total reduction percentage and applies it to the citation(s) in the aggregate.  The new calculation method will apply all penalty reductions serially.  What this means is a slightly lower penalty reduction for employers.  Here is a simple example to illustrate this concept.  An employer's total penalty is $10,000.  The employer is eligible for the following reductions:  10% good history; 20% size, and a 15% good faith reduction.  Under the current method, the employer will receive a total reduction of 45% which amounts to a penalty reduction of $4,500 or a penalty of $5,500.  Under the new method, the employer will recieve a $1,000 history discount ($10,000 * .1), a $1,350 good faith discount, ($9,000 * .15) and a size discount of $1,530 ($7,650 * .20).  In total, the new method will arrive at a penalty reduction of $3,880 or a penalty of $6,120.  In this example, the final penalty amount is increased by $620 by simply changing the way the reduction is calculated.

For more information, you can review a summary of the changes on OSHA's website.  The link can be found at http://www.osha.gov/dep/administrative-penalty.html


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Don Berner, the Labor Law, OSHA, & Immigration Law Guy
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Boyd Byers, the General Employment Law Guy
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Jason Lacey, the Employee Benefits Guy
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