You don’t have to be an economist to know that inflation has negative implications, affecting the labor market in various ways. Employers are looking for ways to operate more efficiently, and employees are asking for more money to account for the higher cost of living. The price of eggs at the supermarket, am I right?

Inflation continues to impact the labor market. Last week OSHA announced that it is increasing its minimum and maximum penalties for OSH Act violations by 7.7% to account for inflation. This increase surpasses 2022, which saw penalties rise by 6.2%. OSHA is ordering states to adopt this change in their work-safety programs while the agency awaits a federal judge’s ruling in litigation to determine if the mandate is lawful. On January 17th, the increase took effect under a direct final rule.

Maximum Fines for “Willful” and “Repeated” Violations:

• $136,532 per violation in 2021
• $145,027 per violation in 2022
• Now up to $156,259 per violation

Penalty for “Serious” or “Other-Than-Serious” Violations:

• $13,653 per violation in 2021
• $14,052 per violation in 2022
• Now $15,625 per violation
• This applies to violations of posting requirements and failure to correct a previously cited violation

OSHA increases penalty minimums and maximums each year based on the October Consumer Price Index for all Urban Consumers, compiled by the Bureau of Labor Statistics under the 2015 Inflation Adjustment Act. The inflation adjustments have been the largest in the last two years since Congress enacted the program. The 2015 law initially capped penalties at $70,000 for willful or repeated violations, and efforts to raise that amount, outside of inflation adjustments, previously failed.

Litigation & Increase in Penalties

The January 13th rule maintains that “State Plans are required to increase their penalties in alignment with OSHA’s penalty increases to maintain at least as effective penalty levels.”

The state of South Carolina is pushing the federal district court to overturn the mandate for delegated state programs to be “at least as effective as” the federal agency. South Carolina says that requiring state plan programs to set maximum penalties equal to or greater than OSHA’s, varies from the OSH Act that allows states to set their own work-safety policies with specific parameters. Their claim: the “at least as effective” language only requires states to achieve comparable results as the agency regarding work safety rather than matching OSHA’s enforcement policies. The case, McMaster et al. v. Department of Labor, is still awaiting results after the December 2nd hearing.

OSHA counters the state, stating that the law requires matching penalty levels, seeking to dismiss the suit as improper. However, the rule stems from the 2015 adjustment law or its 2016 rule that first called upon the states to match OSHA’s increases in penalties.

In October, OSHA stated, “South Carolina has known for more than six years exactly how OSHA reads the OSH Act in conjunction with the 2015 Civil Penalties Act, and yet has never brought suit.”

Increase in Penalties = Increase Pressure on Employers

OSHA violations are costly for employers and increase pressure on them, amongst many other pressures impacting employers due to inflation. However, Axiom Medical has consulted employers on the management of OSHA mandates for more than two decades and can assist by providing employers with custom-built OSHA Compliance and Safety Programs.