Employment Law Daily Labor Secretary authorized to cite ‘controlling employers’ at multi-employer worksites for OSHA violations
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Thursday, November 29, 2018

Labor Secretary authorized to cite ‘controlling employers’ at multi-employer worksites for OSHA violations

By Kathleen Kapusta, J.D.

Reexamining, in light of “the seismic shift” brought about by Chevron, its own precedent announcing that “OSHA regulations protect only an employer’s own employees,” the Fifth Circuit found that the Secretary of Labor has the authority under the Occupational Safety and Health Act to issue a citation to a general contractor at a multi-employer construction worksite that controls a hazardous condition at that worksite, even if the condition affects another employer’s employees. Declaring its precedent obsolete to the extent it conflicts with the Secretary’s interpretation of Section 654(a)(2), the court reversed an ALJ’s decision vacating an OSHA citation issued to a general contractor for exposing a sub-subcontractor’s employees to a cave-in hazard (Acosta v. Hensel Phelps Construction Co., November 26, 2018, Graves, J., Jr.).

Wall of soil. As the general contractor for a public library construction project, Hensel Phelps maintained control over the worksite through the presence of on-site management personnel. During the project, a nearly vertical wall of soil, measuring approximately 12 feet in height and 150 feet in length, was allowed to develop. Despite OSHA regulations mandating that excavations in this soil type must use protective systems to protect employees from cave-ins, no protective systems were put in place.

Citation. Assigned to install rebar at the base of the wall of soil, a sub-subcontractor expressed concern about the combination of the weather that day and the instability of the wall. Nonetheless, it was required to send its employees to the excavation area. After receiving a complaint of hazardous working conditions, OSHA inspected the cite and cited both the subcontractor and Hensel Phillips for willfully violating a safety regulation by exposing employees to a cave-in hazard from an unprotected excavation.

Multi-employer citation policy. The citation against Hensel Phelps was issued pursuant to OSHA’s multi-employer citation policy, which provides that a general contractor or other employer that has control over a worksite and that should have detected and prevented a violation through the reasonable exercise of its supervisory authority (a “controlling employer”) may be cited for a violation, whether or not its own employees were exposed to the hazard. Hensel Phelps contested the citation but an ALJ found it was a controlling employer that had a duty to act reasonably to prevent or detect and abate worksite violations even when the affected employees were those of another employer. Nonetheless, the ALJ vacated the citation based on Fifth Circuit precedent, specifically Melerine v. Avondale Shipyards, Inc., a 1981 case which announced that “OSHA regulations protect only an employer’s own employees.” After the decision became final, the Secretary petitioned the Fifth Circuit for review.

Chevron and Brand X. While a court reviewing an agency’s interpretation of its authority under the statute it administers must engage with the Chevron framework, Melerine and the cases it relied on all predated Chevron. Thus, because its pre-Chevron statutory interpretation was at odds with the Chevron deference possibly due an administrative agency’s subsequent interpretation, the appeals court turned to National Cable & Telecommunications Ass’n v. Brand X Internet Services in which the Supreme Court held that “[a] court’s prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court decision holds that its construction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion.”

OSH Act provisions. Here, the Secretary argued that OSH Act Sections 654(a)(2) and 652(8) granted him authority to cite controlling employers at multi-employer worksites. Section 654 provides that: “(a) Each employer—(1) shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees; (2) shall comply with occupational safety and health standards promulgated under this chapter.” Further, “occupational safety and health standard,” observed the court, is defined in Section 652(8) as a standard that requires the taking of some action “reasonably necessary or appropriate to provide safe or healthful employment and places of employment.” Hensel Phelps argued that Section 654(a) could not reasonably be read as granting the Secretary authority to impose liability outside the employer-employee relationship, observed the court, explaining that it “is in this disagreement that a Chevron question arises.”

Noting that subsection (a)(1) contains the limiting language “to each of his employees,” but that subsection (a)(2) does not, the court observed that Congress “perhaps intended to include the limiting language in subsection (a)(1) and, by excluding that language from subsection (a)(2), perhaps left open the possibility that an employer could be cited for a violation at a worksite he controls but that is also populated by employees of various other employers.” This reading was further bolstered by combining the text of Section 654(a)(2) with Section 652(8)’s definition of “occupational safety and health standard,” as together they require an employer to take action to provide safe or healthful “employment” and “places of employment.” The term “places of employment,” the court explained, may limit the employer’s duty to worksites where he has employees, but it cannot be “limited to only the ‘employment’ of his employees because that interpretation would render the phrase ‘places of employment’ redundant of ‘employment’ and, therefore, superfluous.”

Other circuits. Further, the Fifth Circuit pointed out, Hensel Phelps’ view of Section 654(a)(2)—that it permits citation of only those employers who expose their own employees to hazards—is contrary to the view of seven other circuit courts that have held that the statute unambiguously accords with the Secretary’s interpretation or that it is at least ambiguous on the issue. The court also rejected Hensel Phelps’ assertion that the controlling employer policy violates Section 4(b)(4)—which states that “Nothing in this Act shall be construed to . . . affect . . . the common law . . . duties, or liabilities of employers”—finding that no controlling-employer citation under Section 654(a)(2) would, on its face, affect Hensel Phelps’ common law duties as an employer.

Nor did the court agree with Hensel Phelps’ argument that the Secretary’s purported authority under the Act was improperly premised on an expansive definition of “employer” and “employee,” contrary to the Supreme Court’s holding in Nationwide Mutual Insurance Co. v. Darden that Congress intends the term “employee” to connote a traditional common-law master-servant relationship if a statute does not set forth a different definition. Section 654(a)(2) can be read as a reflection of Congress’s intent to position the importance of maintaining safe workplaces over and above any employer-employee relationships that exist within those workplaces, reasoned the court.

Ambiguous intent. Finding that Congress’s intent in promulgating Section 654(a)(2) was ambiguous on the issue of the Secretary’s authority to issue citations to controlling employers at multi-employer worksites, the court noted that Chevron directs courts to accept an agency’s reasonable resolution of an ambiguity in a statute that the agency administers. And here, the Secretary’s interpretation of Section 654(a)(2) as permitting him to cite a controlling employer at a multi-employer worksite was well within the bounds of permissible interpretation. At a construction worksite, said the court, “populated by subcontractors, sub-subcontractors, and their employees performing various (and often overlapping) tasks, only the general contractor maintains supervisory authority over—and has access to—the entire space. If a general contractor enjoys the benefits of project supervision, it follows that he should also bear the burdens, by being held to comply—and to direct its subcontractors to comply—with the Act’s safety standards.”

Reasonably defensible. And while Hensel Phelps pointed to the Supreme Court’s decision in United States v. Mead Corp., which held that agency enforcement policies are not entitled to Chevron deference when they derive from sources outside notice-and-comment rulemaking or formal agency adjudication, the Secretary did not derive any authority from the Multi-Employer Citation Policy in citing Hensel Phelps; rather he relied on the statute itself and engaged in adjudication on the basis of that statutory authority. Because the Secretary’s construction of the statute as granting authority to issue citations to controlling employers was a “reasonably defensible” one, the court found that under Chevron, it was required to defer to it.

Complex dispute. The court next turned to Melerine and the cases it relied on to determine the provenance of the principle that the Act protects only an employer’s employees, and decide whether it “follows from the unambiguous terms of the statute and thus leaves no room for agency discretion.” Not only did Melerine, however, expressly recognize that the court decided to come down on one side of a “complex dispute,” it and most of the cases predating it analyzed an OSHA regulation and not the text of the statute itself. Noting that Melerine acknowledged it was plausible to interpret the statute in a way that gives weight to the lack of limiting language in Section 654(a)(2), but that it held it was bound to interpret the statute (or the regulation) consistently with precedent, the court here observed that the “decision is, quite simply, the opposite of ‘judicial precedent holding that the statute unambiguously forecloses the agency’s interpretation.’” Thus, said the court, the Secretary’s reasonable interpretation of the ambiguous statute must govern.

Noting further that the Secretary interprets the Act in a way that directly conflicts with the rules followed by Melerine and the cases it relied on, the court found that Brand X, in conjunction with Chevron, “instructs us to defer to the Secretary’s reasonable interpretation that § 654(a)(2) authorizes him to issue citations to controlling employers at multi-employer worksites.”

As to the ALJ’s decision, while he found he could not apply Commission precedent to permit the citation against Hensel Phelps because Melerine mandated otherwise, Chevron and Brand X represented a change in the law, said the court, finding that Melerine and its underlying cases were obsolete to the extent they conflicted with the Secretary’s interpretation of Section 654(a)(2). Accordingly, reversal of the ALJ’s decision was warranted.

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