An administrative law judge of the Occupational Safety and Health Review Commission affirmed a citation and a $12,471 penalty against a construction employer in a case in which an appeals court reversed a decision vacating a citation issued under the U.S. Occupational Safety and Health Administration’s multi-employer liability policy. 

In Secretary of Labor v. Hensel Phelps Construction Co., Hensel Phelps was the general contractor on a library construction project in Austin, Texas, and was hit with a willful citation and a proposed $70,000 penalty by OSHA after inspectors found trench violations and cave-in hazards on site. Hensel Phelps challenged its liability as a controlling employer although the parties agreed that if the citation was affirmed, it should be reclassified as an other-than-serious violation with a revised penalty amount of $12,471, according to review commission documents.

In 2017, an administrative law judge ruled OSHA regulations require the protection of an employer’s own employees from workplace hazards and vacated the citation, basing the initial decision on a 1981 ruling by the 5th U.S. Circuit Court of Appeals in New Orleans called Melerine v. Avondale Shipyards Inc. The appeals court held in that decision that the Occupational Safety and Health Act and its safety standards protect only an employer’s own employees although that decision involved a subcontractor employee’s negligence action against higher-level contractors.

The 5th Circuit on Nov. 26 reversed and remanded the Hensel Phelps case after concluding “that the Secretary of Labor has the authority under (OSHA regulations) to issue citations to controlling employers at multi-employer worksites for violations of the Act’s standards.”

The 2nd, 6th and 9th circuits had previously upheld OSHA’s multi-employer citation policy, meaning that if the 5th Circuit had not reversed the decision it could have led to a split in the circuit courts that prompted U.S. Supreme Court review of the dispute.

However, in light of the 5th circuit’s ruling, the law judge affirmed the other-than-serious violation, and a $12,471 penalty, writing that “the 5th Circuit reversed its historical position on multi-employer liability under the Occupational Safety and Health Act.”

The law judge’s decision became a final order of the review commission on Monday.

The U.S. Department of Labor had asked the 5th court to take into account the 1984 U.S. Supreme Court case Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., which calls for courts to defer to an agency’s reasonable interpretation of an ambiguous statutory provision it implements or enforces. The 5th circuit re-examined Melerine in light of the Chevron decision and concluded in Hensel Phelps that the agency does have the authority to issue a citation to a general contractor at a multi-employer construction worksite who controls a hazardous condition at that worksite, even if the condition affects another employer’s employees.

But the Chevron deference has been seen as potentially vulnerable to being overturned by the high court since Associate Justice Neil Gorsuch joined the court in April 2017 and Associate Justice Brett Kavanaugh was confirmed in October.

The law judge’s decision was “not unexpected in light of the analysis that was applied,” Michael Abcarian, Dallas-based regional managing partner, Fisher Phillips LLP, and attorney for Hensel Phelps. “The 5th Circuit case relied on the Chevron doctrine – deference to federal agency interpretation of the statute. That is very likely going to be coming up for review in the U.S. Supreme Court in the not-too-distant future.”

“There are perceptions the Supreme Court may be ready to substantially change, possibly even dismantle, that deference doctrine in favor of the courts interpreting statutes and regulations … not being bound necessarily by federal agency interpretation,” he added.