OSHA’s New Multi Employer Citation Policy Directive: What is on the Horizon for Texas General Contractors and Subcontractors?

INTRODUCTION

Shortly after the Occupational Safety and Health Act (the Act) was adopted in 1970, the Occupational Safety and Health Review Commission (the Commission) began having difficulty apportioning responsibility in situations where there was no direct connection between the employer controlling the site, and the employer creating the hazard. Moreover, employers who simply had employees exposed to the hazard, but neither had control over the employees or created the violation were likewise perplexing to the Commission. After struggling for years to reach a consensus as to when a certain employer should be cited for alleged acts of a third party, the Commission began to invoke a decisional policy they dubbed the “multi employer workplace policy.”1 On December 10, 1999, the Occupational Safety and Health Administration (OSHA or the Administration) released a clarification of its Multi Employer Citation Policy (MECP).2 This paper will begin by introducing the concept of the “controlling employer” in Section I, and will highlight the duties expected of an employer to remain in compliance. Section II will suggest possible implications of the policy in an attempt to promote thought and discussion by the reader to further examine whether such a policy is practical or attainable.

Part I: The Multi Employer Citation Policy: An Overview

1. Foundations of the MECP

The Occupational Safety and Health Act of 1970 was enacted to “assure safe healthful working conditions” were provided to America’s laborers.3 The Secretary of Labor is given the power to enforce the Act by issuing citations for violations of the safety and health standards promulgated by him under the Act, and by assessing fines.4 Primary responsibility for enforcement of the Act is delegated to OSHA.5 OSHA’s compliance officers conduct inspections of a workplace to determine whether the employer is in compliance with the standards adopted by the Secretary. Under ideal circumstances, the employer is easily identifiable and the issuance of citations is routine. However, in situations where multiple employers are on a site, it is not always simple for OSHA to identify the appropriate employer to cite in order to assure compliance and abatement of the alleged problem. This might occur when a general contractor and several subcontractors are on a particular construction job. Under these circumstances, OSHA would be unclear as to varying levels of control and exposure.

The common law struggled with this problem and vacillated from circuit to circuit on who should be cited for a particular violation. Some circuits held that the act applied to the employees of a subcontractor, others held there was no such duty.6 OSHA itself has grappled with how best to achieve that end in workplaces where the conditions under which employees work and the hazards to which they are exposed, may be under the control of employers other than their own.7 The Fifth Circuit had adopted the minority stance that the Act did not create a duty of care to protect third parties.8

The Administration eventually adopted the majority view, thereby legislatively overruling the minority circuits, and requiring that the employer who in their view was in the best position to require compliance should accept responsibility. The Multi Employer Citation Policy (the MECP), as the directive was titled, was the result of much deliberation on how best to enact a uniform procedure for enforcement in order to meet the goals of the Administration.

2. The New MECP

The recent MECP directive became effective on December 10, 1999.9 The directive claims that it was only intended to clarify the existing Commission-based policy, and in no way changes employer duties.10 The policy continues by describing the two-step process used to determine whether more than one employer is to be cited for safety and health violations on a worksite.11

The first step a compliance officer must take when considering which employers to cite, is to classify the employer.12 The employer can be classified as a “creating, exposing, correcting, or controlling employer.”13 These definitions are of utmost importance. They are also overlapping and nonexclusive.14

The “Creating Employer” is defined as “the employer that caused a hazardous condition that violates an OSHA standard.”15 The “Exposing Employer” is defined as “an employer whose own employees are exposed to the hazard,” although that employer need not have created the standard.16 This type of employer is citable if he created the hazard, or if he knew or should have known of the condition and failed to take steps to protect his employees.17 The “Correcting Employer” is “an employer who is engaged in a common undertaking, on the same worksite as the exposing employer, and is responsible for correcting a hazard.”18 This is usually established through contractual obligations to provide the subcontractors a safe working environment.

It is the fourth classification which is so troublesome from a compliance standpoint. A “Controlling Employer” is defined as “an employer who has general supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them.”19 Even an employer who has no explicit contractual duties with respect to safety, can still be a “controlling employer” if, in actual practice, it exercises “broad control over subcontractors at the site.”20 Additionally, contractual provisions cannot exculpate an employer by expressly providing they have no right to control safety. The MECP provides that if the employer has “broad responsibility” for aspects of the job or its responsibilities even merely “involve safety,” they are citable.21 Simply stated, if a contractor has the “power” to correct safety and health violations itself, or to require others to correct them, then that contractor has the duty to do so as a “controlling employer.” As one might imagine, the “controlling employer” classification has generated substantial controversy.

1. What Makes a “Controlling Employer.”

It is difficult to imagine a general contractor who is not a “controlling employer” under the MECP’s liberal definition. By the inherent nature of the relationship virtually every general contractor has “general supervisory authority” over its subcontractors. The MECP provides for several ways in which “general supervisory authority” can be created. It can be created by an express contractual provision, such as the case where a general contractor specifically retains the right to enforce compliance by a subcontractor (which also makes them citable as a correcting employer). It can also be created by a combination of other contract rights. In the circumstances where a contract does not address the issue of who has the right to control safety, or where the contract states that the employer does not have such a right, an employer may still be a controlling employer. Broad contractual authority, resulting from a combination of contractual rights, that give an employer responsibility over almost all aspects of the job, can be construed to involve safety. This is true when the general contractor has “the authority to resolve disputes between subcontractors” or to “set schedules and determine construction sequencing” because OSHA believes that this is likely to “affect safety.”22 In addition, “general supervisory authority” can be created in actual practice, even when the employer has no express contractual authority.

For the sake of illustration, assume a general contractor (GC) hires subcontractors X (plumbing), Y (electrical) and Z (masonry) to rehabilitate a building. Assume further that the contracts between GC and X, Y, and Z provide that each subcontractor is responsible for OSHA compliance by their own employees, but GC retains the right to determine when each phase of the subcontractors work can be performed, and the right to require that subcontractors meet contract specifications. By the MECP’s definition, GC is a “controlling employer” by virtue of the fact that it has “broad control” over the subcontractors.

In practical terms, when OSHA’s compliance officers appear at a jobsite, one of the first questions asked of a potential “controlling employer” is whether that company has the right to tell a subcontractor to stop doing something if it believed it to be in noncompliance. For instance, the compliance officer will ask the employer “if you saw subcontractor Z’s employee not wearing a hard hat, do you have the power to tell that employee to put one on?” This question receives a “yes” response almost 100% of the time, and by doing so, the contractor ripens into a “controlling employer.”

2. Responsibilities of a “Controlling Employer”

An employer who falls within one of the four categories prescribed by the MECP has obligations with respect to OSHA requirements. 23 The extent of responsibility depends on which of the category of employers applies. If an employer has been defined as a “controlling employer,” the next step for a compliance officer is to assess their actions to determine conformity to OSHA requirements. According to the MECP, a “controlling employer must exercise reasonable care to prevent and detect violations on the [work]site.”24 Thus, there are three essential concepts with respect to a controlling employer’s duties to the employees of a subcontractor: prevent, detect and “reasonable care.”

In order for a general contractor to prevent violations of the Act by the employees of a subcontractor, the general contractor must take affirmative steps to evaluate the compliance of all subcontractors he would be considered to be “controlling.” The two obvious ways a general contractor can accomplish this is by undertaking training of the employees of its subcontractors and/or by conducting periodic inspections of the work as it is being performed to make sure the employees of the subcontractors are in compliance.

If an employee of a subcontractor is not in compliance, then the general contractor has a duty to require compliance (which, incidentally, again makes GC liable as a “correcting employer.”) It is easy to imagine the difficulties involved with this expansive responsibility on large projects where numerous subcontractors are performing dozens of different trades. The general contractor/”controlling employer” must hire “inspectors” to police the jobsite and monitor all of the subcontractors just to be in compliance.

Furthermore, the general contractor/”controlling employer” has the duty to detect violations. What this means is that the general contractor/”controlling employer” inspectors must be sufficiently trained to recognize a subcontractor who is acting in noncompliance. For instance, assume again that GC hires three trade subcontractors: X (electrical), Y (plumbing) and Z (masonry). In order to satisfy its duty, in theory, the GC must send an inspector to prevent and detect noncompliance. Suppose the inspector sent to “prevent” violations by its subcontractors happens across the electrical subcontractor’s employees. The GC is charged with the duty to use “reasonable care” to know when that electrician is not in compliance, even though the GC or his inspector may have no background whatsoever with electricity. As you can see, the GC’s burden to detect can be extremely difficult, if not impossible, to discharge. It can be construed as requiring an inspector who is an expert in compliance for all of the trades utilized on the worksite. Commentators have envisioned large safety forces policing the worksite in an attempt to comply.25

To discharge their duty to prevent and detect, an employer must exercise “reasonable care.” “Reasonable care” is not defined in the MECP, so it is necessary to draw from the common law for assistance. “Reasonable care” is generally defined at common law as, that degree of care to which the reasonable person would have exercised under same or similar circumstances.26

However, the MECP continues by proclaiming that the applicable standard that a “controlling employer” must comply with to satisfy its duty to exercise “reasonable care” to prevent and detect violations is actually “less than what is required of an employer with respect to protecting its own employees.”27 This means that the “controlling employer” is “not normally required to inspect for hazards as frequently or to have the same level of knowledge of the applicable standards or of trade expertise as the employer it has hired.”28 The Administration apparently struggled to define the “less than reasonable care” standard. Rather than give a definition, the MECP gives employers a list of “factors” that relate to the “reasonable care” standard.

The MECP indicates that the frequency and attentiveness that a “controlling employer” must use to meet its duty include: 1. the scale of the project; 2. the nature and pace of the work, including the frequency with which the number, or types of hazards, change as the work progresses; 3. how much the “controlling employer” knows about the safety practices of the employer it “controls,” and about that employer’s level of expertise; 4. the “controlling employer’s” knowledge of prior noncompliance problems with that subcontractor; and, 5. whether the “controlling employer” sees strong indications that the other employer has implemented effective safety and health efforts.29 Other indicators include the use of an effective, graduated system of enforcement for noncompliance, coupled with regular jobsite safety meetings and safety training.

The obvious policy of the Administration is clear. OSHA wants the larger companies to shoulder the responsibility, so it will in turn compel compliance on its worksites. It is their belief that the larger companies are in a better position to supervise the subcontractors. They believe that if a subcontractor acts in noncompliance, then the “controlling employer” would be obligated to require that subcontractor to leave the site. Alternatively, and possibly more commonly, a general contractor would be less encouraged to hire a “fly by night” subcontractor and instead insist on only those subcontractors with well developed safety policies and training programs. In theory, at least, the more watchdogs there are on a worksite, the fewer violations there are, and subsequently, the less employee injuries.

Commentators note that this theory is erroneous.30 One foreseeable consequence of the MECP is that general contractors will likely delete the provision in the standard general contractor agreement which provides that the subcontractor shall be responsible for compliance with OSHA, and to comply with the employer’s safety manuals. The reason for this is that it may be seen to contractually establish “control” or the “right to control.” Or worse yet, general contractors may distance themselves from the worksite completely, and simply hire the subcontractor to complete the contract specifications without providing any control whatsoever over their work or an accounting of their expertise. Obviously, discouraging the inclusion of safety provisions in general contractor agreements and participation by the general contractor in the project fails to carry forth the purposes of the Act, and may indeed be more dangerous to workplace safety and health.31

There also is a fundamental problem with the standard of care proposed by the MECP. To determine what behavior satisfies the general paradigm of “reasonable care,” courts are bound look to the customs of the community.32 Evidence of the usual and customary conduct of others under similar circumstances is normally the indication of what the community regards as proper.33 The standard of care requires the employer to use the skill and knowledge commonly possessed and used in that employer’s particular industry.34 This is an objective standard.

OSHA summarily rejects the community standard approach and in its place establishes a subjective standard. The Administration generally suggests what is reasonable, and the OSHA compliance officer evaluates an employer’s conduct based on those standards. For example, assume again a general contractor (GC) hires subcontractors X (plumbing), Y (electrical) and Z (masonry) to rehabilitate a building. GC sends an inspector once a week to the jobsite to confirm the subcontractors are acting in compliance. GC believes it has satisfied its duty of care. It is quite possible that an OSHA compliance officer may have a different opinion as to how frequently that the GC must inspect the jobsite and cites GC for a violation committed by subcontractor Y’s employee anyway. The point is, no general contractor can ever be sure whether it is acting in compliance or not because the “reasonable care” standard is subjective to OSHA. For this reason, an attorney advising an employer who is cited under this standard should allege the constitutional defense of “vagueness” in its Notice of Contest.35

Part II: Three Possible Secondary Effects on Employers

As Part I demonstrated, it will be difficult for an employer to answer the question, am I, and all my subcontractors, complying with this new directive? The next question that an employer is bound to ask may be easier to answer, but the results will be equally alarming, and that is: What effect, if any, will this new citation policy have on matters outside the control of OSHA? This author proposes that there may be secondary effects of the MECP that pose difficult tort law consequences in Texas. Whether these consequences are intentional or unintentional, it is only a matter of time before an employer will need to address them.

1. The Retained Control Problem

As a general proposition, a contractor’s duty of care to a subcontractor’s employees is commensurate with the control it retains over the subcontractor’s work.36 If a general contractor exercises no control over a subcontractor, then there is no duty owed to the subcontractor’s employees. However, one who entrusts work to an independent contractor, and actually retains some control over the operative details of the work, is subject to liability for his failure to exercise that control with “reasonable care.”37

There are certain rights that a contractor does retain that do not invoke a duty to a subcontractor’s employees. For example, it is not enough to merely exercise a general right to order work stopped or resumed, to inspect its progress or to receive reports, to make suggestions or recommendations which need not necessarily be followed, or to prescribe alterations and deviations.38 Such general rights are usually reserved to the employer, but it does not mean the subcontractors are controlled as to their methods of work, or as to operative details. To invoke a duty, there must be such a retention of right of supervision that the subcontractor is not entirely free to do the work in his own way.39

The problem is that if the general contractor exercises the amount of control outlined by OSHA, including performing routine safety inspections, training the subcontractor’s employees and/or detecting and correcting problems, general contractors then breach this threshold and by definition become “controlling employers,” thus exposing themselves to civil liability. In effect, the general contractor becomes exposed to liability for any injury that occurs because the general contractor undertook to supervise the safety of that subcontractor. A Plaintiff’s lawyer would only need to have a client who suffered an on the job injury while working for a subcontractor, and the knowledge that the general contractor retained some control over the safety aspect of the subcontractor’s business to make a prima facie case against the general contractor. (See also, discussion of the “Borrowed Servant Problem”, infra.)

2. The Negligence Per Se Problem

Although OSHA’s mandates do not create a “private” cause of action, there is no question they affect existing theories of law. Negligence per se appears to be one of them.

Negligence per se is a strange aspect of tort law. In its simplest form, it is an evidentiary threshold. It relieves the claimant of the burden of proving that a defendant’s actions breached the standard of care, when the claimant is a member of a class of persons the statute was intended to protect.40 In the OSHA regulation context, the main issue becomes whether the claimant was a member of the class that the OSHA regulation was intended to protect. Most jurisdictions, prior to the enactment of the MECP, have accepted proof of an OSHA violation as evidence of negligence per se with respect to third person non-employees. However, the Fifth Circuit, including Texas, has upheld the Act’s own provisions that it neither enlarges nor diminishes “common law or statutory rights, duties, or liabilities.”41 The 5th Circuit’s lone minority view held that OSHA regulations protect only an employer’s own employees and do not establish a standard of care due to third persons.42 In the 5th circuit, therefore, the class protected by OSHA regulations comprises only an employers’ own employees.43 Because the employees of a subcontractor were not considered in the “class of protected persons” under the Melerine line of decisions, a negligence per se claim was certain to fail.

The OSHA MECP directive apparently has changed this because it defines a standard of care due to third parties. A general contractor/”controlling employer” has the duty to “prevent” and “detect” safety violations by the employees of a subcontractor. Clearly, the class of persons the MECP was designed to protect is the employees of the subcontractor. The Melerine decision and its progeny have apparently been legislatively overruled by OSHA. In fact, the “clarification” the MECP mentions as its goal is probably a direct result of the 5th Circuit’s rogue decision.

It now appears that if an employee of a subcontractor is injured on the job, the general contractor/”controlling employer” will be subject to a private cause of action by the injured party for negligence arising out of that injury. A Plaintiff’s lawyer would simply plead that the general contractor/”controlling employer” “retained control” over the employee when it discharged its duty to “prevent” and “detect,” but it did so negligently. If the employer is found to have violated its duties under the OSHA MECP directive, that could be submitted as conclusive evidence of negligence in the private cause of action. Even if it is not considered conclusive evidence of negligence, it can always be used as some evidence of negligence.44

3. The Borrowed Servant Problem

The last problem proposed by this author concerns the common law issue of borrowed servant, or “de facto” employment. As has been shown in Section I of this paper, OSHA expects a general contractor to exert control over the employees of his subcontractors to prevent worker injuries. The borrowed servant doctrine provides that the employee of employer 1 may ripen into the employee of employer 2 if enough control is exerted over that employee by the second employer. That borrowed servant, as the employee is then known, then retains all the legal rights of an employee including workers compensation entitlement.45

The test for determining whether a person is the employee of the original employer or of the borrowing employer is whether the employee is subject to the specific direction and control of the loaning or the borrowing employer. “Direction and control” have been held to be the critical factors by which the borrowed servant is to be determined.46 It seems to reason that if a general contractor/”controlling employer” instructs an employee of a subcontractor to adhere to OSHA standards, and then disciplines that employee pursuant to the guidelines of the OSHA MECP directive, then there is no doubt that the general contractor/”controlling employer” is exercising “direction” and “control.” At least one court has held that the right to “verbally discipline” is a factor to consider when evaluating whether a borrowed servant situation exists.47 The borrowed worker ripens into the “de facto” employee of the borrowing employer.48

The problem with this scenario is that virtually every worker on a jobsite could become the employee of the general contractor, and the general contractor would be forced to undertake the expense to provide adequate workers’ compensation for all of those potential employees. In essence, the partition separating independent contractor and general contractor could erode to the point that the distinction may become meaningless.

The Texas Labor Code provides some protection against this possibility. The Texas Labor code provides that a general contractor is not prevented from “directing a subcontractor or the employees of a subcontractor to stop or change an unsafe work practice” out of fear of destroying the separate nature of the general contractor/subcontractor relationship.49 However, it is unclear whether the code is strong enough to protect a general contractor exerting the degree of control contemplated by the OSHA MECP directive. “Stopping” or “changing” an unsafe practice appears to envision a lesser degree of control than the MECP’s edict to “prevent” and “detect” violations. It is certain that this provision alone will generate substantial litigation.

CONCLUSION

There can be no question that the face of the general contractor/independent contractor relationship has changed forever in the wake of OSHA’s new Multi Employer Citation Policy directive. Essentially, OSHA has opined that “authority” over a worksite is the same as “control” over a worksite, which gives rise to liability. It is the opinion of this commentator that it is unrealistic and counterproductive to assume that because a general contractor has nominal authority over a vast construction site with numerous subcontractors, it is in a position to abate all the violations created by the subcontractors. General contractor law and subcontractor law will be forever changed under this directive. For this reason, the MECP is an ineffective and unnecessary penal tool to achieve compliance, which will likely lead to an increased number of lawsuits against the general contractors, and increasing their exposure for damages.
_________________________________________________________________________

* Mr. Grubbs is Of Counsel to Pappas Grubbs Price PC, in Houston, Texas where he practices Labor and Employment Law, Employer’s Liability Law and Occupational Safety and Health law. Mr. Grubbs is available for consultation on any of these matters by contacting him at 713-951-1014. Mr. Grubbs received his Juris Doctorate degree from the South Texas College of Law in 1996, and his Bachelors of Business Administration from the University of Texas at Austin in 1992. Mr. Grubbs would like to thank Mr. Chris Farmer for his research and editing assistance. Mr. Farmer received his Juris Doctorate degree from the University of Houston Law Center in 2001.

1 M. Rothstein, Occupational Safety and Health Law (1998).

2 OSHA Directives, CPL 2 0.124 Multi Employer Citation Policy, <http://www.osha slc.gov/OshDoc/Directive_data/CPL_2 0_124.html>.

3 29 U.S.C. § 651(b).

4 Id.

5 Id.

6 See; Marshall v. Knutson Construction Co., 566 F.2d 596 (8th Cir. 1977); see also Gil Haugan, 7 OSHC 2004, 1979 OSHD 24,105(1979)(general contractor owes duty to employees of subcontractors); Cf., Howard Electric Co., 6 OSHR 1518, 1978(Texas); Melerine v. Avondale Shipyards, Inc., 659 F.2d 706 (5th Cir. 1980)(Texas)(general contractor owes no duty to employees of third parties).

7 Who’s Who in the Workplace: Implications for Employer Responsibility Under the Occupational, Safety and Health Act, Bor, American Bar Association CLE, 1998.

8 See; Melerine v. Avondale Shipyards, Inc., 659 F.2d 706 (5th Cir. 1980)(Texas).

9 OSHA Directives, CPL 2 0.124 Multi Employer Citation Policy; (http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=DIRECTIVES&p_id=2024) .

10 Id.

11 Id.

12 Id.

13 Id.

14 Id.

15 Id.

16 Id.

17 Id.

18 Id.

19 Id.

20 Id.

21 Id.

22 Id., Types of Controlling Employers, example 9.

23 Id.

24 Id.

25 M. Rothstein, Occupational Safety and Health Law at 233 (1998).

26 See, e.g.; Bennet v. Span Industries, Inc., 628 S.W.2d 470, 473-74 (Tex. App.-Texarkana, 1982, ref’d n.r.e.); Philadelphia Mfrs. Mut. Ins. Co. v. Gulf Forge Co., 555 F. Supp. 519 (S.D. Tex.1982); Texas & P. R. Co. v Barrett (1897) 166 U.S. 617, 41 L Ed 1136, 17 S. Ct. 707.

27 See; OSHA Directives, CPL 2 0.124 Multi Employer Citation Policy.

28 Id.

29 Id.

30 See; M. Rothstein, Occupational Safety and Health Law at 232 (1998).

31 Id.

32 See W. Page Keeton et al., Prosser and Keeton on Torts § 33, at 193 (5th ed. 1984).

33 Prosser, supra, at 193.

34 See Restatement (Second) of Torts Sec. 299A cmt. E (1965).

35 For a discussion of the vagueness defense, see; Ryder Truck Lines v. Brennan, 497 F.2d 230 (5th Cir. 1974.)(Holding that in order to pass constitutional muster, the statute must afford a reasonable warning against the proscribed conduct in light of common understanding and practices)

36 Hoechst Celanese Co. v. Mendez, 967 S.W.2d 354 (Tex. 1998); Hammock v. Conoco, 902 S.W.2d 127 (Tex. App.-Houston [1st.Dist.] 1995 writ denied).

37 See Restatement (Second) of Torts Sec. 414 (1977).

38 PMB Systems Eng., Inc. v. Hendershot, 741 F.2d 795 (5th Cir. 1984).

39 Id.

40 See; Marshall v. Isthmian Lines, Inc., 334 F.2d 131, 134 (5th Cir. 1964).

41 Melerine v. Avondale Shipyards, Inc., 659 F.2d 706 at 709(5th Cir. 1980), quoting 29 U.S.C. § 653 (b)(4).

42 Melerine v. Avondale Shipyards, Inc., 659 F.2d 706, 711 (5th Cir. 1981).

43 American Petroleum Inst. v. OSHA, 581 F.2d 493 (5th Cir. 1978), aff’d, 448 U.S. 607, 100 S. Ct. 2844 (1980.)

44 See Melerine at 709.

45 Marshall v. Toys-R-Us Nytex, Inc., 825 S.W.2d 193, 195-96 (Tex. App.-Houston [14th Dist.] 1992, writ denied) (citing Sparger v. Worley Hosp., Inc., 547 S.W.2d 582, 583 (Tex. 1977), see also, Denton v. Yazoo & M. Valley R. Co.., 284 U.S. 305, 308 (1932).

46 Standard Oil v. Anderson, 212 U.S. 215, 222 (1909).

47 Parker v. Joe Lujan Ent., Inc., 848 F.2d 118 (9th Cir. 1988).

48 Marshall v. Toys-R-Us Nytex, Inc., 825 S.W.2d 193, 195-96 (Tex. App.-Houston [14th Dist.] 1992, writ denied) (citing Sparger v. Worley Hosp., Inc., 547 S.W.2d 582, 583 (Tex.1977), see also, Denton v. Yazoo & M. Valley R. Co., 284 U.S. 305, 308 (1932).

49 TEX. LABOR CODE §. 406.125.

INTRODUCTION

Shortly after the Occupational Safety and Health Act (the Act) was adopted in 1970, the Occupational Safety and Health Review Commission (the Commission) began having difficulty apportioning responsibility in situations where there was no direct connection between the employer controlling the site, and the employer creating the hazard. Moreover, employers who simply had employees exposed to the hazard, but neither had control over the employees or created the violation were likewise perplexing to the Commission. After struggling for years to reach a consensus as to when a certain employer should be cited for alleged acts of a third party, the Commission began to invoke a decisional policy they dubbed the “multi employer workplace policy.”1 On December 10, 1999, the Occupational Safety and Health Administration (OSHA or the Administration) released a clarification of its Multi Employer Citation Policy (MECP).2 This paper will begin by introducing the concept of the “controlling employer” in Section I, and will highlight the duties expected of an employer to remain in compliance. Section II will suggest possible implications of the policy in an attempt to promote thought and discussion by the reader to further examine whether such a policy is practical or attainable.

Part I: The Multi Employer Citation Policy: An Overview

1. Foundations of the MECP

The Occupational Safety and Health Act of 1970 was enacted to “assure safe healthful working conditions” were provided to America’s laborers.3 The Secretary of Labor is given the power to enforce the Act by issuing citations for violations of the safety and health standards promulgated by him under the Act, and by assessing fines.4 Primary responsibility for enforcement of the Act is delegated to OSHA.5 OSHA’s compliance officers conduct inspections of a workplace to determine whether the employer is in compliance with the standards adopted by the Secretary. Under ideal circumstances, the employer is easily identifiable and the issuance of citations is routine. However, in situations where multiple employers are on a site, it is not always simple for OSHA to identify the appropriate employer to cite in order to assure compliance and abatement of the alleged problem. This might occur when a general contractor and several subcontractors are on a particular construction job. Under these circumstances, OSHA would be unclear as to varying levels of control and exposure.

The common law struggled with this problem and vacillated from circuit to circuit on who should be cited for a particular violation. Some circuits held that the act applied to the employees of a subcontractor, others held there was no such duty.6 OSHA itself has grappled with how best to achieve that end in workplaces where the conditions under which employees work and the hazards to which they are exposed, may be under the control of employers other than their own.7 The Fifth Circuit had adopted the minority stance that the Act did not create a duty of care to protect third parties.8

The Administration eventually adopted the majority view, thereby legislatively overruling the minority circuits, and requiring that the employer who in their view was in the best position to require compliance should accept responsibility. The Multi Employer Citation Policy (the MECP), as the directive was titled, was the result of much deliberation on how best to enact a uniform procedure for enforcement in order to meet the goals of the Administration.

2. The New MECP

The recent MECP directive became effective on December 10, 1999.9 The directive claims that it was only intended to clarify the existing Commission-based policy, and in no way changes employer duties.10 The policy continues by describing the two-step process used to determine whether more than one employer is to be cited for safety and health violations on a worksite.11

The first step a compliance officer must take when considering which employers to cite, is to classify the employer.12 The employer can be classified as a “creating, exposing, correcting, or controlling employer.”13 These definitions are of utmost importance. They are also overlapping and nonexclusive.14

The “Creating Employer” is defined as “the employer that caused a hazardous condition that violates an OSHA standard.”15 The “Exposing Employer” is defined as “an employer whose own employees are exposed to the hazard,” although that employer need not have created the standard.16 This type of employer is citable if he created the hazard, or if he knew or should have known of the condition and failed to take steps to protect his employees.17 The “Correcting Employer” is “an employer who is engaged in a common undertaking, on the same worksite as the exposing employer, and is responsible for correcting a hazard.”18 This is usually established through contractual obligations to provide the subcontractors a safe working environment.

It is the fourth classification which is so troublesome from a compliance standpoint. A “Controlling Employer” is defined as “an employer who has general supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them.”19 Even an employer who has no explicit contractual duties with respect to safety, can still be a “controlling employer” if, in actual practice, it exercises “broad control over subcontractors at the site.”20 Additionally, contractual provisions cannot exculpate an employer by expressly providing they have no right to control safety. The MECP provides that if the employer has “broad responsibility” for aspects of the job or its responsibilities even merely “involve safety,” they are citable.21 Simply stated, if a contractor has the “power” to correct safety and health violations itself, or to require others to correct them, then that contractor has the duty to do so as a “controlling employer.” As one might imagine, the “controlling employer” classification has generated substantial controversy.

1. What Makes a “Controlling Employer.”

It is difficult to imagine a general contractor who is not a “controlling employer” under the MECP’s liberal definition. By the inherent nature of the relationship virtually every general contractor has “general supervisory authority” over its subcontractors. The MECP provides for several ways in which “general supervisory authority” can be created. It can be created by an express contractual provision, such as the case where a general contractor specifically retains the right to enforce compliance by a subcontractor (which also makes them citable as a correcting employer). It can also be created by a combination of other contract rights. In the circumstances where a contract does not address the issue of who has the right to control safety, or where the contract states that the employer does not have such a right, an employer may still be a controlling employer. Broad contractual authority, resulting from a combination of contractual rights, that give an employer responsibility over almost all aspects of the job, can be construed to involve safety. This is true when the general contractor has “the authority to resolve disputes between subcontractors” or to “set schedules and determine construction sequencing” because OSHA believes that this is likely to “affect safety.”22 In addition, “general supervisory authority” can be created in actual practice, even when the employer has no express contractual authority.

For the sake of illustration, assume a general contractor (GC) hires subcontractors X (plumbing), Y (electrical) and Z (masonry) to rehabilitate a building. Assume further that the contracts between GC and X, Y, and Z provide that each subcontractor is responsible for OSHA compliance by their own employees, but GC retains the right to determine when each phase of the subcontractors work can be performed, and the right to require that subcontractors meet contract specifications. By the MECP’s definition, GC is a “controlling employer” by virtue of the fact that it has “broad control” over the subcontractors.

In practical terms, when OSHA’s compliance officers appear at a jobsite, one of the first questions asked of a potential “controlling employer” is whether that company has the right to tell a subcontractor to stop doing something if it believed it to be in noncompliance. For instance, the compliance officer will ask the employer “if you saw subcontractor Z’s employee not wearing a hard hat, do you have the power to tell that employee to put one on?” This question receives a “yes” response almost 100% of the time, and by doing so, the contractor ripens into a “controlling employer.”

2. Responsibilities of a “Controlling Employer”

An employer who falls within one of the four categories prescribed by the MECP has obligations with respect to OSHA requirements. 23 The extent of responsibility depends on which of the category of employers applies. If an employer has been defined as a “controlling employer,” the next step for a compliance officer is to assess their actions to determine conformity to OSHA requirements. According to the MECP, a “controlling employer must exercise reasonable care to prevent and detect violations on the [work]site.”24 Thus, there are three essential concepts with respect to a controlling employer’s duties to the employees of a subcontractor: prevent, detect and “reasonable care.”

In order for a general contractor to prevent violations of the Act by the employees of a subcontractor, the general contractor must take affirmative steps to evaluate the compliance of all subcontractors he would be considered to be “controlling.” The two obvious ways a general contractor can accomplish this is by undertaking training of the employees of its subcontractors and/or by conducting periodic inspections of the work as it is being performed to make sure the employees of the subcontractors are in compliance.

If an employee of a subcontractor is not in compliance, then the general contractor has a duty to require compliance (which, incidentally, again makes GC liable as a “correcting employer.”) It is easy to imagine the difficulties involved with this expansive responsibility on large projects where numerous subcontractors are performing dozens of different trades. The general contractor/”controlling employer” must hire “inspectors” to police the jobsite and monitor all of the subcontractors just to be in compliance.

Furthermore, the general contractor/”controlling employer” has the duty to detect violations. What this means is that the general contractor/”controlling employer” inspectors must be sufficiently trained to recognize a subcontractor who is acting in noncompliance. For instance, assume again that GC hires three trade subcontractors: X (electrical), Y (plumbing) and Z (masonry). In order to satisfy its duty, in theory, the GC must send an inspector to prevent and detect noncompliance. Suppose the inspector sent to “prevent” violations by its subcontractors happens across the electrical subcontractor’s employees. The GC is charged with the duty to use “reasonable care” to know when that electrician is not in compliance, even though the GC or his inspector may have no background whatsoever with electricity. As you can see, the GC’s burden to detect can be extremely difficult, if not impossible, to discharge. It can be construed as requiring an inspector who is an expert in compliance for all of the trades utilized on the worksite. Commentators have envisioned large safety forces policing the worksite in an attempt to comply.25

To discharge their duty to prevent and detect, an employer must exercise “reasonable care.” “Reasonable care” is not defined in the MECP, so it is necessary to draw from the common law for assistance. “Reasonable care” is generally defined at common law as, that degree of care to which the reasonable person would have exercised under same or similar circumstances.26

However, the MECP continues by proclaiming that the applicable standard that a “controlling employer” must comply with to satisfy its duty to exercise “reasonable care” to prevent and detect violations is actually “less than what is required of an employer with respect to protecting its own employees.”27 This means that the “controlling employer” is “not normally required to inspect for hazards as frequently or to have the same level of knowledge of the applicable standards or of trade expertise as the employer it has hired.”28 The Administration apparently struggled to define the “less than reasonable care” standard. Rather than give a definition, the MECP gives employers a list of “factors” that relate to the “reasonable care” standard.

The MECP indicates that the frequency and attentiveness that a “controlling employer” must use to meet its duty include: 1. the scale of the project; 2. the nature and pace of the work, including the frequency with which the number, or types of hazards, change as the work progresses; 3. how much the “controlling employer” knows about the safety practices of the employer it “controls,” and about that employer’s level of expertise; 4. the “controlling employer’s” knowledge of prior noncompliance problems with that subcontractor; and, 5. whether the “controlling employer” sees strong indications that the other employer has implemented effective safety and health efforts.29 Other indicators include the use of an effective, graduated system of enforcement for noncompliance, coupled with regular jobsite safety meetings and safety training.

The obvious policy of the Administration is clear. OSHA wants the larger companies to shoulder the responsibility, so it will in turn compel compliance on its worksites. It is their belief that the larger companies are in a better position to supervise the subcontractors. They believe that if a subcontractor acts in noncompliance, then the “controlling employer” would be obligated to require that subcontractor to leave the site. Alternatively, and possibly more commonly, a general contractor would be less encouraged to hire a “fly by night” subcontractor and instead insist on only those subcontractors with well developed safety policies and training programs. In theory, at least, the more watchdogs there are on a worksite, the fewer violations there are, and subsequently, the less employee injuries.

Commentators note that this theory is erroneous.30 One foreseeable consequence of the MECP is that general contractors will likely delete the provision in the standard general contractor agreement which provides that the subcontractor shall be responsible for compliance with OSHA, and to comply with the employer’s safety manuals. The reason for this is that it may be seen to contractually establish “control” or the “right to control.” Or worse yet, general contractors may distance themselves from the worksite completely, and simply hire the subcontractor to complete the contract specifications without providing any control whatsoever over their work or an accounting of their expertise. Obviously, discouraging the inclusion of safety provisions in general contractor agreements and participation by the general contractor in the project fails to carry forth the purposes of the Act, and may indeed be more dangerous to workplace safety and health.31

There also is a fundamental problem with the standard of care proposed by the MECP. To determine what behavior satisfies the general paradigm of “reasonable care,” courts are bound look to the customs of the community.32 Evidence of the usual and customary conduct of others under similar circumstances is normally the indication of what the community regards as proper.33 The standard of care requires the employer to use the skill and knowledge commonly possessed and used in that employer’s particular industry.34 This is an objective standard.

OSHA summarily rejects the community standard approach and in its place establishes a subjective standard. The Administration generally suggests what is reasonable, and the OSHA compliance officer evaluates an employer’s conduct based on those standards. For example, assume again a general contractor (GC) hires subcontractors X (plumbing), Y (electrical) and Z (masonry) to rehabilitate a building. GC sends an inspector once a week to the jobsite to confirm the subcontractors are acting in compliance. GC believes it has satisfied its duty of care. It is quite possible that an OSHA compliance officer may have a different opinion as to how frequently that the GC must inspect the jobsite and cites GC for a violation committed by subcontractor Y’s employee anyway. The point is, no general contractor can ever be sure whether it is acting in compliance or not because the “reasonable care” standard is subjective to OSHA. For this reason, an attorney advising an employer who is cited under this standard should allege the constitutional defense of “vagueness” in its Notice of Contest.35

Part II: Three Possible Secondary Effects on Employers

As Part I demonstrated, it will be difficult for an employer to answer the question, am I, and all my subcontractors, complying with this new directive? The next question that an employer is bound to ask may be easier to answer, but the results will be equally alarming, and that is: What effect, if any, will this new citation policy have on matters outside the control of OSHA? This author proposes that there may be secondary effects of the MECP that pose difficult tort law consequences in Texas. Whether these consequences are intentional or unintentional, it is only a matter of time before an employer will need to address them.

1. The Retained Control Problem

As a general proposition, a contractor’s duty of care to a subcontractor’s employees is commensurate with the control it retains over the subcontractor’s work.36 If a general contractor exercises no control over a subcontractor, then there is no duty owed to the subcontractor’s employees. However, one who entrusts work to an independent contractor, and actually retains some control over the operative details of the work, is subject to liability for his failure to exercise that control with “reasonable care.”37

There are certain rights that a contractor does retain that do not invoke a duty to a subcontractor’s employees. For example, it is not enough to merely exercise a general right to order work stopped or resumed, to inspect its progress or to receive reports, to make suggestions or recommendations which need not necessarily be followed, or to prescribe alterations and deviations.38 Such general rights are usually reserved to the employer, but it does not mean the subcontractors are controlled as to their methods of work, or as to operative details. To invoke a duty, there must be such a retention of right of supervision that the subcontractor is not entirely free to do the work in his own way.39

The problem is that if the general contractor exercises the amount of control outlined by OSHA, including performing routine safety inspections, training the subcontractor’s employees and/or detecting and correcting problems, general contractors then breach this threshold and by definition become “controlling employers,” thus exposing themselves to civil liability. In effect, the general contractor becomes exposed to liability for any injury that occurs because the general contractor undertook to supervise the safety of that subcontractor. A Plaintiff’s lawyer would only need to have a client who suffered an on the job injury while working for a subcontractor, and the knowledge that the general contractor retained some control over the safety aspect of the subcontractor’s business to make a prima facie case against the general contractor. (See also, discussion of the “Borrowed Servant Problem”, infra.)

2. The Negligence Per Se Problem

Although OSHA’s mandates do not create a “private” cause of action, there is no question they affect existing theories of law. Negligence per se appears to be one of them.

Negligence per se is a strange aspect of tort law. In its simplest form, it is an evidentiary threshold. It relieves the claimant of the burden of proving that a defendant’s actions breached the standard of care, when the claimant is a member of a class of persons the statute was intended to protect.40 In the OSHA regulation context, the main issue becomes whether the claimant was a member of the class that the OSHA regulation was intended to protect. Most jurisdictions, prior to the enactment of the MECP, have accepted proof of an OSHA violation as evidence of negligence per se with respect to third person non-employees. However, the Fifth Circuit, including Texas, has upheld the Act’s own provisions that it neither enlarges nor diminishes “common law or statutory rights, duties, or liabilities.”41 The 5th Circuit’s lone minority view held that OSHA regulations protect only an employer’s own employees and do not establish a standard of care due to third persons.42 In the 5th circuit, therefore, the class protected by OSHA regulations comprises only an employers’ own employees.43 Because the employees of a subcontractor were not considered in the “class of protected persons” under the Melerine line of decisions, a negligence per se claim was certain to fail.

The OSHA MECP directive apparently has changed this because it defines a standard of care due to third parties. A general contractor/”controlling employer” has the duty to “prevent” and “detect” safety violations by the employees of a subcontractor. Clearly, the class of persons the MECP was designed to protect is the employees of the subcontractor. The Melerine decision and its progeny have apparently been legislatively overruled by OSHA. In fact, the “clarification” the MECP mentions as its goal is probably a direct result of the 5th Circuit’s rogue decision.

It now appears that if an employee of a subcontractor is injured on the job, the general contractor/”controlling employer” will be subject to a private cause of action by the injured party for negligence arising out of that injury. A Plaintiff’s lawyer would simply plead that the general contractor/”controlling employer” “retained control” over the employee when it discharged its duty to “prevent” and “detect,” but it did so negligently. If the employer is found to have violated its duties under the OSHA MECP directive, that could be submitted as conclusive evidence of negligence in the private cause of action. Even if it is not considered conclusive evidence of negligence, it can always be used as some evidence of negligence.44

3. The Borrowed Servant Problem

The last problem proposed by this author concerns the common law issue of borrowed servant, or “de facto” employment. As has been shown in Section I of this paper, OSHA expects a general contractor to exert control over the employees of his subcontractors to prevent worker injuries. The borrowed servant doctrine provides that the employee of employer 1 may ripen into the employee of employer 2 if enough control is exerted over that employee by the second employer. That borrowed servant, as the employee is then known, then retains all the legal rights of an employee including workers compensation entitlement.45

The test for determining whether a person is the employee of the original employer or of the borrowing employer is whether the employee is subject to the specific direction and control of the loaning or the borrowing employer. “Direction and control” have been held to be the critical factors by which the borrowed servant is to be determined.46 It seems to reason that if a general contractor/”controlling employer” instructs an employee of a subcontractor to adhere to OSHA standards, and then disciplines that employee pursuant to the guidelines of the OSHA MECP directive, then there is no doubt that the general contractor/”controlling employer” is exercising “direction” and “control.” At least one court has held that the right to “verbally discipline” is a factor to consider when evaluating whether a borrowed servant situation exists.47 The borrowed worker ripens into the “de facto” employee of the borrowing employer.48

The problem with this scenario is that virtually every worker on a jobsite could become the employee of the general contractor, and the general contractor would be forced to undertake the expense to provide adequate workers’ compensation for all of those potential employees. In essence, the partition separating independent contractor and general contractor could erode to the point that the distinction may become meaningless.

The Texas Labor Code provides some protection against this possibility. The Texas Labor code provides that a general contractor is not prevented from “directing a subcontractor or the employees of a subcontractor to stop or change an unsafe work practice” out of fear of destroying the separate nature of the general contractor/subcontractor relationship.49 However, it is unclear whether the code is strong enough to protect a general contractor exerting the degree of control contemplated by the OSHA MECP directive. “Stopping” or “changing” an unsafe practice appears to envision a lesser degree of control than the MECP’s edict to “prevent” and “detect” violations. It is certain that this provision alone will generate substantial litigation.

CONCLUSION

There can be no question that the face of the general contractor/independent contractor relationship has changed forever in the wake of OSHA’s new Multi Employer Citation Policy directive. Essentially, OSHA has opined that “authority” over a worksite is the same as “control” over a worksite, which gives rise to liability. It is the opinion of this commentator that it is unrealistic and counterproductive to assume that because a general contractor has nominal authority over a vast construction site with numerous subcontractors, it is in a position to abate all the violations created by the subcontractors. General contractor law and subcontractor law will be forever changed under this directive. For this reason, the MECP is an ineffective and unnecessary penal tool to achieve compliance, which will likely lead to an increased number of lawsuits against the general contractors, and increasing their exposure for damages.
_________________________________________________________________________

* Mr. Grubbs is Of Counsel to Pappas Grubbs Price PC, in Houston, Texas where he practices Labor and Employment Law, Employer’s Liability Law and Occupational Safety and Health law. Mr. Grubbs is available for consultation on any of these matters by contacting him at 713-951-1014. Mr. Grubbs received his Juris Doctorate degree from the South Texas College of Law in 1996, and his Bachelors of Business Administration from the University of Texas at Austin in 1992. Mr. Grubbs would like to thank Mr. Chris Farmer for his research and editing assistance. Mr. Farmer received his Juris Doctorate degree from the University of Houston Law Center in 2001.

1 M. Rothstein, Occupational Safety and Health Law (1998).

2 OSHA Directives, CPL 2 0.124 Multi Employer Citation Policy, <http://www.osha slc.gov/OshDoc/Directive_data/CPL_2 0_124.html>.

3 29 U.S.C. § 651(b).

4 Id.

5 Id.

6 See; Marshall v. Knutson Construction Co., 566 F.2d 596 (8th Cir. 1977); see also Gil Haugan, 7 OSHC 2004, 1979 OSHD 24,105(1979)(general contractor owes duty to employees of subcontractors); Cf., Howard Electric Co., 6 OSHR 1518, 1978(Texas); Melerine v. Avondale Shipyards, Inc., 659 F.2d 706 (5th Cir. 1980)(Texas)(general contractor owes no duty to employees of third parties).

7 Who’s Who in the Workplace: Implications for Employer Responsibility Under the Occupational, Safety and Health Act, Bor, American Bar Association CLE, 1998.

8 See; Melerine v. Avondale Shipyards, Inc., 659 F.2d 706 (5th Cir. 1980)(Texas).

9 OSHA Directives, CPL 2 0.124 Multi Employer Citation Policy; (http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=DIRECTIVES&p_id=2024) .

10 Id.

11 Id.

12 Id.

13 Id.

14 Id.

15 Id.

16 Id.

17 Id.

18 Id.

19 Id.

20 Id.

21 Id.

22 Id., Types of Controlling Employers, example 9.

23 Id.

24 Id.

25 M. Rothstein, Occupational Safety and Health Law at 233 (1998).

26 See, e.g.; Bennet v. Span Industries, Inc., 628 S.W.2d 470, 473-74 (Tex. App.-Texarkana, 1982, ref’d n.r.e.); Philadelphia Mfrs. Mut. Ins. Co. v. Gulf Forge Co., 555 F. Supp. 519 (S.D. Tex.1982); Texas & P. R. Co. v Barrett (1897) 166 U.S. 617, 41 L Ed 1136, 17 S. Ct. 707.

27 See; OSHA Directives, CPL 2 0.124 Multi Employer Citation Policy.

28 Id.

29 Id.

30 See; M. Rothstein, Occupational Safety and Health Law at 232 (1998).

31 Id.

32 See W. Page Keeton et al., Prosser and Keeton on Torts § 33, at 193 (5th ed. 1984).

33 Prosser, supra, at 193.

34 See Restatement (Second) of Torts Sec. 299A cmt. E (1965).

35 For a discussion of the vagueness defense, see; Ryder Truck Lines v. Brennan, 497 F.2d 230 (5th Cir. 1974.)(Holding that in order to pass constitutional muster, the statute must afford a reasonable warning against the proscribed conduct in light of common understanding and practices)

36 Hoechst Celanese Co. v. Mendez, 967 S.W.2d 354 (Tex. 1998); Hammock v. Conoco, 902 S.W.2d 127 (Tex. App.-Houston [1st.Dist.] 1995 writ denied).

37 See Restatement (Second) of Torts Sec. 414 (1977).

38 PMB Systems Eng., Inc. v. Hendershot, 741 F.2d 795 (5th Cir. 1984).

39 Id.

40 See; Marshall v. Isthmian Lines, Inc., 334 F.2d 131, 134 (5th Cir. 1964).

41 Melerine v. Avondale Shipyards, Inc., 659 F.2d 706 at 709(5th Cir. 1980), quoting 29 U.S.C. § 653 (b)(4).

42 Melerine v. Avondale Shipyards, Inc., 659 F.2d 706, 711 (5th Cir. 1981).

43 American Petroleum Inst. v. OSHA, 581 F.2d 493 (5th Cir. 1978), aff’d, 448 U.S. 607, 100 S. Ct. 2844 (1980.)

44 See Melerine at 709.

45 Marshall v. Toys-R-Us Nytex, Inc., 825 S.W.2d 193, 195-96 (Tex. App.-Houston [14th Dist.] 1992, writ denied) (citing Sparger v. Worley Hosp., Inc., 547 S.W.2d 582, 583 (Tex. 1977), see also, Denton v. Yazoo & M. Valley R. Co.., 284 U.S. 305, 308 (1932).

46 Standard Oil v. Anderson, 212 U.S. 215, 222 (1909).

47 Parker v. Joe Lujan Ent., Inc., 848 F.2d 118 (9th Cir. 1988).

48 Marshall v. Toys-R-Us Nytex, Inc., 825 S.W.2d 193, 195-96 (Tex. App.-Houston [14th Dist.] 1992, writ denied) (citing Sparger v. Worley Hosp., Inc., 547 S.W.2d 582, 583 (Tex.1977), see also, Denton v. Yazoo & M. Valley R. Co., 284 U.S. 305, 308 (1932).

49 TEX. LABOR CODE §. 406.125.