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New Orleans: U.S. 5th Circuit Reinterprets Project Manager Responsibility in Austin Construction Case

Feature Photo: The new Austin Central Library at 710 W. Cesar Chavez Street took four years to build and opened in 2017. An OSHA citation that resulted from its construction led to a new precedent on workplace responsibility for project managers in Texas, Louisiana and Mississippi. Image: Google Streets.

Posted: 12-6-2018

by Adolfo Pesquera

New Orleans — The U.S. Court of Appeals for the Fifth Circuit has receded from a 1981 precedent concerning employer liability and recognized the Occupational Safety and Health Administration’s authority to cite “controlling employers” for the actions of non-employees on a construction job site.

In an opinion released Nov 26, the Fifth Circuit reversed the decision of an OSHA administrative law judge (ALJ) who ruled in favor of a general contractor who protested a $70,000 fine that resulted during the construction of a public library in the City of Austin.

The ALJ ruled reluctantly in favor of the general contractor because the Fifth Circuit had held since 1981 (Melerine v. Avondale Shipyards Inc.) that the controlling employer–a legal term for the contractor in charge of the overall project–was only responsible for the safety of their own employees.

The Fifth Circuit has jurisdiction over Texas, Louisiana and Mississippi. Its position on controlling employer responsibility has been in conflict with other federal appellate district courts and an OSHA rule known as the Multi Employer Worksite Doctrine that allows the agency to cite general contractors for the actions of subcontractors on job sites they supervise.

Department of Labor Secretary Alex Acosta appealed the 2017 ALJ decision. Attorneys at Seyfarth Shaw blogged on the significance of the case, stating it represents “a serious threat to OSHA’s multi-employer policy. If upheld by the 5th Circuit, OSHA’s ‘controlling employer’ policy may be in jeopardy.”

Unorthodox and Very Dangerous

The circumstances that led to the citation involved a subcontractor that was brought in by the general contractor in the spring of 2015 to excavate soil for a new foundation. A nearly vertical wall of Type C soil (the least stable type, consisting of granular soils in which particles do not stick together) was allowed to develop.

Diagram of the proper sloping remedy for a Type C soil excavation.

Diagram of the proper sloping remedy for a Type C soil excavation.

The wall measured 12 feet high and 150 feet in length. OSHA rules require excavations of this type use protective systems, such as sloping, to protect workers from a cave-in. This had not been done.

On a rainy day, the subcontractor was assigned to install rebar at the base of the excavation in preparation for a concrete pour.

The subcontractor was concerned about the combination of rain and the unsecured dirt wall and ordered his employees to work in another area of the project site. A city inspector told the subcontractor his men could only work in the excavation pit.

The subcontractor emailed the general contractor’s senior project manager, stating, “Placing rebar in the mud and rain is unorthodox and very dangerous.”

The opinion notes that the project manager’s cursory reply insisted the subcontractor comply with the city inspector’s instructions.

The subcontractor consented, sending his crew back to the excavation pit, but that same day the OSHA Austin office received a complaint of hazardous working conditions. An OSHA compliance officer responded and found three workers “at the base of the unprotected wall of excavated soil,” the Fifth Circuit noted.

Both the general contractor and subcontractor were cited for willful violation of an OSHA regulation “by exposing employees to a cave-in hazard.”

At the administrative hearing, both parties agreed on three key facts:

  1. The excavation was not adequately protected
  2. The general contractor knew this because its supervisor saw the subcontractor crew working next to the unprotected excavation.
  3. The general contractor had management authority of the entire site and specific authority to prevent the violation.

Nevertheless, the ALJ concluded that since the case was likely to be appealed to the Fifth Circuit, that court’s precedent case would preclude a finding against the general contractor.

When considered from the point of view of other federal appellate courts, it has taken the Fifth Circuit more than a generation to fall in line. The 29-page opinion cited fellow circuit court interpretations that tackled workplace safety law and distinctions in its text between the meaning of “employment” versus “places of employment.”

  • 1999 – 7th Circuit – United States v. Pitt-Des Moines Inc. – “The use of the words ‘his employees’ in describing the duties of Section 654(a)(1) and the conspicuous absence of any limiting language in Section 654(a)(2) certainly indicate that a broader class was meant to be protected by the latter …”
  • 1984 – 6th Circuit – Teal v. E.I. DuPont de Nemours & Co. – “We believe that Congress enacted Sec. 654(a)(2) for the special benefit of all employees, including the employees of an independent contractor …”
  • 1977 – 8th Circuit – Marshall v. Knutson Constr. Co. – “… the duty of a general contractor is not limited to the protection of its own employees from safety hazards, but extends to the protection of all the employees engaged at the worksite”
  • 1975 – 2nd Circuit – Brennan v. OSHA Review Commission – “Section 654(a)(2)’s specific duty to comply with the Secretary’s standards is in no way limited to situations where a violation of a standard is linked to exposure of his employees to the hazard. It is a duty over and above his general duty to his own employees …” [Note: the 9th Circuit agreed with the 2nd Circuit opinion in a case decided in 1978.]
  • 1974 – 4th Circuit – Brennan v. Gilles & Cotting Inc. – “… the question of whether a general contractor should be concurrently responsible for the safety of subcontractor workmen under the concept of a joint or statutory employer can be answered either way.”

The respondent before the Fifth Circuit put forth two defenses to which the court answered.

GC: The law forces the general contractor to assert control over subcontractor activities, impermissibly increasing its liability.

Answer: Any expansion of liability would arise from a later action under state law, not federal law. No controlling-employer citation under federal law would affect common law duties as an employer.

GC: The Secretary’s purported authority is improperly premised on an expansive definition of employer and employee.

Answer: There is no uniform nationwide definition of ‘employer.’ The controlling-employer citation policy is not base an employer’s liability on the existence of an employer-employee relationship.

The Fifth Circuit panel’s thinking turned on a recognition of the ambiguous nature of the definitions in federal law for Employer and Employee. This case then afforded the court the opportunity to draw upon Chevron USA Inc. v. Natural Resources Defense Council Inc., a 1984 U.S. Supreme Court decision that directed courts to accept an agency’s reasonable resolution of an ambiguity in a statute.

In this light, the Fifth Circuit reexamined its 1981 stance in Melerine and found it wanting because that court analyzed an OSHA regulation, “not the text of the statute in which we and other circuits have found ambiguity. We cannot ignore the glaring reality that Melerine is silent on the scope of any provision of the Act.

“Even were we to assume that Melerine’s discussion of regulations applies to the Act as well, the decision proves, in obvious terms, that this court’s prior construction of the Act was just a choice of one side of a ‘complex debate.’

“The court acknowledged that it is plausible to interpret the statute, as the Secretary does, in a way that gives weight to the lack of limiting language in § 654(a)(2), but it held that it was bound to interpret the statute (or, more accurately, the regulation) consistently with precedent.”

Aerial view of Austin's new Central Library. Image: Google Earth.

Aerial view of Austin’s new Central Library. Image: Google Earth.


The Fifth Circuit opinion: R. Acosta, Secretary, LABR v. Hensel Phelps Constr

adolfo@virtualbx.com

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By |2018-12-10T10:10:19+00:00December 6th, 2018|Feature Story, Industry News|

About the Author:

Adolfo Pesquera (Reporter/Editor) is a veteran news journalist. He has worked for Hearst Corp., American Lawyer Media, News Corp and Freedom Communications. His work has been published in newspapers and magazines across the USA. He is a journalism graduate of UT-RGV. He writes, edits and creates digital pages for VBX.

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