By Mark A. Lies II
Editor’s Note – Mark Lies II is a labor and employment law attorney and partner with the Chicago, IL, law firm of Seyfarth Shaw. Legal topics provide general information, not specific legal advice. Individual circumstances may limit or modify this information.
In this era of the evolving workplace, employers face many challenges in trying to operate their businesses. Frequently, employers must rely upon independent contractors, as well as temporary employees, in order to perform certain functions. Depending upon the status of the individuals who enter the premises to perform work, there can be significant liability issues under the Occupational Safety and Health Administration (OSHA), worker’s compensation, and negligence.
Recent Decision
In Secretary of Labor v. Froedtert Memorial Lutheran Hospital, Inc., Occupational Safety and Health Review Commission Docket No. 97-1839, the OSHA review commission recently conducted an exhaustive analysis of these relationships as they impact an employer’s legal duties to these individuals requiring safety and health compliance. The decision indicates that OSHA and the commission are closely examining these relationships to determine who has the obligation to protect these individuals from workplace hazards.
In Froedtert, the respondent employer was a hospital that utilized temporary workers from two outside temporary help agencies to provide housekeeping services at the hospital. Among the expected duties, the temporary workers would have potential for contact with blood. The temporary workers were told to use gloves and proper chemicals for cleaning. They were not given training by the hospital regarding blood borne pathogens or hazard communication, nor were they offered the hepatitis B vaccine.
During the scope of their work, six temporary employees suffered needle stick injuries requiring medical treatment with prescription medication. The hospital did not record any of these injuries on the OSHA log.
OSHA became aware of the situation and conducted an inspection, eventually resulting in the issuance of citations. Four citations eventually went to trial in which the agency had cited the hospital for willful violations involving
• failure to record the needle stick injuries on the log;
• failure to make the hepatitis B vaccination available to the temporary employees;
• failure to provide hazard communication training;
• failure to provide training regarding blood borne pathogens.
Common Law Employer
The evidence was conflicting at trial, but it showed that it was unclear whether the hospital or the temporary agencies had agreed as to exactly who was responsible for providing the safety and health training to the temporary employees. The review commission found that since the hospital exercised a high degree of control over the temporary employees that it was the “common law employer” and thus had the duty to comply with the cited regulations.
As part of its analysis, the review commission confirmed that an employer can in fact delegate its OSHA compliance obligations if it does it effectively, that is, the third party performs these agreed upon responsibilities. If the hospital had developed appropriate contractual language with the temporary agencies regarding the duty to provide the training and vaccinations, it could have avoided liability if the agencies had performed these obligations.
Independent Contractors
While not the primary focus of the decision, the review commission also examined the relationship between independent contractors and host employers. The commission indicated that it would utilize the common law agency doctrine, with emphasis on the ability of the host employer to control the activities of the independent contractor and its employees, to determine whether a real independent contractor relationship exists. The U.S. Supreme Court in Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318 (1992), set out the test which the commission will utilize, including
• the hiring party’s right to control the manner and means by which the product is accomplished;
• the skill required;
• the source of tools and instrumentalities;
• the location of the work;
• the duration of the relationship between the parties;
• whether the hiring party has the right to assign additional projects to the hired party;
• the discretion of the hired party over when and how long to work;
• the method of payment;
• the hired party’s role in hiring and payment of assistants;
• whether the hired party’s work is part of the hiring party’s regular work;
• whether the hiring party is in business;
• whether any employment benefits are provided;
• the tax treatment of the hired party.
It has been and will continue to be one of OSHA’s inquiries in a multi-employer worksite situation to determine the nature of these relationships when deciding whether there is liability on the part of certain parties for OSHA compliance. Hence, it is important that the contractual documents reflect the independent contractor relationship and that the underlying factors be present in order to claim such a legal relationship between the hiring party and the hired party.
Conclusion
In order to avoid unexpected OSHA liability, as well as other potential liabilities arising under worker’s compensation and negligence, it is essential that the following actions occur:
• A clear contract or agreement setting out the nature of the relationship between the parties (i.e., lessor-lessee, independent contractor) prior to commencement of the work
• Language in the contract or agreement that identifies which party is responsible for safety and health compliance
• Appropriate indemnification language for failure to comply with the contract duties, as well as insurance indemnification
• Documentation that the various parties are in fact complying with their agreed upon contractual obligations (e.g., that actual employee safety and health programs have been developed, employees have been trained, and the programs are being enforced with discipline)
In this manner, the host employer can avoid substantial liability for failure to meet its regulatory and other obligations to these categories of individuals if they are determined to be employees of the employer.
Labor and the Law - April 2004 Render