DOL Raises Penalty Amounts for Legal Violations

Employers that break employment laws are duly warned. The U.S. Department of Labor (DOL) released a final rule on Jan. 11 to raise its civil penalty amounts for legal violations to adjust for inflation. The new penalty amounts took effect on Jan. 15.

The federal Inflation Adjustment Act requires federal agencies to upgrade their monetary penalties based on inflation each year. The Consumer Price Index, a measure of inflation, rose 1.03 percent from October 2022 to October 2023, according to the U.S. Bureau of Labor Statistics. Thus, the DOL penalties will be multiplied by 1.03 percent and rounded to the nearest dollar. The new amounts will apply to any violation that occurred after March 23, 2018, with the penalty being assessed after Jan. 15, 2024.

The inflation correction applies broadly to a variety of federal employment laws. For example, under the Fair Labor Standards Act, the penalty for a child labor violation increased from $15,138 to $15,629.

Under the Family and Medical Leave Act, the penalty for violating the posting requirement jumped from $204 to $211.

The minimum penalty for a willful violation of the Occupational Safety and Health Act (OSH Act) rose from $11,162 to $11,524. The maximum penalties for serious and other-than-serious OSH Act violations increased from $15,625 per violation to $16,131 per violation. The maximum penalty for willful or repeated OSH Act violations increased from $156,259 per violation to $161,323 per violation.

Civil penalties are “often pushed into the background” and don’t get “sufficient emphasis,” compared with liquidated damages, said Eric Su, an attorney with Crowell & Moring in New York City. “Perhaps more-pronounced penalty amounts will get more attention.”

A higher penalty could make settlements more attractive to employers accused of violations. “If the penalty is really high, it does have an impact on settlements because oftentimes that’s something that’s not negotiable,” Su said. It could lead to “the DOL achieving earlier resolution, instead of the employer wanting to test the system and fight things out.”

Nothing has changed in terms of compliance with the laws that the DOL enforces.

Regardless of the size of penalty, “the issue remains the same,” Su explained. “You’ve got to do what you can do to make sure that you’re compliant.”

The monetary penalties are intended to discourage employers from breaking the law, Su said, but sometimes “people aren’t persuaded by its deterrent effect.”