Skip to main content

Liquidated Damages

Question. What are liquidated damages?

Liquidated damages are a creature of contract, and are sometimes used when the exact amount of actual damages will be difficult to ascertain in the event of a breach. Liquidated damages clauses usually pertain to damages for failure to adhere to a contract schedule. Such liquidated damages are agreed to be a reasonable pre-estimate of damages a party will incur, as a result of delayed completion of work. Where liquidated damages run in favor of the Owner, they presuppose that

1. the Owner is entitled to full and beneficial occupancy and use of the completed work following expiration of the contract time; and
2. if the Contractor fails to complete substantially any portion of the work within the contract time, the Owner will sustain extensive damages and serious loss, as a result of such failure.

Liquidated damages are usually expressed in the form of a per diem amount, and are meant to fairly compensate the party assessing liquidated damages, and not to penalize the breaching party.

It may be preferable for contractors to liquidate the owner’s damages for delay, when a contractor fails to reach substantial completion by the completion date. If a valid liquidated damages provision is not established in the contract, the contractor may be liable for the owner’s actual damages. In a commercial or industrial situation, the owner’s actual damages could have been far in excess of what a contractor can economically absorb. Reasonable liquidated damages remain a better alternative than unspecified actual damages. Obviously, low liquidated damages are to the advantage of the contractor.

Safety Policy: Fall Protection: A Top Safety Priority (with “Scaffold Law” Update) (Part I)

Pobably no single safety issue is more critical on the New York construction jobsites than that of fall protection.

Outdoor work, and construction work in particular, is dangerous. In 1995, the Bureau of Labor Statistics reported 1,048 construction fatalities, more than any other industry. Its index of relative risk for fatal occupational injuries, using “1” as the overall risk for all occupations, assigned a risk of 8.1 for construction labor overall, and 13.1 to structural sheet metal work. In 2001, construction accidents accounted for 20.8% of U.S. occupational fatalities. Working on a girder, roof or scaffold multiplies the risk factor, and a momentary lapse in judgment can be fatal.

Falls are a primary cause of workplace injuries and fatalities. OSHA estimates that falls cause more than 100,000 injuries and 150 to 200 fatalities at construction sites annually. In 2000, according to the Bureau of Labor Statistics, 32.4% of construction-industry deaths were fall-related. The New York City Department of Buildings reported that, in 2002, falls were the number one cause of construction-related injuries, accounting for 56% of recorded accidents. OSHA’s fall-protection standards, which take up 30 pages in the Code of Federal Regulations, are theones most commonly cited against construction industry employers.

Everyone reading this article is aware of the perennial controversy over efforts to reform (or undermine) New York’s unique “Scaffold Law,” Labor Law ¬ß 240(1).

Dating back to 1885, the Scaffold Law is widely thought to be a “strict liability” statute, imposing on owners and general contractors an absolute liability, without any requirement of proving their negligence, for any and all gravity-related construction jobsite injuries.

An argument often made in favor of reforming the Scaffold Law that it is unfair to hold liable an owner or general contractor, who has not been negligent, for the injuries of a worker who may have climbed onto a scaffold while under the influence of alcohol or drugs, who may have shunned the use of safety devices, or was otherwise negligent himself.

It is widely believed, also, that the Scaffold Law is greatly to blame for the limited availability and high cost of liability insurance for New York owners and general contractors.

The insurance industry’s critics allege that insurers have raised premiums chiefly to make up for their diminished returns in the securities markets. They suggest that the insurers have cynically boosted premiums, and (in many cases) have curtailed their business in New York, to pressure construction companies into joining in their tooth-and-nail legislative fight to abolish or weaken the Scaffold Law. Even conceding that high medical costs in New York can only increase damage awards, the refusal by some insurers to cover construction projects in the State is difficult to explain, given New York’s low construction injury rates, which (according to U.S. Department of Labor statistics) were the second lowest in the nation in 1999-2001. It seems likely, also, that New York’s favorable experience is also partly creditable to the Scaffold Law.

A further argument by opponents of changing the Scaffold Law is a widespread, “under-the-radar” sector of small construction outfits, which often lack safety programs, worker training, and even liability or Worker’s Compensation insurance. Apart the fact that OSHA enforcement is aimed mostly at larger companies and projects, some of these “underground” outfits limit their operations to nights and weekends, to avoid safety inspections.

Advocates for both legal and undocumented aliens point out the prevalence in the “underground” construction sector of Latino (and Asian) day laborers, who suffer injury and disability in numbers disproportionate to their participation in the workforce, and who may suffer extraordinary consequences (due to their lack of medical coverage, or undocumented status) if injured or disabled. Several notorious fatal accidents in recent years involved scaffolding collapses and immigrant day laborers.

If the reformers’ argument based on drug-addled and negligent construction workers was not always a straw man, recent caselaw decisions have made it one. In the mid-1980s, it is true, in cases such as Zimmer v. Chemung County Performing Arts Inc. and Bland v. Manocherian the Court of Appeals did define the owners’ and general contractors’ duty as essentially an insurer’s liability. As late as 1993, in Ross v. Curtis-Palmer Hydro-Electric Co., the Court of Appeals was unequivocal that the “negligence, if any, of the injured worker is of no consequence.”

Through the 1990s, however, the pendulum swung considerably rightward, with increasing numbers of cases going to the jury on “proximate cause” grounds (arguably, a back-door reintroduction of comparative negligence) and some courts recognizing an exception to strict liability in the case of the “recalcitrant worker,” one who disregards instructions to use adequate safety devices.

To give just one example of the shift, in Bernal v. City of New York (1995) the plaintiff was being lowered from a scaffold on a “Hi-Lo,” a device not previously used for that purpose. The “Hi-Lo” struck the scaffold, which collapsed, causing injury to the plaintiff. Both the trial court and the Appellate Division held that the plaintiff was not entitled to summary judgment, as a reasonable finder of fact could conclude that the plaintiff’s co-worker’s conduct had been the sole proximate cause of the plaintiff’s injuries. Under the logic of Bernal, a co-worker’s negligence might provide a defense under Labor Law ¬ß 240(1), even though the plaintiff’s own negligence is supposed to be irrelevant.

Some stability may emerge following the Court of Appeals’ decision last year in Blake v. Neighborhood Housing Services of New York City, Inc. In that case, the Court of Appeals discussed the history of the statute, and cases employing the terms, “strict” or “absolute” liability. The Scaffold Law is, the Court said, an exception to CPLR 1411, which makes the plaintiff’s contributory negligence a defense. And liability under the Scaffold Law, the Court said in Blake, is “absolute,” in the limited sense that the statute imposes a nondelegable duty on owners and general contractors to provide safe scaffolding. However, the Court emphasized that liability was never intended to be “absolute,” as that term is used in other contexts (e.g., blasting activities and the keeping of wild animals) in which liability is imposed for injury even without fault — where the defendant’s activity violates no law, and is carried out with the utmost care.

Thus, while denying that it was changing the law or constricting the traditionally liberal construction of the Scaffold Law, the Court in Blake stated that the legislative purpose could not be advanced by imposing liability for every fall at a construction site. To impose liability under ¬ß 240(1), therefore, there must be proved both a statutory violation of the duty to provide safe scaffolding, and that the violation was a contributing (not necessarily the sole) cause of the plaintiff’s injury.

At least since the Court of Appeals’ clarification of the Scaffold Law in Blake, the worker receiving a windfall from a jury, following his drunken tumble off of a scaffold, is probably a red herring in terms of the reform controversy. Certainly, he would still have to show some defect in the scaffolding — and, were a jury to find that his intoxication was the sole proximate cause of his injury, under Blake’s authoritative (if circular) reasoning, that would necessarily imply that there was no statutory violation.

In Cahill v. Triborough Bridge and Tunnel Authority, also decided in 2004, the Court of Appeals gave its express, if qualified blessing to the “recalcitrant worker” defense, holding that where an employer has made adequate safety devices available and instructed employees in their use, an employee may not recover under the Scaffold Law for injuries caused solely by his violation of those instructions.

Three additional Scaffold Law cases merit passing mention. In LoCicero v. Princeton Restoration, Inc., the Supreme Court, Suffolk County, rejected a defense that a driver delivering rebar mats, injured as a bundle of rebar fell on him as he used a boom crane on his flatbed truck to hoist the bundle to the second floor, was not employed to work on the library addition, and therefore was not a member of the class protected by ¬ß 240(1). The decision makes clear that hazards of building materials falling from a hoist, as they are being conveyed to a higher level, are covered by the statute, and an injured plaintiff delivering material to the site may be protected where his work is “necessary and incidental” to the construction project.

Conversely, in Markgraf v. Suffolk County Water Authority, an engineer employed at another location by the lessee of part of the premises under construction fell and was injured as he crossed a plank resting on wood joists. In a reminder that the Scaffold Law does not cover all gravity-related construction-site injuries, in Markgraf the plaintiff could not recover under ¬ß 240(1). Where an inspector is a member of a team that undertook an enumerated activity under the construction contract, he is protected even while performing ancillary duties. But where his inspection is “merely investigatory,” and where he is not working for the contractor that is performing or will perform the project, he is not a member of the protected class, and ¬ß 240(1) does not apply.

And, while in Hudgins v. City of New York the court on post-trial motions put a somewhat startling jury verdict aright, in that case the plaintiff sustained injuries when planking he was standing on, which had been placed atop a 25-foot high sidewalk bridge, was struck by a passing vehicle, causing the planking (and a section of the bridge) to collapse. At trial, the plaintiff won a verdict as to the liability of co-defendant City of New York (whose driver operated the truck that struck the planking) and a substantial damage award.

What is startling about Hudgins is that the jury apportioned liability 90% against the City, and 10% against the plaintiff (and presumably was instructed by the trial judge on comparative negligence). On a post-trial motion, the court hastened to correct this error, holding that the plaintiff’s comparative fault was irrelevant, and would not defeat his right to full compensation. As contributory negligence in Scaffold Law cases was abolished by the Court of Appeals in Koenig v. Patrick Construction Corp. in 1948, the error at trial was an egregious one.

What are the implications for New York construction companies of recent developments, and in particular Blake? While the ingredients that go into policy, like those of sausages, cannot be reliably foreseen, possibly gasbags on both sides of the dispute will see their arguments deflated. While Blake dealt plaintiffs’ trial lawyers a clear defeat, the insurers lost one of their principal arguments. It should be hard for them to argue in the future that it is “impossible” for insurers to defend against “absolute” (insurer’s) liability under the Scaffold Law, now that the Court of Appeals has said in Blake that “at no time did the Court or the Legislature ever suggest that a defendant should be treated as an insurer after having furnished a safe workplace.”

Even its detractors have not attacked the Scaffold Law’s vicarious liability provisions, as they are generally agreed to be a salutary disincentive to hire uninsured or slipshod contractors. Possibly, the controversy over the Scaffold Law will soon be narrowed to whether construction workers falling off scaffolds should be subject to comparative negligence standards like everybody else.

New York’s position as a leader in construction industry safety (and, yes, Democratic control in the Assembly) suggests that our system is not “broke” sufficiently to impel the Legislature to make OSHA compliance a prima facie defense under the Labor Law. In combination with the dawning recognition that drastic reform is not in the cards for the short term, New York’s admirable safety experience may soon get the insurers off the sidelines, with the result (we hope) that insurance will become more widely available, and at more favorable rates.

Continuing on this theme in next month’s article, we will discuss fall protection from an OSHA compliance standpoint, and look at how cases before the OSH Review Commission and U.S. Courts of Appeals have dealt with violations.

Thomas H. Welby is a licensed professional engineer, as well as an attorney and managing partner of Welby, Brady & Greenblatt, LLP, a construction law firm with its main office in White Plains. Articles in this series are for general guidance only, and should not be relied upon as providing all information necessary for compliance with OSHA and other legal requirements.

Safety Policy: Contractors’ and Subcontractors’ Liability Under OSHA’s “Multi-Employer Doctrine”

In last month’s article, we discussed how it may be a defense to an OSHA violation that the party cited was not the employer of affected workers at the jobsite. This month, we will look at OSHA’S “multi-employer doctrine,” and how a general contractor or a subcontractor can be cited even for conditions it did not create, and which affect only other contractors’ employees.

Universal Construction Co., Inc. v. OSHRC was an appeal to the U.S. Court of Appeals for the Tenth Circuit from a decision of the Commission imposing penalties for “serious” OSHA violations. In that case, Universal Construction Company (Universal), as general contractor, contracted with UMB Bank to construct a branch bank office in Missouri. Universal then subcontracted parts of the work to A. Zahner Sheetmetal Company (Zahner). An OSHA compliance officer observed a Zahner employee violate two OSHA standards. Universal’s field manager and personnel were at the site, and in a position to observe the violations. They had authority to correct the hazards, or to direct Zahner’s foreman to do so, but failed to use that authority. It was not disputed that Zahner created the hazards, and that only Zahner employees were exposed to any danger.

OSHA cited Universal for a “serious” violation, based on Universal’s ability to correct the hazardous conditions. An administrative law judge, relying upon the multi-employer doctrine, upheld the citation.

The Court of Appeals’ decision upholding the violations explains the origins of the multi-employer doctrine. Not surprisingly, it arose from construction industry cases, in which hazards created by one employer often pose dangers to employees of other entities. The OSHA statute does not expressly create liability outside the employer-employee relationship. Rather, the multi-employer doctrine is an interpretation of 29 U.S.C. ¬ß 654(a)(2) (which requires each employer to “comply with occupational safety and health standards promulgated under this chapter”). The Secretary of Labor has asserted the doctrine since the 1970s, and all but one of the federal Courts of Appeals that have considered it (including the Second Circuit, which embraces New York) have approved it.

Under the multi-employer doctrine, a general contractor or subcontractor may be cited for a hazard it created, even if none of its own employees are endangered. While rules of craft jurisdiction or other factors may limit an employer’s authority to abate hazards created by other contractors, a contractor of any tier is not excused from taking reasonable steps to protect its own employees (for example, by alerting the contractor causing the danger and asking him to abate it, or by directing one’s own forces to avoid an unsafe condition). Normally, it is the general contractor who has overall control of the site, and the ability to assure that other contractors fulfill their OSHA obligations.

The Universal court, endorsing the majority view, held that it is reasonable, and consistent with the purposes of the Act, to hold a general contractor liable for violations which it could reasonably have been expected to prevent or abate, by reason of its supervisory capacity. The general contractor’s duty runs not only to its own employees, “but extends to protection of all worksite employees.”

While the “multi-employer doctrine” may sustain an OSHA claim against a contractor exercising control over the worksite, generally the duty imposed will not run against the owner. In Jordan v. NUCOR Corporation, the injured employee worked for one of several contractors constructing an addition to a NUCOR steel plant. The contract between NUCOR and Jordan’s employer denied that NUCOR was acting as a general contractor, and assigned to the contractor the duty to ensure the safety of its work force. The rights reserved to NUCOR — essentially, the boilerplate rights to terminate a contractor in default, take possession of the site and complete the project — were held to be insufficient to impute to NUCOR general supervisory control over the jobsite, or control over the crane operator whose negligence resulted in Jordan’s injuries.

In Jordan, the U.S. Court of Appeals affirmed the lower court’s grant of summary judgment dismissing Jordan’s action against NUCOR. The decision overstates matters, perhaps, in saying that “[t]he multi-employer doctrine applies only to general contractors, not the owner of the property.” Cases have applied the doctrine to subcontractors, and it does not appear settled that an owner exercising actual control at the jobsite could not be held responsible — even if, formally, it was not acting as general contractor.

However, no such scenario was presented in Jordan. The court determined, and noted also the finding of OSHA inspectors, that the owner had not acted as a general contractor. Accordingly, and as NUCOR did not exercise actual or contractual control over the project, or supervise the use of the crane involved in the accident, it could not have been expected to prevent the safety violations, and the multi-employer doctrine was held not to apply.

It should also be noted that the multi-employer doctrine does not independently establish tort duties between a contractor and employees of other contractors or subcontractors. In Jones v. Parsons Transportation Group, Inc., the plaintiff was the widow of a laborer electrocuted while operating a chipping hammer on an airport expansion project in Maryland. The decedent, Jones, an employee of Whiting-Turner, the general contractor, had been working in an excavation pit. An employee of one of Whiting-Turner’s subcontractors, Belfast Valley Contractors, asked him to chip a piece of concrete obstructing the area where Belfast planned to install the grade beam. While operating the chipping hammer in the area indicated by Belfast’s employee, Jones was electrocuted when the hammer penetrated a concrete utility duct bank, and struck a high-voltage electrical line.

Jones’ widow commenced a negligence action against the Parsons Transportation Group (Parsons) which, as construction manager pursuant to a contract with the owner, was responsible to monitor the general contractor’s work, and to assure compliance with safety standards. The widow relied in part on principles found in Section 324A of the Restatement (Second) of Torts, which states that a person who undertakes to render services to another that he should recognize as necessary to protect a third party can be subject to liability, should he fail to exercise reasonable care and (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owned by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

Because of Maryland case law precedents that are not directly germane to our discussion, the plaintiff in Jones could not maintain her negligence cause of action against the construction manager. She argued, based on OSHA’s multi-employer doctrine, that Parsons was responsible for her husband’s injuries caused by Parsons’ failure to comply with OSHA regulations governing work in proximity to an energized electric circuit.

The Jones court acknowledged that, since a construction contractor must comply with OSHA to protect its own workers, it is “sensible to think of him as assuming the same duty to the other workers at the site who might be injured or killed if he violated the regulations.” However, the court said, OSHA does not independently establish tort duties between a contractor and employees of other contractors or subcontractors. The Act is express that it is not to be construed to affect worker’s compensation laws, or to alter common-law or statutory duties or liabilities of employers as to injuries to their employees. A breach of an OSHA violation is evidence of the standard of care exacted of employers, the court said, but OSHA creates no private right of action, and one will not be implied.

Because Mrs. Jones could not establish a duty owned by Parsons to her husband under a theory of liability independent of OSHA, her action against the construction manager was dismissed.

The fundamental lesson from the above is that general contractors, particularly, should be conscientious in policing potential OSHA violations not only by its own forces, but by all lower-tier contractors subject to its control. Both construction contracts and jobsite practices should be tailored to ensure that general contractors and others who may be liable for OSHA violations, by reason of their supervisory authority, will be aware of their duties, and have the means to carry them out.

Thomas H. Welby is a licensed professional engineer, as well as an attorney and managing partner of Welby, Brady & Greenblatt, LLP, a construction law firm with its main office in White Plains. Articles in this series are for general guidance only, and should not be relied upon as providing all information necessary for compliance with OSHA and other legal requirements.

Lien Rights

Question. Recently I completed a remodeling job on a private residence and the owner has failed to make final payment. What do I need to do in order to place a mechanics’ lien on their home?

A contractor, in order to secure his lien rights, must file a lien with the Clerk of the County in which the property is located within 8 months (or 4 months if it is single family residence) after his last day of work. The lien must be verified by the contractor. Within five days before or thirty days after filing the notice of lien, the contractor must also serve a copy of the lien upon the owner. Additionally, he must file proof of such service with the County Clerk within thirty-five days after the notice of lien is filed.

Pursuant to New York Lien Law the notice of lien must contain:

1. The name and residence of the contractor;

1-a. The name and address of the contractor’s attorney, if any.

2. The name of the owner of the real property, and the interest of the owner.

3. The name of the person by whom the contractor was employed, or to whom he furnished or is to furnish materials; or with whom the contract was made

4. The labor performed or materials furnished and their agreed price or value.

5. The amount unpaid.

6. The time when the first and last items of work were performed and materials were furnished.

7. The address of the property being liened together with its section, block and lot.

Subcontractors and vendors must follow similar, but slightly different, procedures. If properly served and filed the lien will be good for one year unless further extended.

Defense to OSHA Violations Based On Lack of Status as the “Employer”


For a variety of reasons, not the least of which is the difficulty faced by many contractors in satisfying bonding requirements for larger projects (especially in the public sector) today joint ventures and other multientity relationships are prevalent in the construction industry in New York.

Often, it is not immediately clear which entity is, for purposes of OSHA compliance, the “employer” of workers at a construction jobsite. The issue is of twofold importance. First, where companies are combining resources to obtain and perform a construction contract, all participants should take care that any entity in a position to be cited for possible OSHA violations is aware of its responsibilities, and in a position to learn of and to correct potential compliance issues as they arise.

Secondly, because only an “employer” has liability under OSHA, a company cited for OSHA violations and its counsel should always examine the question of whether the cited entity is, under the applicable legal standards, the “employer” of affected workers at the site.

The question is not always an easy one. In Secretary of Labor v. Allstate Painting and Contracting Co., Inc., the respondent, Allstate, in part owing to its status as a “disadvantaged business entity,” won a subcontract with Velotta Company (Velotta) to sandblast and paint bridges for the Ohio Department of Transportation.

With Velotta’s assent, Allstate then entered into a “management agreement” with American Painting Company, Inc. (American) whereby Allstate assigned to American its payments on its contract with Velotta, American agreed to do the blasting and painting work, and Allstate agreed to purchase the public liability insurance, and any bonds required under the Velotta-Allstate contract. American undertook to provide payroll, tax withholding and union benefit contributions, to replenish funds if needed, and to provide the services of its principals, Anthony and Michael Katsourakis, to supervise “Allstate’s employees” at the worksite. Allstate was to receive a share of American’s net profits.

Although identified in the management agreement as “Allstate’s employees,” the workers at the site were longtime American employees. The account used to pay them was in Allstate’s name, but was controlled exclusively by American’s principals. The Katsourakis brothers set the workers’ salaries, and had authority to hire and to fire. Assisted by an employee of American, they disciplined workers and ran the job. What Allstate contributed to the arrangement was, essentially, its “disadvantaged” status (of help in winning the contract in the first place) and its provision of the necessary insurance and bonds.

OSHA cited Allstate for violations of health standards limiting exposure to hazardous metals and air contaminants, and for violations fall protection standards. At the hearing before an administrative law judge (ALJ), one defense asserted by Allstate was that American, not Allstate, was the employer. Only an “employer” may be cited for a violation of OSHA, 29 U.S.C. ¬ß 658(a), and the Secretary of Labor has the burden to prove that the respondent is the employer of the affected workers at the site.

The ALJ rejected Allstate’s defense. He determined that Allstate was the employer, based on the fact that, under the subcontract with Velotta, Allstate retained ultimate responsibility for the work. In addition, the agreement with American was express that laborers on the project “shall be employees of Allstate.”

The ALJ further found that the Katsourakis brothers, having contracted to provide their supervisory skills, acted as agents of Allstate. Additionally, the employees were paid with checks from Allstate’s account; the management agreement provided that American was to assist Allstate in complying with OSHA requirements, and safety programs and training materials used on the project identified Allstate as the employer.

Based on the foregoing rationale, and the “broad prosecutorial discretion” vested in the Secretary of Labor in determining whom to prosecute for violations of the Act, the ALJ denied Allstate’s motion to dismiss.

Allstate appealed to the Occupational Safety and Health Review Commission (Commission). Under the 1992 U.S. Supreme Court decision in Nationwide Mutual Insurance Co. v. Darden, the Commission noted, whether a respondent is an “employer” depends primarily on whether the party has the right to control the manner and means by which the job was accomplished. Factors pertinent to that issue include:

The skill required for the job, the source of the instrumentalities and tools, 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 extent of the hired party’s discretion over when and how long to work, the method of payment, the hired party’s role in hiring and paying assistants, whether the work is part of the regular business of the hiring party, whether the hiring party is in business, the provision of employee benefits and the tax treatment of the hired party.

No single factor among those cited in Darden is conclusive, the Commission stated, and “the primary focus is whether the putative employer controls the workers.” Applying the Darden criteria to the facts before it, the Commission found that the ALJ had erred in finding that Allstate was the “employer.” It reversed the ALJ’s finding, and vacated the citations. The Commission said:

The record establishes . . . that Allstate did not control the hiring, firing or disciplining of the workers at the site, did not supervise their work; and did not supply them with equipment or safety gear. The workers were long-term employees of American, not of Allstate, and Allstate had no right to assign any additional projects to them, regulate their arrival and departure time, or determine how they should do their work. Allstate also did not handle the workers’ training, despite the fact that the name Allstate was written on top of the project’s training sheets and safety plan. . . . .

It was not controlling that the payroll account was in Allstate’s name, the Commission found, as all signatories were American personnel, and Allstate had no access to the account funds. The Commission also overruled the finding that the management agreement transformed America’s principals into agents of Allstate. In an agency relationship, the principal has the right to control the agent’s conduct, but the agreement gave Allstate no right to control the Katsourakis brothers, nor was there evidence that Allstate exercised such control de facto.

The Commission emphasized that Allstate’s entire interest in Allstate’s contract with Velotta were irrevocably assigned to American. That fact, and that American’s principals were the sole signatories on the project bank account, convinced the Commission that Allstate had no right to assert control over the workers, or interfere with American’s performance obligations to Velotta. In sum, Allstate had no control over the workers, such that it could be considered their employer.

Two lessons emerge from the above. First, energetic lawyering can make a difference. The ALJ’s decision was plausible, but Allstate and its attorneys did not accept its superficial analysis. Allstate was able to overcome adverse evidence (e.g., the express identification of the workers as Allstate’s employees in the agreement) to obtain the correct result.

The other lesson is that however a joint venture or other agreement might be structured on paper, for OSHA purposes the “employer” is the entity that controls the workers at the site. If parties to an agreement want a particular party to have (or to share) responsibility for OSHA compliance, that party should be vested with control over workers at the site, assigned bona fide responsibilities in respect of the provision of safety training and equipment to the employees, or be given other indicia mentioned in Darden, as mere recitation, in the agreements governing the project, as a party responsible (or co-responsible) for OSHA compliance probably will not suffice.

Thomas H. Welby is a licensed professional engineer, as well as an attorney and managing partner of Welby, Brady & Greenblatt, LLP, a construction law firm with its main office in White Plains. Articles in this series are for general guidance only, and should not be relied upon as providing all information necessary for compliance with OSHA and other legal requirements.

Don’t Get Burned by OSHA’S General Duty Clause

Most employers are aware that the Occupational Health and Safety Administration establishes specific (and often detailed) health and safety regulations. Employers know that they must become familiar with specific OSHA regulations that apply to conditions, operations and processes relevant to their particular workplace and trade. (e.g. – excavation, masonry, steel erection, etc.) Employers, no doubt, would like to think that their trouble and expense in complying scrupulously with the myriad details of these industry-specific regulations will avoid citations for OSHA violations.

However, as the below cases illustrate, OSHA compliance requires two things of the employer. One of them is to comply with OSHA’s specific standards that apply to conditions, operations, and processes, etc. as found within the employer’s business. Such compliance, although necessary, is not of itself sufficient. OSHA’s “General Duty Clause” codifies a further duty imposed on employers: to use their common sense to furnish employees with a workplace free from recognized hazards that are likely to cause death or serious physical harm.

The case of Secretary of Labor v. R. G. Bigelow Electrical Co., Inc. is illustrative. Ruggles, an electrician, was assigned to tighten a neutral connection while using an aerial lift 20-25 feet above the ground. Ruggles had not been trained on the lift, and he was not provided with personal protective equipment. It was not practicable to de-energize the circuit, and Ruggles went aloft wearing jeans and a polyester t-shirt. He suffered severe burns as he performed work on the circuit, using a conductive allen wrench. Ruggles’ t-shirt melted onto his body, and he had to lower himself down in the lift, because the key to the lift’s ground-level controls was missing. The employer’s defense to the citation for a violation of the General Duty Clause was that protective equipment was available in the employer’s office, but no one had asked that it be delivered to the work site.

The General Duty Clause provides as follows:

Each employer — (1) shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees[.]

To establish a violation of the General Duty Clause, the Secretary of Labor must prove that: (1) the employer failed to render its workplace free of an obvious and recognized hazard; (2) the hazard was causing or likely to cause death or serious physical harm, and (3) there was a feasible method by which the employer could have abated the hazard.

At the hearing, the administrative law judge agreed with the employer that Ruggles could not have completed his assigned task with the circuit box in the off position. He also found, however, that working with a circuit box of 480 volts requires insulated gloves, safety glasses and a face shield, fire retardant clothing, insulated tools, and an insulated blanket. The administrative law judge found that using a conductive tool in close proximity to a live electrical circuit in excess of 50 volts posed a hazard of burns or electrocution. The Secretary’s expert witness testified, without rebuttal, that this was a recognized hazard in the industry. It was clear that the hazards are likely to result in death or serious physical harm, and that feasible means — such as the use of proper clothing and insulated tools — exist to eliminate or materially reduce the hazard. The General Duty Clause citation was affirmed as a “serious” violation.

Construction industry employers should be aware of the interplay between OSHA’s specific standards, and the General Duty Clause. First, the applicability of a specific standard pre-empts the application of the General Duty Clause. 29 C.F.R. ¬ß 1910.5(f) provides:

An employer who is in compliance with any standard in this part shall be deemed to be in compliance with the requirements of [the General Duty Clause], but only to the extent of the condition, practice, means, method, operation, or process covered by the standard.

Thus, if an accident has resulted from a condition, operation, process etc. permissible under a specific OSHA standard, OSHA investigators ordinarily cannot seize upon the General Duty Clause, to make the permitted condition an OSHA violation anyway. The exception to this, however — and it is an important one — is that for the employer to be protected, the condition associated with the injury must (1) have been authorized under the specific standard; and (2) must not have presented an obvious or recognized hazard. The employer has the burden to identify and to establish the applicability of the specific standard, and that the exception just described does not apply.

Employers should be aware, also, of some of the primary defenses to OSHA citations for violations of the General Duty Clause. Not surprisingly, work rules that are adequately communicated to employees, monitored for compliance and effectively enforced, can save the day. In Secretary of Labor v. Performance Site Management, a utility crew was excavating and installing sewer pipes at a job site. Two workers, Roberts and Lintz, were inside trench boxes, installing pipe, while a third worker operated a track hoe with an excavator bucket attached to one of its arms. A fourth worker acted as a “spotter” for the track hoe, and a fifth operated a front-end loader, used to backfill each area of the trench after pipe had been installed. As the track hoe operator was swinging the track hoe around, the bucket disengaged from the track hoe, and fell into the trench. The bucket landed on Roberts, causing his death, and injured Lintz, as the impact threw him from the trench box. Among the OSHA citations that were issued was an alleged violation of the General Duty Clause.

At the hearing, the Secretary of Labor argued that the protocol and safe operating procedures of the Construction Industry Manufacturers Association (“CIMA”) constituted a feasible means of abating the hazard and that, by not adopting it, the employer had failed to take a necessary measure to eliminate or reduce the recognized hazard. However, the administrative law judge, found that the employer’s rules, which forbade working under the track hoe at any time, were the equivalent of the CIMA protocol.

The administrative law judge also found that prior incidents were energetically investigated and measures taken to avoid a recurrence, the employer had a comprehensive maintenance program for its equipment, and an injury rate better than the industry in general. The employer convened meetings, contacted manufacturers and dealers of its equipment to address concerns, and even worked with competitors on safety issues. Importantly, the administrative law judge found that rules were adequately communicated to employees. New hires were given a written safety manual, safety matters were addressed during a five-hour orientation, and workers received specialized classes and weekly “toolbox talks,” in which the rule against working under loads, including the track hoe, were reiterated. Every morning before starting work, a “10/10” meeting was held, at which safety issues were discussed. Energetic programs to monitor compliance with company safety rules, and to discipline offenders, were also in place.

The administrative law judge concluded that the employer had an effective, comprehensive safety program, designed to render its workplace free of recognized hazards including working under loads, which negated the General Duty Clause violation. The citation was dismissed.

In a prior article, we discussed Secretary of Labor v. Thomann Asphalt Paving Corp., which involved a fatal rollover accident involving a Bomag roller. In that case, the fatality occurred as a roller, being operated partially on a paved roadway and partially on the grassy area next to the road, slid off the side of an embankment, pinning the operator underneath.

The critical issue in Thomann Asphalt Paving Corp. became whether the operator’s use of a roller not equipped with a rollover protective system (“ROPS”) violated the General Duty Clause. Testimony at the hearing showed that the industry disfavors requiring ROPS on rollers as a matter of course because, under most conditions, ROPS (which requires that the operator wear a seatbelt) inhibits the operator who needs to be able to stand up in his seat, and obstructs the operator’s vision.

Although the administrative law judge found an “obvious and recognized hazard” and risk of death or serious physical harm, it recast slightly the third inquiry — whether or not there was a feasible means to abate the hazard — to describe that inquiry as whether knowledgeable persons, familiar with the industry, would consider ROPS to be a necessary and valuable element of a sound safety program in the specific circumstances existing at the work site. In answering that question in the negative, the administrative law judge found persuasive one of the complainant’s own expert’s view that, at a jobsite at which the job to be performed did not call for the compaction of sloped areas, the rollover hazard was best addressed with the use of well-trained, knowledgeable operators.

OSHA’s General Duty Clause should not be misread as mere boilerplate, nor as a meaningless preface to clause (2) of 29 U.S.C. ¬ß 653(a) (i.e., the duty co comply with the specific standards promulgated by the Secretary of Labor). Rather, the General Duty Clause takes every employer’s responsibility beyond compliance with specific standards, and demands that the workplace be free of obvious and recognized hazards that can feasibly be abated. It is important for employers, therefore, to be attentive to this responsibility, as well as to the best defenses to General Duty Clause violations.

Thomas H. Welby is a licensed professional engineer, as well as an attorney and managing partner of Welby, Brady & Greenblatt, LLP, a construction law firm with its main office in White Plains. Articles in this series are for general guidance only, and should not be relied upon as providing all information necessary for compliance with OSHA and other legal requirements.