Attorneys: Guolee, Terrence F.
In a big loss to the construction industry and its insurers, a divided Eighth Circuit Court of Appeals upheld an Occupational Safety and Health Administration ("OSHA") policy that allowed its compliance officers to issue citations to general contractors for hazards created on their construction sites by subcontractors. (Solis v. Summit Contractors, Inc., No. 07-2191, 8th Cir. Feb. 26, 2009).
In the case, Summit Contractors Inc. was the general contractor overseeing construction of a college dormitory in Little Rock, Arkansas. Summit subcontracted the entire project and only had four employees on the entire jobsite. Subcontractor All Phase Construction, Inc., was responsible for performing masonry work.
As many as three times during the course of All Phase's work, Summit's project superintendent caught All Phase employees working without fall protection gear on scaffolds without guardrails. Each time, the superintendent warned All Phase to correct the problem. However, when All Phase's employees moved the scaffold to another location, they again would work without fall protection or guardrails.
An OSHA compliance officer eventually saw All Phase's employees working without fall protection. Although no Summit employee was exposed to any fall protection hazard, the OSHA inspector cited Summit for violation of the scaffolding fall protection standard based on OSHA's "multi-employer citation policy."
Under its "multi-employer citation policy," OSHA took the position that, when a violation is discovered on a construction site, the agency can issue a citation to four categories of "employers," defined as follows:
the employer that created the violation ("the creating employer");
any employer whose employees were exposed to the violation (the "exposing employer");
any employer responsible for correcting the violation on the jobsite (the "correcting employer"); and
any employer responsible for controlling the work on the jobsite (the "controlling employer").
Indeed, OSHA asserted that Summit, as the general contractor or "controlling employer," had the ability to prevent or abate the hazard created by All Phase's employees through reasonable exercise of its supervisory authority. Summit contested the citation, arguing that OSHA's regulations place a duty on an employer to protect only its own employees, not those of any subcontractor. Thus, as Summit's employees were not exposed to the fall protection hazard, Summit argued that OSHA exceeded its authority by citing it for All Phase's violation.
In particular, Summit argued that 29 C.F.R. 1910.12(a), the regulation establishing OSHA's construction standards, only placed a duty on employers to protect their own employees, not other subcontractors' employees. Thus, it was argued Summit should not have been cited as the controlling employer when its own employees were not exposed to the hazardous condition.
After the hearing, the Administrative Law Judge ("ALJ") rejected Summit's arguments. However, on April 20, 2007, the Occupational Safety and Health Review Commission (OSHRC), the body responsible for carrying out the adjudicatory functions of OSHA, overruled the multi-employer citation policy and held that it was impermissible to cite a general contractor if it did not create the hazard and none of its own employees had been exposed to the hazard. The Commission then vacated the citation, with two Commissioners finding that the plain language of OSHA's regulations required each employer to protect only its own employees. One Commissioner (OSHA's current Chair, Thomasina Rogers) agreed with the ALJ.
The OSHRC agreed with Summit's position and vacated the citation based on: (1) what it called the "plain language" of the regulation, which states, in part, "[e]ach employer shall protect the employment and places of employment of each of his employees engaged in construction work" (emphasis added); and (2) the Secretary's "checkered history" on multi-employer worksite liability characterized by inconsistent application and explanation.
OSHA, for its part, refused to change its multi-employer citation policy despite the OSHRC's decision in Summit, and the Secretary of Labor filed a petition for review to the Eighth Circuit Court of Appeals on May 21, 2007. However, locally in the Chicago metropolitan area, it was observed that OSHA compliance officers stopped citing under the multi-employer worksite policy, so there is some belief that the decision of the OSHRC had been implemented on a "street level."
Unfortunately, in OSHA's appeal to the Eight Circuit, the court found, in a split decision, that OSHA's "controlling employer" citation policy did not conflict with OSHA regulations. Further, writing for the court, Judge Raymond W. Gruender wrote: "[e]ven if the regulation were ambiguous, we would defer to [OSHA's] reasonable interpretation of her own regulations."
In particular, the court utilized a grammatical interpretation to determine whether the plain language of section 1910.12(a) precluded the multi-employer citation policy. The court separated the regulation into two parts, holding that as reconstructed, section 1910.12(a) requires that: (1) an employer shall protect his employees; and (2) an employer shall protect the places of employment of each of his employees.
Based on this, the Eighth Circuit held that part 2 means that an employer shall protect the places of employment, and read this to include protecting others who work at the place of employment, so long as the employer also has employees at that place of employment. Therefore, the court ruled that the plain language of the regulation did not preclude the controlling employer citation. The court stated that to hold otherwise would render part 2 – the duty to protect places of employment – "superfluous and redundant" if it only required the employer to protect his own employees as Summit contended.
The court then discussed Summit's alternative arguments, including that the "controlling employer" citation policy was an "ill-conceived policy that is counterproductive to the goals of the OSH Act." Reviewing this argument, the court conceded that it was:
uncertain what potential benefits are gained in citing both a subcontractor and a general contractor for a single OSHA violation when the general contractor had informed the subcontractor of the violation on prior occasions.
However, the court stated that this was a "policy concern" that should be addressed to Congress or OSHA, and not the courts.
Notably, Judge C. Arlen Beam dissented, finding that the regulation in question unambiguously "does not support 'controlling' person citations such as those issued in this case." He also observed that:
it is impossible under the OSH Act for even the most sophisticated general contractor to recognize violations by specialized subcontractors, many of whom are larger employers than the general or prime contractor.
Judge Beam also recognized that, in the case of residential construction, "the supposed general homebuilding contractor often has no 'employees' at all 'engaged in construction work' at 'places of employment' contemplated by the regulation." Thus, he agreed with Summit that "to impose the Secretary's rule on these employers is . . . absurd as a matter of rational policy."
The Summit decision effectively means that in the seven states covered by the Eighth Circuit; Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota; a construction general contractor is a guarantor of an OHSA violation-free worksite for all employees on the worksite, even employees of subcontractors. On a broader level, the revival of the multi-employer citation policy will likely also allow plaintiffs' expert witnesses in civil construction injury cases to assert violations of safety protocols against general contractors and other civil defendants in cases where employees of other contractors are injured.
The Eighth Circuit's decision applies only with respect to work considered to be construction under OSHA, and only if the general contractor has employees on the site. It does not apply to non-construction employers who are controlling employers and whose own employees are not exposed to any hazardous condition. Also, it remains to be seen whether OSHRC will defer to the Eighth Circuit's ruling in future cases, or remain with its original decision to see how it fares in other federal circuits. It also remains to be seen how, if at all, this decision will be applied to industries other than construction.
A full copy of the Eighth Circuit's decision can be downloaded at: http://www.ca8.uscourts.gov/opndir/09/02/072191P.pdf.
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Terrence GuoleeTerrence Guolee, a shareholder in our Chicago office, has successfully represented defendants, plaintiffs and carriers in dozens of complex, multi-million dollar claims covering a wide area of facts and law, in both state and federal court.