Potential Shift On OSHA Multi-Employer Policy At 5th Circ.

Acosta v. Hensel Phelps Construction Co., a case pending in the Fifth Circuit, may provide an avenue to overrule a 37-year-old decision that made the Occupational Safety and Health Administration’s multi-employer policy unenforceable. This decision could have far-reaching impacts on risk allocation and safety programs throughout the Fifth Circuit’s geographic region, which includes Texas, Louisiana and Mississippi.

Background

General contractor, Hensel Phelps, contracted with the city of Austin to build a library. Hensel Phelps subcontracted a portion of the work to Haynes-Eaglin-Waters LLC, or HEW. HEW subcontracted some of its scope of work to CVI Development LLC, or CVI. CVI’s work included the performance of excavation on the project.

OSHA received a safety complaint and an OSHA compliance officer conducted an inspection at the work site. The OSHA compliance officer found CVI employees working next to an excavated wall in intermittent rain without proper sloping or other protections from cave-in hazards. The investigation indicated that Hensel Phelps, as the general contractor, instructed CVI to continue work in the area even after some safety concerns had arisen. OSHA ultimately issued citations for violations of the cave-in protections under the general trenching and excavation rules. Hensel Phelps received a willful citation from OSHA for these violations under OSHA’s multi-employer work site policy despite it not having any employees exposed to the hazard. The multi-employer work site policy allows OSHA an avenue to issue citations to more than one employer for a hazardous condition that violates an OSHA standard regardless if the employer actually employs the employee(s) exposed to the hazard.

The Legal Battle

Hensel Phelps ultimately appealed the citation to the Occupational Safety and Health Review Commission. In its decision, the commission found that Hensel Phelps had sufficient control and authority over the job site including the sub-subcontractor, CVI and its employees, to reasonably be expected to prevent or correct the violation. The commission also stated that normally, the citation would be affirmed under applicable commission case law. However, the commission acknowledged that the project was located in Austin, Texas, which is within the geographical jurisdiction of the Fifth Circuit, which has held that “OSHA regulations protect only an employer’s own employees.”[1] As a result the commission held that because Fifth Circuit precedent applied, Hensel Phelps cannot be liable for an OSHA violation based solely upon a subcontractor’s employees’ exposure to the dangerous condition.
OSHA, through the secretary of labor’s office, appealed the commission’s decision to the Fifth Circuit in an attempt to overturn the Fifth Circuit’s holding in Melerine v. Avondale Shipyards Inc. The Fifth Circuit has received full briefing and held oral arguments for the case on Aug. 8, 2018.

At oral arguments, the secretary of labor’s office argued that OSHA should be allowed to enforce its multi-employer policy at a single work site in a way that allows it to levy citations to all of those responsible for safety. OSHA’s arguments focused on more recent United States Supreme Court decisions that indicate that a court should interpret a statute with a deference to the governmental agency’s interpretation of that statute. Accordingly, the agency’s, in this case OSHA’s, interpretation is that all employers on a work site have sufficient control and authority over the job site. OSHA also pointed out that seven other federal circuit courts have adopted OSHA’s interpretation and that the Fifth Circuit was alone in its prior interpretation.

In response, Hensel Phelps argued that the Fifth Circuit previously ruled that the statute (OSHA regulations) “explicitly” confines liability to the employment relationship only. In other words, the court already looked at this issue and ruled that liability under OSHA only attaches to the employer of the employee harmed or in danger due to a condition. Thus, Hensel Phelps believes that the secretary of labor is attempting to overturn law that the court clearly determined in its prior decision. The justices questioned Hensel Phelps’ counsel about the fact that as the general contractor, Hensel Phelps, knew of the conditions and had the authority to change the dangerous condition that existed.

The Fifth Circuit justices hearing the oral arguments appeared focused on who is in the best position to interpret the statute at issue — OSHA or the court. One justice indicated through a question that allowing OSHA to hold the general contractor responsible in this instance would promote overall safety for a construction job site. The court also indicated that several other circuits have held in favor of OSHA’s interpretation and suggested that the Fifth Circuit needed to decide if it wanted to remain alone in its interpretation.

Potential Effect

The Fifth Circuit is poised to make a decision that could have far-reaching implications on the applicability of OSHA’s multi-employer policy. Currently, in the geographic region of the Fifth Circuit (Texas, Mississippi and Louisiana), OSHA’s multi-employer policy is considered unenforceable as to other employer’s employees. If the Fifth Circuit changes course and renders a decision overruling its prior decision in Melerine, then projects in Texas, Louisiana and Mississippi will be subject to OSHA’s multi-employer policy. This would broaden risk exposure to general contractors throughout the region.

General contractors and their safety managers need to be ready to implement policies and controls on project sites in order to incorporate this potential risk exposure into their overall safety program. If OSHA prevails, regional compliance officers will likely be instructed to enforce the rule whenever possible. It is always good practice to design safety programs to address and correct all observed violations of safety regulations. However, general contractors need to be especially vigilant in identifying, correcting and documenting issues with subcontractors to make sure corrective action is taken.

The complete article, "Potential Shift on OSHA Multi-Employer Policy At 5th Circ.," was originally published by Law360 on October 26, 2018