The cost of broken safety policies on the jobsite is becoming significantly more expensive based on increasing workforce incidents, OSHA fines and insurance premiums. The increases began when the U.S. Department of Labor (DOL) passed a new law allowing agencies to adjust penalties to reflect the inflation each year. The Federal Civil Penalties Inflation Adjustment Act Improvements Act allows agencies to continue discouraging unsafe actions and be effective by keeping fines high.
One of the most dramatic adjustment to penalties and fines was implemented by the Occupational Safety and Health Administration (OSHA). Since OSHA had not changed the amount of their fines since 1990 for jobsite safety violations, they decided to make up for this deficiency by increasing these fines 78% on August 1, 2016. In addition, these fines will have "automatic" annual increases based on the rate of inflation. Below is a chart outlining the annual increase in fines.
The most expensive fine, Willful or Repeat Violations, increased from $70,000 to $124,709 IN ONE YEAR from 2015 to 2016. The increase did not, and will not, stop in 2016. In 2017, OSHA increased the fines again and will have the ability to do so each year as the cost of living continues to rise.
OSHA has a "cap" that does not allow the agency to increase fines by more than 150% of the existing penalty amount. As indicated in the table there is still a significant increase that can take effect prior to reaching this cap.
Each year the inflation in the U.S. increases approximately 2.9%. This increase can be directly related to the increase in wages because the more money needed to pay employees means more money will need to be made from products or services. This causes an increase in purchasing and living costs, which leads to the increased inflation.
As inflation continues to rise, so will OSHA fines. This increases the importance of workplace safety tremendously and can make a difference in the operating cost, profitability and competitiveness of a business. By ensuring your company has a strong safety policy, effective safety practices and proper safety training, it can save an enormous amount of money each year. Not only will a strong safety program help your company meet its responsibility in providing protection for all employees, but also help your company save money to support its growth and success.
For information on how SMART Safety can build a stronger safety program for your company, please visit the About Us page.