Investigations/Inspections

By James L. Curtis, Patrick D. Joyce, and Craig B. Simonsen

iStock_000009254156LargeSeyfarth Synopsis: OSHA has rescinded its midnight rule, adopted by the outgoing Administration in December 2016 which attempted to end run the federal court’s decision in Volks that limits the statute of limitations on injury recordkeeping violations to six months.

Prior to 2012, OSHA’s longstanding position was that an employer’s duty to record an injury or illness continues for the full five-year record-retention period.  However, in 2012, the D.C. Circuit issued a decision, in AKM LLC v. Secretary of Labor, 675 F.3d 752 (DC Cir. 2012), rejecting OSHA’s position.

The AKM or “Volks” decision found that the standard six month statute limitations applies to an employer’s duty to record work related injuries and illnesses on the OSHA 300 log. The Volks decision effectively ended OSHA practice of issuing citations for alleged recordkeeping errors going back five years.  This decision did not sit well with OSHA.  In December, 2016 OSHA announced a new final rule that OSHA claimed “clarifies” an employer’s “continuing” obligation to make and maintain an accurate record of each recordable injury and illness for a full five years.

As we previously blogged, OSHA’s rule was a clear attempt to avoid the D.C. Circuit‘s ruling.  In response, Congress passed a Resolution to block OSHA’s rule, stating that “such rule shall have no force or effect.”  Agreeing with Congress, the White House issued a Statement of Administration Policy announcing that it “strongly supports” passage of the bill.

The December midnight rule has now been rescinded by OSHA, effectively acknowledging that the six month statute of limitations applies, not the five year statute of limitations.  82 Fed. Reg. 20548 (May 3, 2017).

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By James L. Curtis, Benjamin D. Briggs, and Craig B. Simonsen

Employee Rights Employment Equality Job Business Commuter ConcepSeyfarth Synopsis: In a victory for employers, OSHA has rescinded its policy allowing union representatives to participate in OSHA inspections of non-union employers.

We blogged previously about OSHA’s 2013 standard interpretation guidance letter allowing workers in non-union workplaces to designate a union representative to act as a “walk-around representative” during OSHA compliance inspections.  At the time, we cautioned that an undesirable consequence of the interpretation was that it allowed outsiders with interests potentially contrary to the employer’s to influence the compliance inspection in an effort to generate union support amongst employees.  Since its issuance, OSHA has used the letter to force union participation in inspections of non-union workplaces over employer objections.

In September, 2016 the National Federation of Independent Business (NFIB) sued in Federal Court to challenge OSHA’s “illegal administrative expansion” of the “walk-around” right. The NFIB complaint focused on the fact that, for over four decades, OSHA construed the Act to “afford employees a limited right to accompany an OSHA compliance safety and health officer during a workplace inspection.” See 29 C.F.R. § 1903.8.

OSHA responded to the suit by filing a motion to dismiss in which it raised a number of threshold arguments before attacking the substance of NFIB’s claims. On February 3, 2017, the federal court put a serious dent in OSHA’s continued reliance on the interpretation in a ruling signaling victory to the rising chorus of objections from the business community. The court flatly rejected OSHA’s threshold arguments and then sided with NFIB’s argument that the letter was a legislative rule subject to notice and comment rulemaking, not “interpretive guidance” as OSHA contended.  In reaching this conclusion, the court observed that the letter “flatly contradicts a prior legislative rule as to whether the employee representative must himself be an employee,” and, in turn, should have gone through the formal rulemaking process.

On April 25, 2017, OSHA withdrew this policy via a Rescission Memo.  It states that “given the express guidance in the statute and the applicable regulation, OSHA is withdrawing the February 21, 2013 letter to Mr. Sallman as unnecessary.  Likewise, the guidance in this memorandum supersedes OSHA Instruction CPL 02-00-160, Field Operations Manual (FOM) (8/2/2016), Chapter 3, Section VII.A, which will be revised accordingly.”

Following OSHA’s rescission, NFIB voluntarily dismissed its lawsuit.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Brent I. ClarkJames L. Curtis, Benjamin D. Briggs, Mark A. Lies, II, and Craig B. Simonsen

Construction Inspector 4Seyfarth Synopsis: Congress passes a Resolution to dismantle an OSHA final rule, adopted in December 2016, which despite statutory language to the opposite, “more clearly states employers’ obligations” to record an injury or illness which continues for a full five-year record-retention period.

The Occupational Safety and Health Administration announced in December 2016 a new final rule that OSHA claims “clarifies an employer’s continuing obligation to make and maintain an accurate record of each recordable injury and illness.” The rule had been proposed in July 2015. In response, the House of Representatives this week passed a Resolution to block the regulation, stating that “such rule shall have no force or effect.”

The bill, House Joint Resolution 83, passed by a vote of 231 to 191, will now move to the Senate for consideration. The White House had issued a Statement of Administration Policy announcing that it “strongly supports” passage of the bill.

In a statement, Rep. Byrne said: “OSHA’s power grab is not only unlawful, it does nothing to improve workplace safety. What it does do is force small businesses to confront even more unnecessary red tape and unjustified litigation. As Republicans have been saying for years, OSHA should collaborate with employers to prevent injuries and illnesses in workplaces and address any gaps in safety that might exist.”

OSHA’s longstanding position had been that an employer’s duty to record an injury or illness continues for the full five-year record-retention period. It cited to Occupational Safety and Health Review Commission cases dating back to 1993. In 2012, however, the D.C. Circuit issued a decision, in AKM LLC v. Secretary of Labor, __ F.3d ___, 2012 WL 1142273 (DC Cir., April 06, 2012), reversing the Commission and rejecting OSHA’s position on the continuing nature of its prior recordkeeping regulations.

The AKM or “Volks” decision applied the standard six month statute limitations to an employer’s duty to put work related injuries and illnesses on the OSHA 300 log. The D.C. Circuit decision affectively ended OSHA practices of issuing citations for alleged recordkeeping errors back five years.  OSHA did not appeal the Volks decision.  As we previously blogged, OSHA’s rulemaking was a clear attempt to avoid the D.C. Circuit of Appeals ruling.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Benjamin D. Briggs, James L. Curtis, and Craig B. Simonsen

Employee Rights Employment Equality Job Business Commuter ConcepSeyfarth Synopsis: In a victory for employers, a Texas federal court has refused to dismiss a lawsuit challenging an OSHA interpretation under which non-employee union representatives were permitted to participate in OSHA inspections of non-union employers.

We blogged previously about OSHA’s 2013 standard interpretation guidance letter allowing workers in non-union workplaces to designate a union (or other) representative to act as a “walk-around representative” during OSHA compliance inspections.  At the time, we cautioned that an undesirable consequence of the interpretation was that it allowed outsiders with interests potentially contrary to the employer’s to influence the compliance inspection in an effort to generate union support amongst employees.  Since its issuance, OSHA has used the letter to force union participation in inspections of non-union workplaces over employer objections.

On February 3, 2017, a Texas federal judge put a serious dent in OSHA’s continued reliance on the interpretation in a ruling signaling victory to a rising chorus of objections from the business community.  The ruling came in case in which the National Federation of Independent Business (NFIB) challenged the validity of the interpretation on the following two bases: (1) the letter constitutes a rule subject to notice and comment rulemaking requirements; and (2) the interpretation exceeds OSHA’s authority.

OSHA responded to the suit by filing a motion to dismiss in which it raised a number of threshold arguments before attacking the substance of NFIB’s claims. The court flatly rejected OSHA’s threshold arguments and then sided with NFIB’s argument that the letter was a legislative rule subject to notice and comment rulemaking, not “interpretive guidance” as OSHA contended.  In reaching this conclusion, the court observed that the letter “flatly contradicts a prior legislative rule as to whether the employee representative must himself be an employee,” and, in turn, should have gone through the formal rulemaking process.

The Upshot for Employers

While the court’s ruling does not conclude the litigation, it sends a very clear message about how the dispute will likely end in the event OSHA continues to defend its position regarding the letter. Moreover, with a new administration committed to reducing agency overreach and armed with the ability to simply withdraw the letter, it appears the continued viability of the interpretation is very much in doubt.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Mark A. Lies, II, Brent I. Clark, James L. Curtis, and Craig B. Simonsen

Seyfarth Synopsis: OSHA finalizes rule that “more clearly states employers’ obligations” to record an injury or illness which continues for the full five-year record-retention period.

The Occupational Safety and Health Administration announced last week a new final rule that “clarifies an employer’s continuing obligation to make and maintain an accurate record of each recordable injury and illness.” The rule had been proposed in July 2015.

OSHA’s longstanding position had been that an employer’s duty to record an injury or illness continues for the full five-year record-retention period. It cited to Occupational Safety and Health Review Commission cases dating back to 1993. In 2012, however, the D.C. Circuit issued a decision, in AKM LLC v. Secretary of Labor, __ F.3d ___, 2012 WL 1142273 (DC Cir., April 06, 2012), reversing the Commission and rejecting OSHA’s position on the continuing nature of its prior recordkeeping regulations.

The AKM or “Volks” decision applied the six month statute limitations to an employers duty to put work related injuries and illnesses on the OSHA 300 log. The D.C. Circuit decision affectively ended OSHA practices of issuing citations for alleged recordkeeping errors back five years.

According to OSHA , this new final rule merely seeks to more clearly define employers’ obligations. “This rule simply returns us to the standard practice of the last 40 years,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. According to OSHA the amendments in the final rule add “no new compliance obligations and do not require employers to make records of any injuries or illnesses for which records are not already required.”

In reality, the new rule’s an obvious attempt to avoid the D.C. Circuit decision in Volks. It is important to note that OSHA waived its right to appeal the Volks decision to the Supreme Court at the time and thus cannot legally evade the legal precedent created by that decision.

It is important for employers to ensure that employees who are responsible for recording the company’s injuries and illnesses are well trained to correctly identify those items that need to be logged.

The effective date for the rule is January 18, 2017.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Benjamin D. Briggs, Brent I. ClarkJoshua M. Henderson, and Craig B. Simonsen

Seyfarth Synopsis: Cal/OSHA has recently amended its definition of “repeat” for inspcetion citations to reconcile differences from the Federal OSHA program. The updated rules expand potential liability to California employers.

In August 2015 Cal/OSHA published a Notice of Proposed Rulemaking regarding Repeat citations. The purpose of the amendment was to make California’s “Repeat” violation classification more consistent with Federal enforcement standards by eliminating the “current geographic restrictions” for issuing a “Repeat” citation, and recalculating the starting time for calculating the look back period for a “Repeat” violation. The final Repeat Regulation rule was recently adopted and will be effective on January 1, 2017.

As noted in the Cal/OSHA Final Statement of Reasons, the Director determined that at a minimum, “she must amend the look-back period from three to five years….” “The Director has determined that under Labor Code section 50.7(d), she may not reject Federal OSHA’s recommendation to eliminate establishment/geographic restrictions, because doing so would make California’s Repeat enforcement policy less effective than the federal policy, thus jeopardizing future state plan funding.”

Starting January 1, 2017, California employers will be at risk of a Repeat citation that is based on a previous final citation issued to the same employer anywhere within the State of California.

Also, Cal/OSHA will be able to base a Repeat citation on a previous citation that is many as five (5) years old. Employers should examine their citation history and understand how the new rules may impact their risk of Repeat citations.

The revised rules, which become effective January 1, 2017, clearly increase the risk of Repeat citations and the higher penalties that come with such citations.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the OSHA Compliance, Enforcement & Litigation Team.

By James L. Curtis and Craig B. Simonsen

Employee Rights Employment Equality Job Business Commuter ConcepSeyfarth Synopsis: Industry has sued to block OSHA’s efforts to give unions increased access to non-union worksites.

We had blogged previously about OSHA’s new standard interpretation guidance letter that would allow workers without a collective bargaining agreement to designate a union representative to act on their behalf as their “walk-around representative” during an OSHA inspection. We warned at that time that this interpretative guidance was essentially an invitation to allow union representatives access to employees at non-union facilities for the purpose of union organizing.

Last week the National Federation of Independent Business (NFIB) sued in Federal Court to challenge OSHA’s “illegal administrative expansion” of the “walk-around” right. The NFIB complaint notes that for over four decades OSHA construed the Act to “afford employees a limited right to accompany an OSHA compliance safety and health officer during a workplace inspection.” See 29 C.F.R. § 1903.8.

Under OSHA’s long-standing approach to this provision, an “employee representative” had to be an employee of the employer whose workplace was the subject of the inspection. In very limited cases OSHA might allow for third-party technical specialists to accompany the compliance officer when their presence would be “reasonably necessary.”  OSHA’s guidance letter blows this wide open by allowing a union to serve as the third-party technical specialist even when the union does not represent the employees.

NFIB indicates that OSHA longstanding construction of the Act’s walk-around right accurately captured a delicate legislative balance. “Congress concluded that employees should be allowed to participate in inspections meant to protect their health and safety. But Congress also recognized that this participatory right should not be used as a pretext to facilitate union access to proselytize employees of open-shop businesses….”

According to the Complaint, the NFIB alleges that the real purpose of the change was to facilitate union access to open-shop workplaces. The interpretation “effected these changes without giving the public prior notice or an opportunity to comment. The [interpretation] conflicts with Congress’s purpose behind the Act’s walk-around provision.” NFIM concludes that interpretation’s promulgation also violated the notice-and-comment requirements of the Administrative Procedure Act, 5 U.S.C. § 553(b)-(c).

We will keep you up-to-date as this case proceeds.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the OSHA Compliance, Enforcement & Litigation Team.

By James L. Curtis and Craig B. Simonsen

iStock_000042612884_MediumSeyfarth Synopsis: In this recent case a Federal Magistrate Judge finds that OSHA has gone too far in expanding an incident inspection into a wall-to-wall inspection.

A District Court Magistrate Judge recently recommended that the Court quash a warrant “improvidently granted” to OSHA to expand an accident investigation into a broader Regional Emphasis Program (REP) inspection. Report and Recommendation (R&R), In the Matter of the Establishment Inspection of Mar-Jac Poultry, Inc., No. 2-16-MC-004-JCF (N.D. GA August 5, 2016).

In attempting to expand the accident investigation into a much broader inspection under the REP, OSHA argued that there was overlap between the hazards that caused the accident and hazards addressed by the REP, as well as information reflected on the Company’s OSHA 300 logs showing work-related injuries leading to medical treatment or days lost from work. The Magistrate found that the fact that there was overlap between the hazards that triggered the accident and the hazards in the REP was not sufficient to expand the inspection to cover everything in the REP.  Rather, the inspection could only be expanded to cover those areas where OSHA had uncovered potential violations, in this case electrical issues.  The Magistrate also found that OSHA’s analysis of the OSHA 300 logs likewise confused “exposure to potential hazards with evidence of a possible violation.” The Magistrate said that “it may be true that enough injuries of a certain type could support a finding of probable cause to inspect an entire facility for a specific violation, but OSHA’s presentation on this point falls well short of that mark.”

The Magistrate found that the question was not whether potential hazards exist (all business have potential hazards), but whether potential OSHA violations existed, and OSHA had not made that showing. OSHA is currently in the process of filing objections to the Magistrate’s ruling in hopes that the District Court Judge will reverse this finding. We will update this blog once the District Court rules.

For employers, the important take-away from this case is that without specific and well-founded evidence of a potential OSHA violation, OSHA is not entitled to turn an incident inspection into a wall-to-wall inspection.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the OSHA Compliance, Enforcement & Litigation Team.

By Wan Li, Andrew S. Boutros, Kay R. Bonza, and Craig B. Simonsen

China map icon with a recycle iconSeyfarth Synopsis: The Chinese Ministry of Environmental Protection has just announced criminal, civil, and administrative enforcement statistics, and put companies on notice that those who violate environmental laws and rules may face blacklisting, including restrictions to their future business endeavors.

We have previously written about the need for multinational companies operating in China to comply with Chinese environmental and workplace safety laws and regulations. See for instance Multinationals in China Should be Aware of Increased Enforcement of Environmental Law, Monitoring Requirements – and Fraud, and International Employers Watch Out: China Will Assign Hefty Fines for Worker Safety Violations.

Now more recently, in the last thirty days, the Ministry of Environmental Protection (MEP) in the People’s Republic of China (PRC) has been publishing notices and warnings to “polluters” and industries about their potentially non-compliant business activities.

For example, the MEP’s just-released news announcement summarizing enforcement actions makes clear just how serious China is taking compliance failures of environmental laws and rules. Specifically, the August 1, 2016, notice, Supreme People’s Court Releasing White Paper on China’s Environmental Resource Trial, provides a progress report “since the establishment of Environmental Resource Courts.” In this regard, the notice provides the following eye-popping statistics about China’s enforcement activities from January 2014 to June 2016 by its courts nationwide:

  • A total of 37,216 criminal cases of first instance trial involving air, water and soil pollution that brought 47,087 people to justice;
  • A total of 195,141 civil cases of first instance trial involving resource ownership, environmental infringement and contract disputes; and
  • The conclusion of 57,738 administrative cases of first instance trial involving the environment and its resources.

Only a few days earlier, on July 28, 2016, the MEP, together with 30 other government agencies, issued another announcement warning companies that those who seriously violate environmental laws and rules will face restrictions to their future business endeavors. Specifically, companies may be barred from entering certain businesses, blocked from applying for business permits, or disqualified from loans. In the words of the MEP, “[t]hey will not qualify for preferential policies.” The MEP also highlights 14 serious violations, including operating or engaging in construction work without environmental assessments or permits, and illegally discharging pollutants.

The MEP notes that it will manage a blacklist of companies with “bad environment records” and will share it with other government agencies.

In fact, in what can be viewed as a prospective “industry sweep,” on July 28, 2016, the MEP announced a “national-scale environmental inspection” in the iron and steel industry. The notice states that local areas will be required to strengthen enforcement activities and inspections in this industry, as well as “make effort to reveal, solve, and expose a batch of prominent environmental violations in this industry.”

According to Tian Weiyong, Director General of the Ministry’s Bureau of Environmental Supervision and Inspection, under this program, local areas are required to organize inspectors and inspections involving the “main firms in the iron and steel industry” within their administrative regions. The inspections will also assess how well the iron and steel makers have “attained emission standards and installed and run the automatic monitoring equipment.”  The inspections are slated to occur between June and October 2016.

Multinational businesses and industries that have interests and facilities in China–especially now in the iron and steel industries– may wish to examine the extent of any potential liability in their holdings, in particular since companies with “bad environment records” may be subject to business-disrupting (if not ending) blacklisting.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the International Employment Law Team, the Environmental Compliance, Enforcement & Permitting Team, or the White Collar, Internal Investigations, and False Claims Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

EPA Sign

Seyfarth Synopsis: The 9th Circuit confirmed that an EPAs request for information letter investigating a Superfund cleanup site is a “suit” triggering an insurer’s duty to defend.

This week, the Ninth Circuit Court of Appeals affirmed a District Court decision that an information request issued by the U.S. Environmental Protection Agency in connection with an investigation into a Superfund cleanup site is a “suit” triggering an insurer’s duty to defend. Ash Grove Cement Company v. Liberty Mutual Insurance Company, et al., Nos. 13-35900, 13-35905, and 14-35298 (9th Cir. May 11, 2016).

In the underlying case, Ash Grove received an information request from the EPA pursuant to section 104(e) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9604(e) (104(e) letter), about contamination at the Portland Harbor Superfund Site. Ash Grove promptly forwarded the 104(e) letter to its insurers.

In briefing, the insurers argued that the 104(e) letter was not a “suit” under Oregon law. The Ninth Circuit, though, had previously held that a 104(e) letter is a “coercive information demand” that is “an attempt to gain an end through legal process,” and was therefore a “suit” under Oregon law. Anderson Bros., Inc. v. St. Paul Fire & Marine Ins. Co., 729 F.3d 923, 932-33, 935 (9th Cir. 2013). The Court also rejected the insurers’ argument that the intention of the parties could not have been to treat a 104(e) letter as a “suit,” because the policies distinguished between a “claim” and a “suit.” Id. at 933-34. In addition, the Court addressed and rejected the insurers’ contention that a 104(e) letter cannot constitute a “suit” because it does not require that an “insured take action with respect to contamination within the State of Oregon.” Id. at 934-35.

Finally, the insurers argued, even if the 104(e) letter constituted a suit, their duty to defend ceased after Ash Grove submitted its response to the letter. The Court disagreed, noting that Oregon law provides that the duty “continue[s] as to each unit [of property] until the Record of Decision for that unit [i]s filed.” Schnitzer Inv. Corp. v. Certain Underwriters at Lloyd’s of London, 104 P.3d 1162, 1169 (Or. Ct. App. 2005), aff’d, 137 P.3d 1282 (Or. 2006).