Get Ready for Annual Hikes in Federal Civil Monetary Penalties

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04/27/2017

Hi Visitor,

Get Ready for Annual Hikes in Federal Civil Monetary Penalties

By Anthony Oceguera 

Last year, Congress passed the Federal Civil Penalties Inflation Adjustment Act Improvement Act of 2015, directing Federal agencies to adjust their civil monetary penalties for inflation every year.  Additionally, the law directed agencies to determine the last time their penalties were increased and to issue interim final rules adjusting their penalties for inflation from that date.  These so called “catch up” increases were capped at 150 percent of the existing penalty amount.

On June 30, 2016, the Department of Labor issued two new rules adjusting their various civil penalties.  As a result, OSHA penalties will increase by approximately 78 percent.  The maximum penalty for serious violations will increase from $7,000 to $12,471, and the maximum penalty for willful or repeated violations will rise from $70,000 to $124,709.  

Similarly, Wage and Hour Division penalties for willful violations of the Fair Labor Standards Act minimum wage and overtime provisions will increase by more than 70 percent.    The maximum penalty for these violations will increase from $1,100 to $1,894 per employee for willful or repeated violations.  

Of course, penalties for H2-A violations will also increase.  The maximum penalty for violating H2-A work contracts or governing statutes will increase from $1,500 per violation to $1,631.  The maximum penalty for unlawful discrimination against a H2-A worker will increase from $5,000 to $5,491.  The maximum penalties for a health or safety violation resulting in serious injury or death will increase from $50,000 to $54,373, and from $100,000 to $108,745 if it is a willful or repeat violation.  A company cited for failing to cooperate in an investigation will be subject to a maximum penalty of $5,000 to $5,491.  Lastly, the maximum penalties for employers who improperly displace or reject a US worker will increase from $15,000 to $16,000.

The interim final rule changes apply to penalties assessed after August 1, 2016, with respect to violations that occurred after November 2, 2015.  The Department of Labor will continue to adjust penalties for inflation by January 15 of each year.  

COUNSEL TO MANAGEMENT:

The express purpose behind this law and the increase in penalties is to deter violations.  Therefore, companies should anticipate the Department of Labor being more aggressive in issuing increased violations in an effort to demonstrate that these laws have real teeth.  It is important that companies keep themselves apprised of these future increases in penalty amounts and take appropriate action to comply with the law in order to avoid being subject to increased penalties.  

If you have any questions regarding the various increases in penalties, do not hesitate to contact the experts at The Saqui Law Group.


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