Controlling the Government Inspection

For the last few years, the Occupational Safety and Health Administration, the Mine Safety and Health Administration and other agencies have emphasized cooperation and consultation more than the vigorous enforcement associated with the early 1990s.While no one expects an immediate change in direction, most industry observers expect a ramp-up of enforcement efforts under a Democratic Congress. However, the seeds for this ramp-up have been sown over the last two years, represented by the following:

• $21 million in OSHA fines following the Texas City BP explosion
• The Sago Mine tragedy and the resulting Mine Improvement and New Energy Response Act of 2006 (MINER), or increased use of Pattern of Violation (POV) provisions and MSHA’s March 31, 2006, Directive for Evaluating Flagrant Violations, which includes maximum penalties of $220,000
• Continued pressure for enhanced criminal actions, such as the combined OSHA/Environmental Protection Agency (EPA) efforts
• OSHA’s whistleblower/criminal investigators now spend as much time on Sarbanes Oxley claims as OSHA claims and increasingly focus on “conspiracies,” “wire fraud” and other white collar criminal concerns
• Increased training of OSHA compliance officers (CSHO’s) to anticipate employer defenses, such as “Unpreventable Employee Misconduct”
• An emboldened Chemical Safety Board (CSB) who will often clash even with OSHA in the investigation of “explosion” fatalities

In the face of increased exposure, contractors should plan how to handle more aggressive inspections now. Regardless of whether OSHA, MSHA, the EPA or local law enforcement agencies inspect an employer, certain basic rules apply. The overreaching principle is that the employer should maintain “control” of the investigation. Control involves using finesse and a constant adjustment to the demands of the different agencies investigating a job.

The second principle is to think “broadly” about each inspection-don’t pigeon-hole the inspection as only an OSHA inspection. Recognize, for example, that an employee death on the job may spawn an OSHA inspection, scrutiny by local law enforcement, a wrongful death action and claims of delay and liquidated damages by a general contractor or owner. In addition, owners and general contractors in many industries, including utilities and manufacturing, increasingly scrutinize a bidding contractor’s OSHA workers’ compensation experience. The modest OSHA penalty may be the least expensive aspect of a contractor’s problems arising from a citation.

Next, whether the contractor is a general, sub, construction manager, or owner, he should have a plan in place to ensure that all contractors are immediately made aware of any inspector’s entry. Each contractor should carefully review not only the company’s safety program, but its full contract with other parties onsite, including indemnification provisions, to understand who OSHA will ascribe safety responsibilities. Be familiar with OSHA’s multi-employer citation guidance as interpreted by the Occupational Safety and Health Review Commission (OSHRC) and the courts, and plan accordingly.

Maintaining the control continues from entry through interviews and document production. Determine which contractor representative can best respond to OSHA, while controlling the pace and direction of any inspection. The safety manager should be available, but a well-coached project manager may be the better choice. The project manager, not the CSHO, obtains information from the safety manager and has the opportunity to determine how to best provide it.

Once the OSHA or MSHA compliance officer arrives, the contractor should determine the reason for the investigation and limit the “scope” of the inspection to that purpose. Most OSHA CSHOs will explain the individual complaints they are investigating, confirm that the investigation is in response to a fatality or as a result of a programmed inspection process.

Once the CSHO has stated the purpose of his investigation, the employer should state that he is admitting the CSHO only for the purpose of investigating those delineated complaints. Likewise, the employer should inform the CSHO that his photography should limit itself to the specific areas of complaint, and not consist of broad sweeps of the entire work area. If the CSHO asks to broaden the investigation, the employer may choose to agree or disagree; however, as in all aspects of the inspection, the employer should retain the “control” of this process.

The OSHA CSHO will ask to see documents, and illness and injury reports should be immediately provided. As the investigation goes on, the employer may choose to maintain a running list of requested materials and provide them at the end of the day or on the following day. This process permits the employer to better control the information flow and to review materials before providing them. The OSHA CSHO will generally ask to take still or video photographs, and most employers agree.

The employer should then determine how to handle witnesses. The contractor has an absolute right to have a management representative or his attorney present for all OSHA interviews of supervisory employees and should never surrender this right. The compliance officer has the right to interview non-supervisory employees without a management representative. The employer has the right to refuse to permit OSHA to interview employees onsite; however, with certain exceptions, the employer will usually want to grant interviews of employees. Employees tend to be more truthful when interviewed onsite than at their own homes or offsite. Whenever possible, the employer should speak to witnesses first to explain that OSHA is going to interview them. In the case of a deposition, the employer should advise employees to listen to the question, and only answer with a “yes” or “no” if possible. The employer should tell the employee not to make up answers or speculate.

It is essential that the employer’s last instruction be that the employee tell the absolute truth, coupled with an assurance that the employee will not be retaliated against for cooperating with OSHA. Once OSHA learns that the employee was instructed to tell the truth, they are more likely to believe your overall presentation of facts, and to consider you a “responsible employer.” As to MSHA, an employer should seek to have counsel or management present for supervisor interviews, but should do so promptly and ensure its actions are reasonable.

Although not common, some construction contractors may perform work regulated by MSHA, most likely because they are an independent contractor performing service or construction at a mine. While not unlimited, MSHA has far broader powers than OSHA, and in most circumstances, the agency has the right to conduct inspections without warrants. MSHA is required to inspect mines at least four times per year and will generally be present with far greater frequency than OSHA at even high visibility construction sites. Moreover, emboldened by MINER and other changes, individual investigations have more ability to increase penalties, and of course, unlike OSHA compliance officers, they may also assert claims against individuals. The 1979 Memorandum of Understanding Between OSHA and MSHA, accessible at both http://www.osha.gov/ and http://www.msha.gov/, presents a good starting point for a discussion of where OSHA coverage ends and MSHA coverage begins. The bottom-line is that the construction employer embroiled with MSHA should carefully determine whether MSHA controls the company’s work, and if so, proceed more carefully in efforts to control the inspection process.

Throughout the OSHA inspection, the contractor should be mindful that OSHA can cite employers on a multi-employer site under various theories. OSHA may cite the employer of the exposed employees, the employer who supervised employees in danger, the employer who created a hazard or controlled the site, the employer who controlled a hazard, the employer who abated a hazard or all of the above parties. Contractors should recognize that various contractors may have different interests and positions. Employers should also be prepared to assert that a violation was a result of “unpreventable employee misconduct.” This defense requires that the employer show a published and well-communicated rule, a disciplinary program enforcing safety rules and proof that employees have been disciplined for safety violations in the past. While the disciplinary actions should not be for violation of the rule in question, this defense typically fails when an employer only has proof of “oral” or casual warnings. OSHA administrative law judges look for written warnings, suspensions and discharges. Therefore, as part of a contractor’s advance planning, he should ensure that his supervisors actively provide written warnings and otherwise dutifully enforce safety rules.

Especially in the case of employee fatalities, an employer should avoid creating written statements or otherwise arriving at “conclusions” at an early stage, which may later bind the contractor. Likewise, employers should exercise care in the preparation of accident or incident investigation reports to avoid arriving too soon at conclusions of employee failures or other problems. Finally, OSHA automatically involves an OSHA investigator trained in criminal fact gathering when they believe possible “willful” citations may be involved in a fatality, and in those circumstances, more control is required.

While each step of an appeal can be increasingly costly, contractors typically achieve a better resolution through contests, negotiation and even trial. In determining a strategy, the contractor should consider the three-year risk of “repeat” citations and the effect of citations on future bids or on ancillary litigation.

Once the citations are issued, an employer should always attend an OSHA Informal Conference. While OSHA obviously seeks to avoid contest, they will not retaliate against an employer for filing a contest, especially when the employer assures OSHA that he will do whatever is necessary to continue to guarantee a safe workplace for employees regardless of the legal outcome. An attorney can be useful to analyze items because OSHA Administrative Law Judges often take a more restrictive view of the OSHAct, and OSHA’s counsel may be more willing to negotiate to avoid time-consuming hearings. In MSHA proceedings, especially under the enhanced MINER approach, skilled handling of the investigation is even more important than in an OSHA inspection.

Employers who follow these basic rules should be able to better manage and control inspections, limit penalties and more importantly, reduce hazards.

Construction Business Owner, January 2007