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The Department of Labor (DOL) has issued interim final rules that will
increase civil penalties assessed to employers for willful violations of the
minimum wage, overtime, and child labor provisions in the Fair Labor
Standards Act (FLSA), and civil penalties in the Family Medical Leave Act
(FMLA). There will also be increased penalties under other laws.
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Background Information
On November 2, 2015, Congress passed the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015. It directed federal agencies to
adjust civil penalties for inflation each year. Agencies were instructed to
determine the last time civil penalties were increased and publish interim final
rules to adjust penalties for inflation from that date. The amount of increase
can't exceed 150% of the existing penalty amount.
A DOL Fact Sheet explains that penalties are imposed on employers to
encourage greater compliance. "These penalties, however, are less effective
when they haven't been raised for decades to keep up with inflation," the DOL
states. Recognizing this, Congress passed a law in 1990 directing agencies to
adjust their civil monetary penalties to keep up with inflation, defining a civil
monetary penalty as a penalty for a specific amount or maximum amount set
by federal law that is assessed or enforced by a federal agency.
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"But a low cap on these increases together with complicated rounding rules
kept many penalties from accomplishing Congress's stated goal of keeping up
with inflation over time," the DOL adds.
Furthermore, some agencies, such as the Occupational Safety and Health
Administration (OSHA), were exempt from the 1990 law, so the agency's
penalties haven't increased since 1990. That's why Congress passed the
Inflation Adjustment Act in 2015 to begin annually adjusting penalties using a
more straightforward method than the 1990 law.
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The following H-1B visa program penalties are increasing August 1, 2016:
1. The civil penalty for violations pertaining to strikes, lockouts, displacement
of U.S. workers, notification, misrepresentation of material facts, etc. is
going from $1,000 to $1,782;
2. The civil penalty for willful violations pertaining to wages, working
conditions, misrepresentation of material facts, etc. is increasing from
$5,000 to $7,251; and
3. The civil penalty for each willful violation that caused the displacement of
a U.S. worker is rising from $35,000 to $50,758 per violation.
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H-2B visa program. This visa program allows American employers who meet
specific regulatory requirements to bring foreign nationals to the U.S. to fill
temporary non-agricultural jobs. There are civil penalties on employers for
violations including those related to wages, impermissible deductions,
prohibited fees and expenses, and improper refusal to employ or hire U.S.
workers.
Effective August 1, 2016, the related civil penalty is increasing from $10,000 to
$11,940 per violation.
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OSHA Penalties
OSHA's maximum penalties, which were last adjusted in 1990, will increase by
78%. In addition, going forward, the agency will adjust its penalties for
inflation each year based on the Consumer Price Index.
Serious violations. The top OSHA penalty for serious violations will increase
from $7,000 to $12,471 and its top penalty for willful or repeated violations
will rise from $70,000 to $124,709.
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