January 18, 2012

OSHA's Multi-Employer Worksite Liability Doctrine Upheld Yet Again

General Contractors Continue to Be Held Liable Even If Their Own Employees Are Not Exposed to Hazard
Holland & Knight Alert
Deborah S. Griffin | Gina A. Fonte

On December 14, 2011, the United States Court of Appeals for the District of Columbia (D.C. Circuit Court) upheld a citation issued against a general contractor on the basis of the multi-employer worksite liability doctrine, joining a growing majority of jurisdictions that have considered and enforced the doctrine. The multi-employer worksite liability doctrine provides that an employer, including a general contractor, who creates or controls a worksite safety hazard, may be liable for violations of the Occupational Safety and Health Act (OSH Act) even if the employees exposed to the hazard are solely employees of a different employer. Under this doctrine, general contractors on a construction site may be held responsible for ensuring their subcontractors’ compliance with safety standards if it can be shown that the general contractor could reasonably be expected to prevent or detect and abate the violative condition by reason of its supervisory capacity and control over the worksite.

The Occupational Safety and Health Administration (OSHA) cited Summit Contractors, Inc. alleging that Summit failed to provide ground-fault circuit interrupter protection on equipment it rented for use at a multi-employer construction worksite. According to OSHA, Summit was liable as both a controlling and creating employer for the exposure of a lower tier subcontractor’s employees to the deficient equipment even though none of its own employees were ever exposed to the hazard. Summit first contested the citation before an administrative law judge (ALJ) and lost. It then requested a further review by the full Occupational Safety and Health Review Commission (OSHRC), which affirmed the citation and ruled that Summit was both a “controlling employer” because of its authority over the worksite in general and over the electrical equipment in particular, and a “creating employer” because of the condition of the noncompliant equipment. On appeal, the D.C. Circuit Court, in a brief opinion, affirmed the citation on the facts and rejected Summit’s challenges to the multi-employer worksite liability doctrine holding that imposition of multi-employer liability was within OSHA’s authority. Summit Contractors, Inc. v. Secretary of Labor and Occupational Safety and Health Review Commission, No. 10-1329 (D.C. December 14, 2011) (“Summit Contractors”).

The Summit Contractors decision is significant because the D.C. Circuit Court joins a growing number of jurisdictions, including the Sixth, Seventh, Eighth and Tenth Circuits, which have recently upheld general contractors’ liability under the multi-employer worksite liability doctrine. Increasingly, general contractors are facing OSH Act liability for their failure to ensure overall worksite safety and to require subcontractors to comply with safety standards. As discussed below, Summit Contractors suggests general contractors may not be shielded from liability by contractual provisions delegating responsibility for worksite safety entirely to their subcontractors. Summit Contractors and other similar decisions make clear that OSHA can and will continue to hold general contractors responsible for OSH Act violations under the multi-employer liability worksite doctrine even if none of the general contractor’s own employees were exposed to the cited hazard.

Background

Summit was the general contractor on a 90-unit complex construction project located in the city of Lebanon in Pennsylvania (the “project”). Summit had only two of its own employees at the project, a general superintendent and his assistant, neither of whom performed physical labor at the project. Rather, they performed general superintendent duties, including overall project management, supervision and coordination of work. Summit subcontracted the framing work to Springhill Construction, which in turn subcontracted with Mendoza Framing to do the actual framing at the project. Springhill had only one employee at the project, a superintendent, while Mendoza had 10 to 12 employees on site, including its company owner.

On May 15, 2005, following an OSHA inspection, OSHA issued Summit a one-item serious citation for $1,225 alleging a violation of 29 C.F.R. § 1926.404(b)(1)(ii), dealing with protection of receptacles with ground fault circuit interrupters. The cited equipment was owned by Cleveland Brothers Equipment Rental, an equipment leasing company located in Pennsylvania. Summit’s superintendent had leased the equipment for use at the project, but, at the time of renting the equipment, did not specify ground fault circuit interrupter (GFCI) capability because he assumed that the equipment would come equipped with GFCI protection as had been the case in the past. Summit’s superintendent also had contacted the leasing company to obtain operating instructions when Mendoza’s employees were unable to get the electrical equipment to work. He also ordered the GFCI protection following OSHA’s citation.

The citation alleged that Summit, as general contractor, failed to ensure that Mendoza’s employees were properly protected from the electrical hazards created by the use of the equipment without GFCI protection. Summit’s superintendent had not inspected the equipment and did not notice whether it had GFCI protection when the equipment initially arrived on site or at any time prior to the OSHA inspection. There was no evidence that any of Summit’s own employees ever used the electrical power from the rented equipment or that any of its own employees were ever exposed to the electrical hazard from the equipment at issue. Only the lower-tier framing subcontractor’s employees, working for Mendoza, were observed by the OSHA inspector as being exposed.

Analysis

Summit did not dispute that the equipment at issue did not comply with OSH Act standards as described in the citation. Rather, Summit challenged the citation on three grounds. First, Summit argued that, as a general contractor which neither created the hazard nor had its own employees exposed to the hazard, it could not be held liable for the violation. Additionally, Summit challenged the validity of the multi-employer worksite liability doctrine and insisted that it lacked sufficient control of the project to either prevent or abate the violation. Finally, Summit maintained that it had no knowledge of the violation.

General contractors can be held liable for OSH Act violations even if they did not create or expose their own employees to the hazard.

Relying on 29 C.F.R. § 1910.12(a), which provides in relevant part that “[e]ach employer shall protect the employment of each of his employees engaged in construction work by complying with the appropriated standards prescribed in this paragraph ... ,” Summit argued at each level of the appeal process that this section of the OSH Act regulations placed safety responsibility on the employer for its own employees engaged in construction work.

The ALJ who first heard the case agreed that Summit had not directly created the hazard at issue and that Summit’s two on-site employees were not exposed to the hazard. However, the ALJ rejected Summit’s reading of Section 1910.12(a) as too narrow and concluded that Section 1910.12(a) did not prohibit OSHA from imposing on an employer safety responsibility for employees of a different employer. On review, the OSHRC also found that the plain meaning of Section 1910.12(a) did not invalidate the multi-employer worksite citation policy and did not prevent a non-exposing, controlling employer from being cited at a construction site. On further appeal, the D.C. Circuit Court agreed and in its December 14, 2011, opinion affirmed OSHA’s authority to enforce the multi-employer worksite liability doctrine against general contractors under the facts of Summit Contractors.

Summit, as the general contractor at the project, had sufficient supervisory capacity and control over the worksite to be held liable.

Both the ALJ as well as the OSHRC1 found that Summit had sufficient authority and control of the worksite to prevent or detect and abate the condition which exposed the subcontractor’s employees to electrical hazards. Describing the factors necessary to determine whether a general contractor was a “controlling employer” for purposes of multi-employer worksite responsibility, both the ALJ and the OSHRC stated that the general contractor must be in a position to prevent or correct a violation or to require another employer to prevent or correct the violation, and such control may be in the form of an explicit or implicit contract right.

Considering this standard, Summit argued that its company policy was not to be responsible for the safety of a subcontractor’s employees or for any OSHA requirements placed on subcontractors. In support of its position, Summit cited various provisions of its subcontract with Springhill expressly stating that the subcontractor was solely responsible for compliance with all OSHA requirements. The subcontract further provided that Springhill would be responsible for complying with all laws, regulations or rules bearing on the performance of the work. Additionally, Springhill had a duty to hold Summit harmless against any liability, including the assessment of OSHA fines and legal costs.

The ALJ maintained that, regardless of its stated company policy or its written agreements with subcontractors, Summit could not “contract away” its overarching responsibility for worksite safety, or its responsibilities under the OSH Act. Moreover, the record showed that Summit’s supervisor was responsible for “overseeing the Project, ordering materials, ordering different subs in a timely fashion” to execute work at the project. According to the ALJ, various provisions in the subcontract also allowed Summit to exert control and veto power over its subcontractors’ actions including Summit’s ability to:

  • back-charge its subcontractors for various failures to comply with the subcontract provisions
  • hold retainage
  • deny its subcontractors the ability to further subcontract out the work without Summit’s prior written consent
  • approve or reject its subcontractors’ subcontractor selection at Summit’s sole discretion
  • require its subcontractors to keep their work areas clean and orderly subject to Summit’s review
  • require its subcontractors to have competent and sufficient supervisory personnel present at the project at all times

Further, Summit had the contractual authority to control and direct the work schedule, coordinate the work, and expedite or terminate the subcontractors’ work. Concluding that Summit’s authority explicitly granted by a combination of subcontract provisions was broad enough to encompass Summit’s control over the safety of the project and the sub-subcontractor’s employees, the ALJ held Summit responsible for the alleged violation. The ALJ noted that as a general contractor, Summit held a unique position at the project and had the authority, under its subcontracts, to enforce any subcontractor’s compliance with the OSH Act requirements. Rejecting Summit’s argument that the ultimate responsibility for the equipment’s safety at the project rested solely with the leasing company or with Mendoza, the ALJ stated that whatever the responsibility attributable to these parties for ensuring the equipment’s safety, such responsibility did not absolve Summit of its own responsibility for safety at the project.

On review, the OSHRC found that Summit was a both a “controlling employer,” because of its authority over the worksite in general and over the electrical equipment in particular, and a “creating employer” because it ordered and did not inspect the noncompliant equipment. Agreeing with the factors considered by the ALJ, the OSHRC held that Summit maintained sufficient control over the project and the noncompliant equipment to be found liable for the violation.

General contractors need not have actual knowledge of the violative condition, constructive knowledge is sufficient for liability.

Summit’s claim that it had no knowledge of the violation similarly was unpersuasive. While the ALJ agreed that Summit might not have had “actual knowledge” that the electrical equipment was noncompliant, the ALJ found that Summit had “constructive knowledge” because it could have known about the violative condition with the exercise of reasonable diligence. Furthermore, the constructive knowledge of Summit’s supervisor could and would be imputed to Summit. Citing the fact that Summit’s assistant superintendent made daily walk-throughs and general inspections of the project, the ALJ maintained that an employer “must make reasonable efforts to anticipate the particular hazards to which its employees may be exposed in the course of their scheduled work.”

Both the OSHRC and the D.C. Circuit Court found that Summit had constructive knowledge and agreed that under the OSH Act the “knowledge” requirement was satisfied if the general contractor had either actual or constructive knowledge of the violation. Therefore if a general contractor either “knows, or with the exercise of reasonable diligence could have known” of the violative conditions then it may be held liable, and a supervisor’s knowledge is imputed to the company. Because Summit could have detected the violation with reasonable effort, it had constructive knowledge and was therefore liable.

Industry Impact

Summit Contractors reflects a growing trend by an increasing number of courts upholding a general contractor’s OSH Act liability under the multi-employer worksite liability doctrine. Gradually, more general contractors are being held accountable for general worksite safety and are expected to prevent, detect and abate violative conditions on their worksites by virtue of their supervisory capacity and control over the worksite regardless of whether their own employees are exposed to the hazard. Summit Contractors suggests that general contractors will not be protected from liability by simply contracting away worksite safety responsibility to their subcontractors. In summary, general contractors may be required to do more to ensure worksite safety or face OSH Act liability exposure.

The appeal period in the Summit Contractors’ case has not yet run and it is unclear whether Summit will appeal the D.C. Circuit Court’s decision to the United States Supreme Court. Even if the case is appealed, review by the U.S. Supreme Court is not guaranteed given the limited number of cases the U.S. Supreme Court hears on a discretionary basis each year. In the event an appeal is made and the U.S. Supreme Court agrees to hear it, we will provide an update.


 

1 Summit did not contest the issue of its supervisory capacity and control of the project on appeal to the D.C. Circuit Court.

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