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Penalty Increase: Ensure You Are in Compliance to Avoid Civil Penalties

By Highland Precision Ag
July, 2016

Farm worker

Did you know, on July 1, 2016 the Civil Penalties Inflation Adjustment Act Improvement Act went into effect. Of course, the devil is in the details or in this case the rules. The US Department of Labor just announced “new” rules to adjust civil penalty amounts to adjust for inflation.

The new method will adjust penalties for inflation, though (like this takes the sting away) 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:

  • 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.
  • 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.
  • 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.
  • WHD’s penalty for willful violations of MSPA will increase from $1,000 to $2,355

Farm field

U.S. Secretary of Labor Thomas E. Perez said “Civil penalties should be a credible deterrent that influences behavior far and wide,”

For example, Wage and Hour determines a farmer willfully or repeatedly violated the minimum wage or overtime pay provision under MSPA with 50 workers affected. Under the new rules, the employer’s penalties (besides back pay) will increase by over $60,000.

See Inflation Adjustment Act – Penalty Adjustments pdf.

The Department of Labor is prepared to provide compliance assistance to any employer seeking to ensure they are in compliance with current law. Highland Precision Ag encourages you to reach out to your local Wage and Hour office for more information.