The federal Occupational Safety and Health Administration, (OSHA), has for the past few years applied an enforcement policy known as the "multi-employer worksite doctrine" to employers in what OSHA characterizes as "general industry". General industry in OSHA means all industries in the manufacturing sector, service industries, and all others except construction and some specialized industries such as shipbuilding and longshoring. The multi-employer worksite doctrine directs OSHA compliance officers to issue citations and propose fines to both the owner/operator of a general industry establishment and the independent contractor who was on site and committed violations of OSHA standards. OSHA’s reasons that owners and operators of general industry establishments control their worksites and therefore are in a position to enforce OSHA standards against their contractors. Owners and operators are fined and cited without regard to whether they are at fault.

The multi-employer worksite doctrine was originally developed in the mid 1970’s to further OSHA enforcement efforts in the construction industry. The agency essentially confined its application to that industry until the mid 1990’s. Then, inexplicably and without prior notice to the public, OSHA applied the policy to general industry. Some employers who have received no fault citations and fines have appealed. On June 2, 1998, the U.S. Court of Appeals for the District of Columbia issued its decision in the first case to reach that level in the judicial system. IBP, Inc. v. Herman, No. 97-1389, unofficially reported BNA DLR for June 3, 1998 (D.C. Cir., June 2, 1998). The Court reversed a decision of the U.S. Occupational Safety & Health Review Commission ("Commission") which is reported at 17 BNA (OSH Cases) 2073 (1997) and vacated OSHA’s citation.

IBP is a meat processing-packing company. The machinery it uses requires cleaning, a function that was contracted out to an independent contractor known as DCS Sanitation Management, Inc. (DCS). DCS was caught flagrantly violating OSHA’s lockout standard which requires that machines be locked out while they are being serviced. IBP was aware that its contractor was not only violating the standard but was also violating IBP’s internal lockout policies. IBP notified the contractor on several occasions of violations observed by IBP supervisors, but the contractor’s employees continued to violate the standard. Although IBP had the power to terminate the contract, it did not exercise that option. It also could have refused entry to its premises by DCS employees, but that option also was not exercised. IBP did not, however, have authority to discipline DCS employees whom it observed violating the lockout rules. The contract between the parties required DCS to supply and manage its own labor force, and it required that DCS comply with OSHA standards.

OSHA cited both companies for the violation. As the D.C. Court of Appeals noted, DCS was found in violation of the standard in a separate proceeding and was subject to an enforcement order issued by the U.S. Court of Appeals for the Eighth Circuit.

In IDP’s case, the federal Occupational Safety and Health Review Commission affirmed the citation to IBP in a split decision rendered in 1997. The majority opinion stated that the "multi-employer worksite policy" had long applied to general industry, and accordingly two commissioners held that the worksite control aspect of the policy applied to IBP. They reasoned that IBP had not exercised its option to take action against DCS and was therefore responsible for the violation. Specifically, the Commission majority suggested that IBP should have exercised its option to terminate the contract with DCS.

The Court of Appeals granted IBP’s petition for review, vacated the citation and reverted the Commission’s decision. It noted, contrary to the Commission majority, that the construction industry policy had not been long applied to general industry. In fact it was careful to point out that the decisions the Commission relied on were not on point. It refused, however, to make the determination whether the policy was or could be applied to establishments in general industry. Instead, it concluded that the majority decision of the Commission was not reasoned decision making of the kind required by the Administrative Procedure Act.

What does all of this mean for employers who own or operate businesses in general industry? It likely means that more cases will have to be taken to the United States Courts of Appeal. The basic issue of whether an employer who owns or operates an establishment in the general industry should, by virtue of that fact alone, be held liable for a contractor’s violations of OSHA standards has not been decided. OSHA is free to continue to apply the policy to owners and operators of general industry establishments. It has done so in a number of other cases and will likely continue to apply the policy. Moreover, Commission judges will continue to follow the Review Commission’s majority’s lead as stated in their opinion in IBP. That may seem strange in view of the Court’s action, however, the Commission views the Court’s decision to be binding only in the D.C. Circuit.

The D.C. Court of Appeals did note that employers in general industry, and for that matter, the construction industry as well, might eliminate safety provisions from their contracts as a response to the Commission’s decision. In other words, employers could use express contractual language to eschew responsibility for OSHA violations committed by contractors and subcontractors. That may not be as easy as it sounds.

For example, OSHA’s lockout standard imposes liability on a host employer to notify contractors of the provisions of the host employer’s lockout program. Similarly, OSHA’s confined space standard requires that host employers inform contractors of the presence of permit required confined spaces in its establishment. Other OSHA standards also require notification to contractors of the existence of hazards in the host employer’s establishment. Obviously, tort laws, environmental laws, and other laws impose specific and general duties on owners and operators regardless of the contractual agreements between the private parties.

Moreover, owners and operators of establishments may be obligated to their own employees for hazardous conditions created by contractors. In the OSHA context, a second aspect of the multi-employer worksite policy that was not at issue in the IBP case is that employers with employees who are exposed to hazards created by other employers (e.g., hazards created by independent contractors) are liable for OSHA fines. OSHA characterizes this as the "exposing employer" aspect of the doctrine. Under this policy, the exposing employer must take steps to protect its employees from hazards created by the contractor. It is easy to imagine that tort law also has application to this situation. The point is that, at least for indemnity and other purposes, workplace hazard issues need to be addressed in contracts.