The Department of Labor recently issued final rules that will increase the civil penalties assessed to employers for violating various federal laws. The higher penalties are part of a law passed last year and are scheduled to begin with those assessed after August 1, 2016. This article explains why the penalties are increasing and some of the new amounts.

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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.

3. Background Information
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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.

5. Penalties Going Up for Violations Related to Employment of
Temporary Non-immigrant Workers
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The DOL issued two interim final rules that will increase civil penalties for
violations related to the employment of temporary non-immigrant workers
under the H-1B and H-2B visa programs.
Descriptions and Penalties
H-1B visa program. The H-1B visa is used by U.S. employers to hire foreign
workers in areas of specialized knowledge or technical expertise, such as
scientists, engineers, or computer professionals. American employers that
apply for the visa must prove there are no qualified U.S. workers that could fill
the positions, and must ensure that the H-1B visa holders are paid the same
as their U.S. counterparts.

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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.

8. DOL Civil Penalties
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The DOL will increase more than 20 civil penalty amounts, effective with civil
penalties assessed after August 1, 2016, with associated violations that
occurred after November 2, 2015. For example:
Minimum wage and overtime. The civil penalty for repeated or willful
violation of the minimum wage and overtime provisions in the FLSA will
increase from $1,100 to $1,894 per violation.
Child labor. The civil penalty for violations will increase from $11,000 to
$12,080.
FMLA. The civil penalty for willful violation of the requirement that employers
post and keep on their premises a notice about the FMLA and the procedures
that employees may use to file complaints will increase from $110 to $163.

9. OSHA Penalties
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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.

10. Other Agencies and Laws
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This article only covers some of the increased penalties. For example, under
the Employee Retirement Income Security Act, there will be several higher
penalties for violations including:
• Failure to furnish documents to certain employees, former participants
and beneficiaries;
• Failure to maintain records; and
• Failure (or refusal) to file an annual report on Form 5500.

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There will also be increased penalties assessed on some employers by the
Employee Benefits Security Administration, Mine Safety & Health
Administration and under the Office of Workers' Compensation Programs. In
addition, the DOL (along with the Department of Homeland Security) has
adjusted penalties associated with the H1B and H2B temporary guest worker
program (see right-hand box).
Click here for a chart showing all of the penalty adjustments.
This article only lists some of the increased penalties employers may face. For
more information about your company's situation, consult with your
employee benefits adviser or employment attorney.

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