In a recent decision, Eric K. Ho, et al., the recently appointed majority of the three-member federal Occupational Safety and Health Review Commission has forcefully reminded OSHA of the Commission’s important role in reviewing OSHA citations. The Commission is an independent federal agency that adjudicates contested citations. The current members are Chairman W. Scott Railton, James Stephens, and Thomasina Rogers.

The Decision is significant because, in determining to issue and litigate citations, OSHA and its attorneys have been effectively placed on notice that the Commission will carefully review OSHA’s interpretations of standards as reflected in citations. Chairman Railton and Commissioner Stephens, who formed the majority, also made clear that a significant level of proof will be required for OSHA to sustain claims of willful violations. These rulings are all the more remarkable because the case involved what the Commission described as “one of the worst employers the Commission has had come before it.” OSHA recently announced that it has appealed the decision to the United States Court of Appeals for the Fifth Circuit in New Orleans, Louisiana.

The Facts

Mr. Ho purchased an abandoned hospital in Houston, Texas to convert into a residential housing community. The hospital contained extensive amounts of asbestos. Mr. Ho was personally aware of the asbestos problem because he signed a property disclosure statement and received an environmental consultant’s report specifically cautioning that only licensed, trained personnel should handle the asbestos, using proper procedures and respiratory protection.

Nonetheless, Mr. Ho hired two workers who were not trained in asbestos removal to supervise renovation and asbestos removal. They, in turn, hired 11 illegal Mexican immigrant workers to assist with the work. These workers, who were not likely to bring attention to themselves by contacting enforcement authorities, were given dust masks, but were not told of the asbestos problem and did not receive training or personal protective equipment.

Four months after the job began, when a Houston city inspector observed workers scraping fireproofing material while wearing only dust masks, he issued a stop-work order. Ho then began negotiations with an asbestos removal contractor, but at the same time ordered his workers to resume work only at night. The employees were locked in while they worked, without adequate ventilation and water, and only one portable toilet.

Approximately two weeks later, an explosion and fire occurred at the site, injuring three workers. The next day, Ho summoned the workers to his office, paid them $1,000 for their work, and required them sign a release stating that they were independent contractors instead of employees. He also paid them an extra $100 in exchange for releasing him from any claims arising out of the fire.

The OSHA Investigation

OSHA investigated and issued citations alleging willful and serious violations, with a proposed total penalty of $1.48 million. After a trial, a Review Commission Administrative Law Judge (“ALJ”) affirmed 28 willful and 12 serious violations, but reduced the penalty to $1.14 million. Separately, Mr. Ho was convicted of criminal violations of the Clean Air Act.
Review Commission Decision

THE “EGREGIOUS PENALTY POLICY”

Ho had been cited for 11 willful violations each of the OSHA respiratory protection and asbestos training standards. In each instance, OSHA issued both a separate willful citation and separate proposed penalty for each employee who assertedly was not given a respirator or not trained. This reflected OSHA’s application of its so-called “egregious citation policy,” under which the Agency, rather than proposing a single penalty for each violation, multiplies the proposed penalty by the number of employees exposed to the cited hazard. Historically, OSHA has reserved application for what it considers “bad actors.”

Over Commissioner Rogers’ vigorous dissent, the Commission majority rejected the per-employee basis for the penalties on the ground that the language of the cited standards did not provide employers with fair notice that they owed separate compliance obligations to each individual employee. The Commission majority recognized that OSHA is due deference to its “reasonable” interpretations of standards, but found it unreasonable for OSHA to assert an interpretation that was not apparent from the text of the standards involved.

In so ruling, the Commission effectively served notice that it will not easily to defer to OSHA’s interpretations that are not readily ascertainable from the text of the standard. The majority’s ruling, if affirmed on appeal, also effectively curtails OSHA’s use of the “egregious” policy for most cases involving violations of standards.

OSHA has been precluded from using the policy in general duty clause cases (i.e., where standards do not govern the cited hazard) by a decision of the Fifth Circuit in Reich v. Arcadian Corp., 110 F3d 1192 (5th Cir. 1997). OSHA maintains that it may use the policy for violations of standards or regulations, such as its illness and injury recordkeeping requirements, which make clear that the employer owes a separate compliance obligation to each individual employee.

PROOF OF WILLFUL VIOLATIONS

The Commission affirmed the ALJ’s decision that Ho had not willfully violated the general duty clause, § 5(a)(1) of the OSH Act, when he ordered the workers to open a pipe of unknown content. The general duty clause is a catchall provision of the OSH Act that OSHA may use as a basis for citations when a standard does not address a serious hazard. OSHA had argued that the overall pattern of Mr. Ho’s outrageous conduct allowed the Commission to infer that his conduct as to the work on the pipe was indifferent to employee safety, thus justifying a willful finding.

The Commission majority rejected this argument, however, even though it agreed that Mr. Ho was “one of the worst employers” that Commission had ever seen. The majority held that to prove a willful violation, OSHA must show that given the facts of the particular episode involved, the employer demonstrated indifference to the specific hazard faced by the employees. This represents a change from prior Commission decisions, which have permitted OSHA to draw an adverse inference from an employer’s overall inferior safety program or performance.

Conclusion

In the early 1990’s, OSHA issued “egregious” citations to generate proposed multi-million dollar penalties, especially in cases involving catastrophic accidents. More recently, however, OSHA has not often used the policy. Therefore, while the ruling limiting the egregious penalty policy has attracted attention, the other aspects of the Decision are more likely to affect the day-to-day administration of the OSH Act. Thus, OSHA is on notice that strained interpretations of its standards are not likely to be approved, and that proving a willful violation will require a strong showing of the facts relating to the employer’s behavior as to the specific hazard involved.