The recent federal budget compromise contains a potentially nasty surprise for some employers. The new law allows the Occupational Safety and Health Administration, among other federal agencies, to increase civil penalties for violation of their regulations. The current maximum penalty for each OSHA violation is $7000, rising to $70,000 for a repeat or willful violation. Under the new law, these potential maximums will increase to $12,744 and $125,438.

The current OSHA penalty amounts have not increased since 1990. For years, the agency has urged Congress to increase its civil penalty authority in order to deter workplace safety violations. In addition to the immediate increase, OSHA can increase penalties in future years based on changes to the Consumer Price Index. The law does not require OSHA to raise penalties to the new maximum level. Between now and August 1, the agency must publish rules setting forth the new penalty maximums.

Of course, OSHA will continue its discretion to set fines for individual violations using a number of factors, including the particular circumstances faced, and the degree of cooperation demonstrated by the employer. In most cases, OSHA does not seek to apply the maximum penalty. Congress required that the penalty amounts continue to fund general government operations to remove any perception that OSHA is using its civil penalty authority to supplement its own budget.