The DOL is taking yet another step toward modernizing; it announced in late June plans to adjust outdated penalties with two interim final rules to comply with new legislation passed last year.

 

On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 was signed into law. The law is intended to “improve the effectiveness of civil monetary penalties (CMP) and maintain their deterrent effect.”  According to the rules and regulations under the new law; the law requires agencies to adjust the level of CMP with an initial “catch-up” adjustment through interim final rulemaking and make subsequent annual adjustments for inflation.

 

Although previous laws did require inflationary adjustments; there were many issues; such as caps on increases, significant and complicated rounding rules, which prevented the penalties for keeping up with inflation. The DOL believes the new law will fix some of these issues.

 

The DOL’s first interim final rule includes the majority of penalties, including but not limited to: OSHA, Employee Benefits Security Administration (EBSA), Office of Worker’s Compensation Programs and Wage and Hour Division (WHD). The second rule is penalties related to H-2B Visa programs and was issued jointly with the Department of Homeland Security.

 

The new penalty adjustments are in some cases just as significant as the new overtime threshold adjustments. The following are only a few examples of the adjustments in effect come August 1st:

 

– WHD Fair Labor Standards Act (FLSA) – Repeat or willful violation of minimum wage or overtime laws will increase to $1,894 per violation (currently $1,100)

 

– OSHA – Serious and Other than Serious violation will increase to $12,471 (currently $7,000)

 

– OSHA – willful or repeat violation maximum penalty will increase to $124,709 (current max is $70,000)

 

It’s important that employers be aware of the new penalty increases and address any potential liabilities immediately.

 

Additional information about the penalty adjustments can be viewed here: https://www.dol.gov/newsroom/releases/opa/opa20160630.

 

The DOL has also made available a table that provides details of all the penalty adjustments, which is found here: https://www.dol.gov/sites/default/files/2016-inflation-penalty-chart.pdf.

 

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