Construction, Employment Law, Publications

Ruling Raises Questions About OSHA Worksite "Controlling Employer" Policy

June 15, 2017

An interesting legal development in Texas might prove significant for construction companies and other employers within the jurisdiction of the U.S. Court of Appeals for the Fifth Circuit – and any other jurisdiction that follows its view. The ruling should also encourage employers in other jurisdictions to challenge their circuit court’s rulings on “multiemployer/controlling employer” policies in an effort to have the 5th Circuit view adopted.

On March 4, 2015, the Occupational Safety and Health Administration (OSHA) Area Office in Austin, Texas, received a complaint concerning a construction jobsite for the new Austin Central Public Library. The complaint alleged that employees of CVI Development, LLC were working in hazardous conditions at the Seaholm Substation East Screen Wall. In response, OSHA Compliance Safety and Health Officer Greg Halter was dispatched to the worksite to conduct an inspection. The inspection revealed that, on March 4, 2015, CVI employees (including the owner and President of CVI) were working next to an excavated wall, an area referred to as the Seaholm Substation East Screen Wall, which measured approximately 12' 6" in depth by 150' in length. The administration law judge (ALJ) and the Occupational Safety and Health Review Commission (“Commission”) noted that the parties’ stipulations were sufficient to prove the prima facie elements necessary to establish the cited violation. The sole remaining issue was whether Hensel Phelps Construction Co, as the General Contractor on the jobsite, could be found liable for the citation based upon CVI employees’ exposure to the violative condition, under OSHA’s “controlling employer” enforcement policy.

CVI was a lower tier subcontractor retained to complete all demolition, excavation and haul-off, backfill and drain, and site concrete (foundation & retaining walls) work as required for the Seaholm Substation East Screen Wall. CVI had been retained by the contractor hired to complete certain foundation and screen wall work on the Seaholm Substation East Screen Wall. CVI had no direct contract with Hensel Phelps Construction Co. However, the record established that Hensel Phelps had overall construction management authority on the library project; supervised the library work through various on-site management personnel, including superintendents, project engineers and project manager(s); and, many of Respondent’s management personnel at this jobsite had extensive OSHA training, education and experience.

CVI employees were working next to the exposed face of a 12-foot high, excavated, vertical, wet, soil wall that was not properly sloped or otherwise protected from cave-in hazards, in full view of Hensel Phelps management personnel. After OSHA’s on-site inspection, Hensel Phelps hired three additional subcontractors to slope the wall to a 1.5 to 1 ratio, to install wire mesh around the large transmission pole, to “shot-crete” the wire mesh and to remove dirt from atop the horizontal concrete structures. Afterward, Hensel Phelps contracted with a registered professional engineer to issue a stamped letter approving CVI employees’ return to the Seaholm Substation East Screen Wall to complete the required work.

In its discussion of the citation approved by the ALJ, the Commission noted that to prove a violation of an OSHA regulation, the complainant must establish by a preponderance of the evidence that: (1) the cited standard applied to the work; (2) the employer failed to comply with the requirements of the cited standard; (3) employees were exposed or had access to the hazard covered by the standard; and (4) the employer had actual or constructive knowledge of the violative condition (i.e., the employer knew, or with the exercise of reasonable diligence could have known). The approved citation stated the following:

Citation 1, Item 1 29 C.F.R. 1926.652(a)(1):

Each employee in an excavation was not protected from cave-ins by an adequate protective system designed in accordance with 29 C.F.R. 1926.652(b) or 1926.652(c). At the Seaholm Substation East Screen Wall, 100 West Avenue, Austin, TX, 78701, on or about March 4, 2015, and at times prior thereto, four (4) workers were installing rebar during intermittent rain in an unprotected excavation approximately twelve feet and six inches (12’6”) deep by one hundred and fifty feet (150’) long, exposing the workers to a cave-in hazard. The cited standard provides: Each employee in an excavation shall be protected from cave-ins by an adequate protective system designed in accordance with paragraph (b) or (c) of this section except when: (i) Excavations are made entirely in stable rock; or (ii) Excavations are less than 5 feet (1.52 m) in depth and examination of the ground by a competent person provides no indication of a potential cave-in. 29 C.F.R. § 1926.652(a)(1).

The Commission noted that the parties stipulated to the facts necessary to establish all of the prima facie elements of the alleged violation. Therefore, as stated above, the sole remaining issue was whether, Hensel Phelps, as the General Contractor for the library project, could be held liable for the violation as a “controlling employer.”

OHSA argued, based upon the parties’ stipulated facts and Commission case law, that Hensel Phelps was properly cited for the violation as a “controlling employer” under OSHA’s Multi-Employer Citation Policy. Hensel Phelps argued, based upon the parties’ stipulated facts and 5th Circuit case law, that OSHA’s “controlling employer” policy had been invalidated and was unenforceable.

The Commission noted that it had previously held that “[A]n employer who either creates or controls the cited hazard has a duty under § 5(a)(2) of the Act,  to protect not only its own employees, but those of other employers ‘engaged in the common undertaking.’” McDevitt Street Bovis, 19 BNA OSHC 1108 (97-1918, 2000) (quoting Anning-Johnson, 4 BNA OSHC 1193, 1199 (No. 3694, 1976)). “An employer may be held responsible for the violations of other employers ‘where it could reasonably be expected to prevent or detect and abate the violations due to its supervisory authority and control over the worksite.”’ Summit Contractors, Inc., 23 BNA OSHC 1196 (No. 05-0839, 2010) (quoting McDevitt at 1109).

The Commission further noted that the parties stipulated to the following facts:  A general contractor normally has responsibility to assure that other worksite contractors fulfill their obligations with respect to employee safety matters that affect the entire construction site;  a general construction contractor is normally well-situated to obtain abatement of safety hazards, either through its own resources or through its supervisory role with respect to work performed by subcontractors;  and, it was reasonable to expect that a general contractor will take reasonable action to assure compliance by subcontractors with required safety standards insofar as all employees on a construction site are affected.

The stipulated record established that Hensel Phelps had sufficient control and authority over this jobsite, including subcontractor CVI and its employees, to reasonably be expected to prevent and/or correct the violation in this case. Hensel Phelps’ management employees present at the excavation could have easily prevented the CVI employees from working in the unprotected area along the vertical wall, and/or ordered them to come out of the unprotected area once Hensel Phelps management employees observed them. Hansel Phelps did neither. Accordingly, Citation 1, Item 1 would be affirmed under applicable Commission case law. Summit Contractors, Inc.; McDevitt Street Bovis; Anning-Johnson, supra. Inc., 23 BNA OSHC 1196 (No. 05-0839, 2010) (quoting McDevitt at 1109).

However, the Commission noted this violation occurred at a jobsite in Austin, Texas, which is in the geographical jurisdiction of the U.S. Court of Appeals for the 5th Circuit. In 1981, the Fifth Circuit clearly ruled that the OSH Act, and regulations implemented thereunder, serve to protect an employer’s own employees from workplace hazards. Melerine v. Avondale Shipyards, Inc., 659 F.2d 706 (5th Cir. 1981). In a case involving a subcontractor employee’s negligence action against higher level contractors, the Court unambiguously stated, “OSHA regulations protect only an employer’s own employees.” Id. at 711. On that basis, the court concluded that the referenced OSHA regulations did not create or define any duty on behalf of a higher level contractor to the employees of a subcontractor. Id. at 712-13. The 5th Circuit expressly adopted the rationale of a former Commission Chairman who wrote [in pertinent part] that status as an employer under the Act “does not necessarily mean that the [R]espondent is in violation of 29 U.S.C. §654(a)(2) for every failure to comply with a safety standard which occurs within its worksite. For example, an employer cannot be held in violation of that subsection if his employees are not affected by noncompliance with a standard….” Id. at 711. “In this circuit, therefore, the class protected by OSHA regulations comprises only employers’ own employees.” Id. at 712. See also Southeast Contractors v. Dunlop, 512 F.2d 675 (5th Cir. 1975) [A contractor is not responsible for the OSHA violative acts of his subcontractors or their employees].

The Commission then stated:  “Where it is highly probable that a Commission decision would be appealed to a particular circuit, the Commission has generally applied the precedent of that circuit in deciding the case – even though it may differ from the Commission’s precedent.” Kerns Bros. Tree Service, 18 BNA OSHC 2064 (No. 96-1719, 2000). And, as articulated by Respondent, “a holding by a court of appeals on a legal question is binding on the Review Commission in all cases arising within that circuit until and unless the court of appeals or the Supreme Court overturns that holding…” Smith Steel Casting v. Donovan, 725 F.2d 1032, 1035 (5th Cir. 1984). In this case, it was undisputed that the employees working in the unprotected excavation, exposed to the hazardous condition, were not employed by Hensel Phelps. They were employed by subcontractor CVI. In addition, there is no evidence in the record that any of Respondent’s own employees were exposed to the hazardous condition. Accordingly, applying 5th Circuit precedent, Hensel Phelps cannot be liable for a violation of the Act based solely upon a subcontractor’s employees’ exposure to the condition. Accordingly, Citation 1, Item 1 was vacated by the Commission.

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