August 6, 2013

When Knowing Is No Sure Thing: 11th Circuit Requires OSHA to Dig Deeper Before Imputing Supervisor's Misconduct to Employer

Holland & Knight Alert
Howard Sokol

In a recent case of first impression, the U.S. Court of Appeals for the 11th Circuit reversed the Occupational Safety and Health Review Commission (OSHRC) and held that an employer is not automatically liable for the health and safety violations committed by one of its supervisors. On July 24, 2013, the 11th Circuit found in ComTran Group, Inc. v. U.S. Department of Labor that the Occupational Safety and Health Administration (OSHA) did not meet its affirmative burden against a utility contractor in citing the employer for alleged trench violations, because OSHA was not able to establish the requisite employer knowledge based solely on the misconduct of one of its supervisors.

In a twist on the well-established rule that knowledge may be imputed to the employer when one or more of its supervisors has knowledge of an employee’s violative conduct, the court explained that such reasoning should not be extended when the misconduct, unforeseeable to the employer, is carried out by a supervisor, as was the case in ComTran. In such cases, OSHA must demonstrate the presence of additional facts in order to find that the employer had (or should have had) "knowledge" of the supervisor’s misconduct and, therefore, should be liable under the Occupational Safety and Health Act (Act).

Facts and OSHA's Citation

The facts in ComTran show that as part of the company’s contract with the local government in Atlanta, certain utilities were being relocated. The foreman dug and was then working in a six-foot hole surrounded by a resulting unprotected collapsible wall of dirt and other materials more than 10 feet high. OSHA issued a citation to ComTran for two serious violations of the Act, with fines and penalties totaling nearly $10,000. The first alleged a violation of the excavation standard, which requires, among other things, that the material taken from the ground be removed and kept sufficiently clear of the opening of the trench (29 C.F.R. §1926.651(j)(2)). The second alleged a violation of the protective systems standard in such situations for the company’s failure to provide any number of measures to safeguard against a collapse and then cave-in of the excavated material (29 C.F.R. §1926.652(a)(1)).

OSHA's Burden in Finding a Violation

To sustain a citation against an employer, the Secretary of Labor has the affirmative obligation of demonstrating the following four requirements (the "Test"): (a) the applicability of the cited standard, (b) the employer’s noncompliance with the standard’s terms, (c) the employee access to the violative conditions, and (d) the employer’s actual or constructive knowledge of the violation (i.e., the employer either knew or, with the exercise of reasonable diligence, could have known of the violative conditions).

Contest and Case Before the OSHRC

Upon contest of the citation by ComTran, and without resolution before the local OSHA area office, the case was heard before an administrative law judge (ALJ) at the OSHRC. While the ALJ easily found that the first three elements of the Test were met, he engaged in a more extensive analysis regarding the fourth and final element. Ultimately, the ALJ determined that the employer knew or should have known about the dangerous trenching condition and violation of the Act because the foreman knew of it. He knew of it because he created the danger by violating the Act. Therefore, according to the ALJ, the supervisor’s knowledge was imputed to ComTran. With the ALJ’s order becoming a final decision when the OSHRC denied discretionary review, ComTran appealed to the 11th Circuit.

The 11th Circuit's Decision

On the limited and novel issue before the 11th Circuit, the court focused solely on whether ComTran had "knowledge" of the violation of the Act. The court used a two-step process to conclude that ComTran did not have the requisite knowledge to warrant the citation. The court first determined that the foreman knew or should have known about his own misconduct, notwithstanding his testimony that he was not aware of the excavation and cave-in hazards because he became "lost" in his work. But the court then concluded that the foreman’s knowledge should not be imputed to ComTran.

Relying on decisions from five of its sister courts (the 3rd, 4th, 5th, 6th, and 10th Circuit Courts of Appeal), and while noting that a supervisor is usually deemed the "eyes and ears" of his employer — and the employer is deemed to know what the supervisor knows — the analysis must be different when the violation at issue is committed by only a single supervisor. In such situations, reasoned the 11th Circuit, the Secretary of Labor must show "something more," for otherwise the "employer knowledge" of the Test would be rendered meaningless and unacceptably shift the burden away from the Secretary to the employer. In this regard, the 11th Circuit held that the Secretary cannot meet her requisite initial burden by "merely point[ing] to the misconduct itself." Rather, and separate and apart from the actual misconduct of the supervisor, the Secretary must also show that noncompliance or deficiencies by the employer under the Act, such as evidence of "lax safety standards." Finally, the court rejected various technical and unconvincing arguments by the Secretary as to why the authority from the other circuits should not be followed.

Why ComTran Matters

The ComTran decision is positive, especially for those employers located within the 11th Circuit (Alabama, Florida and Georgia), and particularly for those companies that enforce the Act’s safety and health standards as well as their own policies and procedures. It will be more difficult for OSHA to hold liable well-run and law abiding employers for violations of the Act — and for the health and safety actions of their rogue or otherwise noncompliant supervisors.

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