Department of Labor Announces Interim Final Rules Adjusting Penalties Based on Inflation

 
Tuesday, July 5, 2016
 

The U.S. Department of Labor announced two interim final rules to adjust its penalties for inflation based on the last time each penalty was increased. These rules are a result of the Federal Civil Penalties Inflation Adjustment Act Improvements Act which Congress passed in 2015 and which directs directs agencies to adjust their penalties for inflation each year, and requires agencies to publish “catch up” rules this summer to make up for previous lags in adjustments.

The first rule will cover the vast majority of penalties assessed by the department’s Employee Benefits Security Administration, Mine Safety and Health Administration, Occupational Safety and Health Administration, Office of Workers’ Compensation Programs, and Wage and Hour Division. The second rule will be issued jointly with the Department of Homeland Security to adjust penalties associated with the H-2B temporary guest worker program.

Under the 2015 law, agencies are directed to publish interim final rules by July 1, 2016. The department will accept public comments for 45 days to inform the publication of any final rule.

The new method will adjust penalties for inflation, though the amount of the increase is capped at 150 percent of the existing penalty amount. The baseline is the last increase other than for inflation. The new civil penalty amounts are applicable only to civil penalties assessed after Aug. 1, 2016, whose associated violations occurred after Nov. 2, 2015.   

The rules published under the 2015 law will modernize some penalties that have long lost ground to inflation:

1.  OSHA’s maximum penalties, which have not been raised since 1990, will increase by 78 percent. The top penalty for serious violations will rise from $7,000 to $12,471. The maximum penalty for willful or repeated violations will increase from $70,000 to $124,709.


2.  OWCP’s penalty for failure to report termination of payments made under the Longshore and Harbor Workers’ Compensation Act, has only increased $10 since 1927, and will rise from $110 to $275.

3.WHD’s penalty for willful violations of the minimum wage and overtime provisions of the Fair Labor Standards Act will increase from $1,100 to $1,894.

 

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