Temporary Employees And Contractors Potential OSHA And Other Liabilities

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1 Temporary Employees And Contractors Potential OSHA And Other Liabilities American Society of Safety Engineers Louisville, Kentucky March 28, 2008 TODD B. LOGSDON Greenebaum Doll & McDonald PLLC 3500 National City Tower 101 South Fifth Street Louisville, KY

2 Todd B. Logsdon Todd B. Logsdon is an attorney in the Louisville office of the law firm of Greenebaum Doll & McDonald PLLC, where he represents employers in a variety of forums, including state and federal courts and before administrative agencies. Todd obtained his undergraduate degree from Murray State University, as well as his graduate degree in Occupational Safety and Health, and his law degree from the University of Louisville. He is a member of the American Bar Association, Labor and Employment Law Section, Occupational Safety and Health Committee, as well as the Indiana, Kentucky and Louisville Bar Associations. Todd is admitted to practice in Kentucky and Indiana state courts, the Eastern and Western Districts of Kentucky, the Northern and Southern Districts of Indiana, and the Sixth Circuit Court of Appeals. Todd accrued many years of practical experience prior to beginning his legal career working in manufacturing with responsibilities for Human Resources and Safety. Todd lectures and advises employers on a variety of labor and employment topics, as well as OSHA issues. 2

3 DEFINITIONS Temporary Employee An employee of a temporary help service, employee leasing service, personnel supply service or temporary employee agency assigned to work on the premises of a host employer. Kentucky Workers Compensation Act defines a temporary worker as a worker who is furnished to an entity to substitute for a permanent employee on leave, or could meet seasonal or short-term workload conditions for a finite period of time. 3

4 DEFINITIONS Contractor Various laws and regulations provide varying definitions of an employee versus an independent contractor, including the following: Federal and State Tax Codes Federal and Kentucky Civil Rights Laws Federal Immigration Laws Federal and Kentucky Wage and Hour Laws Unemployment Compensation Insurance Laws Workers Compensation Law OSHA 4

5 DEFINITIONS (continued) Contractor The OSH Act at 29 U.S.C. 652(6) defines an employee to mean an employee of an employer who is employed in a business of his employer which affects commerce. The OSH Act at KRS (2) defines an employee to mean any person employed except those employees excluded (federal employees). Various multi-factored tests are used to determine whether an individual is an employee or an independent contractor, ranging anywhere from 4 to 20 factors. Historically, the ability to control the specific details of the work has been considered the most important or controlling factor; however, recent Kentucky Supreme Court cases have specifically held that no one factor is of greater importance than the others and no one factor is determinative. 5

6 DEFINITIONS (continued) Contractor The Supreme Court has focused on the following ten factors: (1) The extent of control which, by the agreement, the master (employer) may exercise over the details of the work; (2) Whether or not the one employed is engaged in a distinct occupation or business; (3) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (4) The skill required in the particular occupation; (5) Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; 6

7 DEFINITIONS (continued) (6) The length of time for which the person is employed; (7) The method of payment, whether by the time, or by the job; (8) Whether or not the work is part of the regular business of the employer; (9) Whether or not the parties believe they are creating the relation of master and servant (employer and employee); and (10) Whether the principal is or is not in business. 7

8 RECORDKEEPING ISSUES 29 C.F.R defines covered employees for purposes of recording injuries on the OSHA 300 Log. Covered employees may include employees from a temporary help service, employee leasing service, or personnel supply service... if you supervise these employees on a day to day basis. OSHA has indicated that day to day supervision generally exists when, in addition to specifying the output, product or result to be accomplished by the person s work, the employer supervises the details, means, methods and processes by which the work is to be accomplished. 8

9 RECORDKEEPING ISSUES The injury or illness need only be recorded once by either the host, contractor or temp agency, whichever is most appropriate based on the day to day supervision. 9

10 RECORDKEEPING ISSUES Additional recordkeeping issues. In addition to the OSHA 300 Log, the Form 301, or its equivalent, as well as the days away and restricted days, must also be maintained by the host employer if that employer supervised the temporary employee s day to day activities. (See Standard Interpretation Letter to Mr. Edwin Foulke June23, 2003). This will require coordination with the temporary employee agency, who may be responsible for the provision of medical treatment and case management. 10

11 RECORDKEEPING ISSUES Contractors employees generally the contractor will record injuries and illnesses to its employees on its own OSHA 300 Log unless the host employer is supervising the contractor s employees on a day to day basis. 11

12 TRAINING ISSUES Temporary Employees Who is responsible for providing safety training to temporary employees? It depends on... The parties agreement. Has the contract between the temporary agency and host employer specified which entity will be responsible for training? If the agreement does not define who is responsible for safety training, then OSHA evaluates the relationship between the employer and worker. The primary factor is who controls the day to day activities of the worker (See Standard Interpretation Letter, August 15, 1991) 12

13 TRAINING ISSUES Temporary Employees (cont.) Shared responsibility between temporary agency and host employer. Temporary agency may be considered the exposing employer because it is the temporary agency s employees who are exposed to safety hazards. Host employer may be considered the creating or controlling employer because it controls the work site and may be the entity creating safety hazards. 13

14 TRAINING ISSUES Temporary Employees (cont.) Examples: Hazard communication (see Standard Interpretation Letter, August 3, 1994). Temporary agency may be required to provide general training on hazard communication, and the host employer may be required to provide the site-specific training related to hazard communication. Powered industrial trucks (see Standard Interpretation Letter, February 16, 1999) The temporary agency is required to ensure that its employees are adequately trained prior to operating a powered industrial truck (see Standard Interpretation Letter, April 10, 2000). The host employer is responsible for evaluating the adequacy of any prior training of a temporary employee assigned to its site and is further required to provide the site-specific training. 14

15 TRAINING ISSUES Temporary Employees (cont.) Both employers may be cited, so each employer should ensure the training is provided, regardless of who actually provides it. 15

16 TRAINING ISSUES Contractors Who is responsible for providing safety training to contractors and their employees? It depends but generally, the employer (in this case the contractor or sub) is responsible for providing its employees the required training. The contract between the parties should require safety training and address who is responsible for providing it. The host employer should advise the contractor of the host employer s own safety requirements and of particular hazards unique to the work environment. Some examples include: Lockout/tagout; Confined space; Hazard communication; Process safety management. 16

17 TRAINING ISSUES Special Issues With Non-English Speaking Employees OSHA s stated policy employee training required by OSHA standards must be presented in a manner that employees can understand. Regardless of the precise language in the standard, the terms train and instruct mean to present information in a manner that employees receiving it are capable of understanding (Standard Interpretation Letter, April 17, 2007). 17

18 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) The employer must instruct its employees using both a language and vocabulary that the employees can understand. If employees are not literate, telling them to read training materials will not satisfy the employer s training obligation. 18

19 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Employee comprehension training provisions of certain standards include specific requirements related to employee comprehension. 19

20 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Examples: Lockout/tagout requires the employer to verify the employees have acquired the knowledge and skills for which they have been trained. Respiratory protection requires retraining when inadequacies in the employee s knowledge or use of the respirator indicate that the employee has not retained the requisite understanding or skill. Blood borne pathogens requires an opportunity for interactive questions and answers with the person conducting the training session. 20

21 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Enforcement guidance compliance officers will determine whether an employer s training is effective. If the compliance officer determines there is a deficiency, he/she must document evidence of any barriers to understanding. Reasonable person standard if a reasonable person would conclude that the employer had not conveyed the training to its employees in a manner they were capable of understanding, then the violation may be cited as serious. 21

22 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Additional language issues 29 C.F.R (f)(4)(iv) specifications for accident prevention signs and tags. The signal word and major message shall be understandable to all employees who may be exposed to the identified hazard. Consider multiple languages and/or pictograms. 22

23 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Beware of English only rules. Requiring English only can create other potential liability under federal and state civil rights laws as they relate to national origin discrimination. 23

24 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Examples: April 2001, EEOC reached a $2.4 Million settlement against a Texas University where 18 Hispanic housekeepers allegedly were ordered to speak only English on the job. Some employees did not speak English, and all were forbidden to speak Spanish, even during breaks. July 2003, a Colorado casino agreed to pay $1.5 Million to settle a national origin discrimination suit with the EEOC on behalf of a class of Hispanic employees who alleged that they were verbally harassed and subjected to English only rules. The employees alleged that managers or other non-hispanic employees would shout, English! English! at Hispanic employees during encounters. 24

25 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Examples: May 2006, EEOC announced the settlement of a national origin discrimination suit against a hospital for $200,000 on behalf of a class of Hispanic employees. The employees, who worked in housekeeping, were subjected to English only rules without any business justification. A manager reportedly told the employees, This is America, speak English. 25

26 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) Employers need a business reason for an English only rule. It is more likely to be legal only if the employer needs employees who speak English to operate its business safely or efficiently. The EEOC Compliance Manual offers the following examples of valid English only rules: 26

27 TRAINING ISSUES Special Issues With Non-English Speaking Employees (cont.) For communications with customers, co-workers or supervisors who only speak English; In emergencies or other situations in which workers must speak a common language to promote safety; For cooperative work assignments in which the English only rule is needed to promote efficiency; and To enable a supervisor who only speaks English to monitor the performance of an employee whose job duties require communication with co-workers or customers. Recent U.S. Senate vote 27

28 MULTI-EMPLOYER CITATION POLICY Applies to all multi-employer worksite, regardless of industry (i.e., manufacturing, construction, etc.) More than one employer may be cited for the same hazardous condition in a workplace Employers categorized into four (4) categories/roles: Creating Employer Exposing Employer Correcting Employer Controlling Employer recent OSHRC decision An employer may fill more than one role 28

29 MULTI-EMPLOYER CITATION POLICY Determining Liability on Multi-Employer Sites First Step Determine which role or roles the employer fills If the employer satisfies one or more roles, it has obligations under the OSHA regulations based on that role(s) Second Step Determine if the employer s actions were sufficient to meet the obligations of the respective role Obligations will vary depending on the role 29

30 MULTI-EMPLOYER CITATION POLICY Employer Roles Defined: Creating the employer that caused the hazardous condition that violated the standard Exposing an employer whose own employees are exposed to the hazard Correcting an employer engaged in a common undertaking, on the same worksite as the exposing employer, and is responsible for correcting a hazard Typically an employer with responsibility of installing/maintaining safety/health devices 30

31 MULTI-EMPLOYER CITATION POLICY Employer Roles Defined (cont d): Controlling an employer who has general supervisory authority over the worksite, including: Power to correct safety violations itself, or Require others to correct the violations. Control can be established by: Contract, or Exercise of control in practice 31

32 MULTI-EMPLOYER CITATION POLICY Employer Obligations by Role: Creating Employer Creating a hazard may violate a regulation Employer who creates a hazard is citable, even if its employees are not exposed 32

33 MULTI-EMPLOYER CITATION POLICY Employer Obligations by Role (cont d): Exposing employer Did not create hazard, but its employees are exposed May be cited if: Knew of the hazardous condition or failed to take steps to failed to exercise reasonable diligence to discover the condition, and Failed to take steps consistent with its authority to protect its employees If Exposing employer has authority to correct hazard must do so If lacks authority to correct hazard, citable unless: Asks creating or controlling employer to correct hazard; AND Informs its employees of the hazard; AND Takes reasonable alternative protective measures May include removing its employees in extreme circumstances 33

34 MULTI-EMPLOYER CITATION POLICY Employer Obligations by Role (cont d): Correcting employer Must exercise reasonable care in preventing and discovering violations, AND Meet its obligations of correcting hazards 34

35 MULTI-EMPLOYER CITATION POLICY Employer Obligations by Role (cont d): Controlling employer Must exercise reasonable care to prevent and detect violations on the site Duty to exercise reasonable care is less than duty to protect employer s own employees Not normally required to inspect for hazards as frequently, or Have the same level of knowledge of the trade or applicable standards as the employer it has hired 35

36 MULTI-EMPLOYER CITATION POLICY Employer Obligations by Role (cont d): Controlling employer (cont d): Factors Affecting Reasonable Care: Scale of project Nature and pace of work Knowledge of safety history and practices of subcontractor More frequent inspections if knowledge of non-compliance, or no experience with the subcontractor Less frequent inspections if subcontractor has good safety programs, history of compliance, and good past experiences. Evaluating Reasonable Care will consider: Appropriate frequency of inspections Implemented effective system for promptly correcting hazards Enforces compliance with effective, graduated system including follow-up inspections 36

37 MULTI-EMPLOYER CITATION POLICY Secretary of Labor v. Summit Contractors, Inc., OSHRC, No , 4/27/07. Eliminates liability for a construction controlling employer that neither creates nor has Employees exposed to the cited hazard. Decision issues last day of Chairman Railton s term. Decision based on plain language of 29 CFR (a) adopting the construction standards. OSHRC held an employer may only be cited for a violation of construction standards involving his employees. Limited to construction violations, not general industry. Has bee appealed by Secretary of Labor, 8 th Cir. has not ruled. Both Federal & Kentucky OSHA have ignored the OSHRC holding thus far ex. Recent citations by KOSH. 37

38 OTHER POTENTIAL LIABILITY Workers Compensation Any employer in the Commonwealth of Kentucky with one or more employees is required to provide workers compensation benefits. If the employer fails to provide this coverage, it can be responsible for liquidated damages in an amount equal to the compensation due the employee. A company s operations can also be restrained for failure to provide coverage or benefits. 38

39 OTHER POTENTIAL LIABILITY Workers Compensation (cont.) The state can place a lien on an employer s property for unpaid compensation owed to an employee. A contractor is liable for the workers compensation benefits of a subcontractor s employees if the subcontractor does not provide its own workers compensation insurance (known as up the ladder). 39

40 OTHER POTENTIAL LIABILITY Workers Compensation (cont.) Note regarding Indiana law employers utilizing independent contractors must have proof that they have workers compensation insurance or an exemption from coverage from the Department of Revenue or else the independent contractor will be considered an employee of the contractor for purpose of workers compensation. An employer s workers compensation insurance company may retroactively increase the insurance premium if the employer fails to obtain proof of insurance and/or an exemption. 40

41 OTHER POTENTIAL LIABILITY Workers Compensation (cont.) Best practice ensure that a temporary agency providing temporary employees or a contractor agrees to provide workers compensation benefits coverage for its employees and require proof of coverage. 41

42 OTHER POTENTIAL LIABILITY Tort Liability Temporary employees. If the day to day activities of temporary employees are controlled by the host employer, and the temporary employee is working within the scope of his or her employment, then the host employer and temporary employer could potentially be responsible for injuries to a third party caused by the temporary employee. 42

43 OTHER POTENTIAL LIABILITY Tort Liability Contractors. Liability to third parties the general rule is that an employer is not liable for the torts of an independent contractor in the performance of his job, unless the work is inherently dangerous. Liability to the independent contractor potential tort liability to an independent contractor who is injured due to the employer s violation of a KOSHA regulation negligence per se. (See Hargis v. Baize, 168 S.W.3d 36 (Ky. 2005).) Liability beyond a KOSH citation and workers compensation. 43

44 OTHER POTENTIAL LIABILITY Employment Law Issues Civil Rights Laws Temporary Employees both the Temporary Agency and the Host Employer can be liable for employment discrimination claims such as race, sex, age and disability discrimination under theory of coemployment. Contractors Only the Employer is liable, generally Host Employer will not be liable. 44

45 OTHER POTENTIAL LIABILITY (Continued) Wage & Hour Laws Misclassification of employee as Independent Contractor could result in liability. Immigration - Misclassification of employee as Independent Contractor could result in liability. Unemployment Compensation Insurance - Misclassification of employee as Independent Contractor could result in liability. Payroll Tax Issues - Misclassification of employee as Independent Contractor could result in liability. FMLA recent 6 th Cir. decision liability of joint employers 45

46 RECOMMENDATIONS Classify workers correctly as Employees or Independent Contractors Know and meet your obligations to workers based on their classifications Include safety responsibilities in contracts with Temporary Agencies and Contractors Train effectively 46

47 Thank you for your time. If you have any questions, please feel free to contact Todd Logsdon. TODD B. LOGSDON Greenebaum Doll & McDonald PLLC 3500 National City Tower 101 South Fifth Street Louisville, KY

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