OSHA and the Independent Contractor OSHA Regulations with Rules for Multi-Employers

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OSHA and the Independent ContractorOSHA Regulations with Rules for Multi-Employers

. . . . Using Independent Contractors Can be a Dilemma . . . .

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. . . . Multi- Employer Worksites . . . .

1. Who is primarily responsible for Safety?

2. Who created the hazard?

3. Who is exposed to the hazard?

4. Who is ultimately responsible for Hazards?

. . . . The Exposing Employer . . . .

►On Multi-Employer worksites, citations will usually be issued to the employer whose employees are exposed to the hazard.

. . . . Others Usually Cited . . . . (Whether or not employees are exposed)

1. The Creating Employer.

2. The Controlling Employer.

3. The Correcting Employer.

. . . . Prior To a Citation IssueDoes an Employer Have A Legitimate Defense? . . . .

1. The employer did not create the hazard.

2. The employer did not have responsibility or authority to correct the hazard.

3. The employer can demonstrate that all employees are notified of the hazard.

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. . . .The Employer has Instructed Employees . . . .

1. How to recognize a hazard.

2. The exposing employer has taken means to protect employees from a hazard.

3. Has removed employees from job to avoid citation. (In extreme circumstances)

. . . . If an Exposing Employer Meets These Defenses . . . .

1. That Employer Shall Not Be Cited.

2. If All Employers with Exposed Employees meets these defenses, then Only Creating and Controlling Employers shall be cited.

. . . . In Such Circumstances . . . .

3. The Controlling Employer and the Hazard Creating Employer: Shall be cited even though none of their employees are exposed to the Hazard.

. . . . Penalties . . . .

►Penalties are appropriately calculated, using: . . . . the number of all exposed employees of all the employers as the number of employees for probability assessment.

. . . . Using Independent Contractors Can be a Dilemma . . . .

1. Where did contractor liability come from?

2. Is it important to pre-qualify contractors?

3. What does OSHA think?

4. The BIG liability question $$$$$$.

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Several incidents in late 1980’s and early 1990’s led to the “OSHA Process Safety Standard.”

1. Pasadena, TX- 1989 - 23 dead, 132 injured in an explosion.

2. Cincinnati, OH- 1990 - 2 dead in an explosion.

3. Sterlington, LA- 1991 - 8 dead, 128 injuries - chemical release.

4. The OSHA Process Safety Standard specifically targets contractors because contractors were the cause of all these catastrophes.

5. Process Safety Management 1910.119 (PSM) applies to contractors performing maintenance, repair, turnaround, major renovation and specialty work.

. . . . Contractor Liability . . . .

1. OSHA applies contractor liability into Multi-Employer work sites through:

“Program Directives and Standard Interpretations”

There is no OSHA “standard” on contractor liability.

2. But, you can be cited and fined for Contractor Violations if you are an Owner or:

a. Exposing Employer b. Creating Employer

c. Controlling Employer d. Correcting Employer.

3. More importantly, as an owner or controlling contractor you can be held financially liable for injuries to third parties.

. . . . Is it Important to Pre-Qualify Contractors? . . . .

1. Owners and/or Controlling Contractors can be held financially liable for injuries and deaths to third parties.

2. Third parties can damage your site and/or injure your employees . . . . and you can be fined by OSHA for their violations.

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3. You absolutely MUST pre-Qualify all Contractors!

. . . . What Does OSHA Think? . . . .

1. Under the OSHA Multi-Employer Citation Policy both construction and non-construction citations shall be issued to employers whose employees are exposed to hazards. (exposing employer)

2. Additionally, the following employers shall be cited, whether or not their own employees are exposed:

a. The employer who actually creates the hazard.(the creating employer)

b. The employer who is responsible, by contract or actual practice, for safety and health conditions on the worksite and who has the authority for ensuring that the hazardous conditions are corrected.

(the controlling employer)

c. The employer who has the responsibility for actually correcting the hazard.

(the correcting employer)

. . . . OSHA Multi-Employer Worksite . . . . Questions . . . .

1. How many different contractors typically work on one work site?

2. Which contractor is liable if someone is hurt?

3. Who is cited if a standard is violated?

4. Which category or role is the employer?

a. Exposing b. Creating c. Correcting d. Controlling(Employers can have Multiple Roles)

5. Does an employer meet the obligations of one of the categories or roles above?

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. . . . What is an Exposing Employer? . . . .

1. “An employer whose own employees are exposed to the hazard.” (If they created the hazard.)

2. If the employer didn’t create the hazard it is still citable if:

b. The employer knew the hazard, or would/should have known about it because they followed reasonable diligence.

c. The employer failed to take steps to protect employees.

3. If exposing employer does not have authority to correct hazard the employer must:

a. Ask the creating or controlling employer to correct it.

b. Inform all employees about the hazard.

c. Take reasonable alternative protective measures.

4. If there is imminent danger . . . . Remove the employees from the job!

. . . . What is the Creating Employer?. . . .

1. “The employer that caused a hazardous condition(s) that violates an OSHA standard.”

2. Employers must not create violations / hazards.

3. If they do create / cause violations they are citable even if only employees of other employers are exposed to the hazards.

. . . .What is the Correcting Employer? . . . .Notes:___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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1. Common worksite and projects as the Exposing Employer

2. Correcting employer is and must be responsible for correcting hazards.

3. Correcting employer must exercise reasonable care in:

a. Preventing and discovering violations.

b. Meeting the obligation to correct hazards immediately.

. . . . What is the Controlling Employer? . . . .

1. The Controlling Employer has general supervisory authority.

a. The Controlling Employer has authority to correct or require others to make corrections.

b. The Controlling Employer cannot accomplish this by contract or in practice.

2. The Controlling Employer must use reasonable care to prevent and detect hazards.

a. Lesser extent than for its own employees.

b. Less frequent inspections required.

c. Less knowledge of trade standards required.

3. Factors that controlling employer uses to determine the inspection schedule:

a. Size and scale of the project.

b. Nature and pace of work, hazards change.

c. How much is known about subcontractor.Notes:___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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d. More frequent inspections are typical for unknown or previously non-compliant subcontractors.

e. Less frequent inspections are required for subcontractors with strong safety and health efforts.

4. Factors OSHA uses to evaluate if reasonable care is evident:

a. Frequent periodic inspections.

b. Effective system in place to correct help hazards.

c. Effective, graduated enforcement of all rules is necessary.

5. Types of Controlling Employer:

a. Established by a Contract. b. Dispute resolution, schedules, sequencing.

c. Architects / Engineers. d. Appointed Control without Explicit Contractual Authority.

. . . . Multiple Roles . . . .

1. May be an exposing employer in combination with other roles.

2. May be a correcting employer if authorized to correct hazard.

. . . . OSHA Rules for Multiple Employers . . . .

1. Specific rules can be found in:

a. Hazard Communication 1910.1200 b. Process Safety Management 1910.119Notes:___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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c. Permit-Required Confined Spaces 1910.146 d. Lockout/Tag out 1910.147

2. Citation Policies apply to all hazards.

. . . . Civil Liability . . . .

1. Worker’s compensation only covers the employee-employer relationship.

2. Subcontractor employees may sue general contractor.

3. Prevention:

a. Reasonable care must be taken to prevent/correct hazards.

b. There must be coordination with other employers.

c. Must be part of the Contract terms / practices with contractors.

. . . . Workshop . . . .

1. Cawley’s Tater Flake Company hired Hightone Paints, to do repair and painting.

2. During the repair work, Hightone removed a railing near a walkway, exposing Hightone employees, Cawley’s Tater Flake employees and customers to a 7 foot drop.

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3. Cawley’s Tater Flake put up a sign, warning the customers of the hazard.

4. Who should be cited for the missing rail????

Both Hightone Paints and Cawley’s Tater Flake Co. Receive Citations:

1. Cawley’s Tater Flakes is the exposing employer.

2. Hightone also has employees exposed.

3. The warning sign is not sufficient to meet a legitimate defense.

1. Ma/Pa Inc., contracted with Bumstead Plumbing to repair sewer pipes on their property.

2. The contract stated that Bumstead Plumbing was responsible for all safety and health conditions related to the sewer job. 3. Bumstead Plumbing dug a trench and did not provide protection against cave-ins for three of their employees working in the trench.

4. Which Company(ies) receive(s) the citation?

Bumstead receives the citation. Bumstead is the exposing employer.

1. Since Ma/Pa:

a. Had no employees exposed. b. Did not create the hazard.

c. Was not responsible for the safety and health conditions related to the trench and . . .

d. Did not have responsibility for correction.

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2. Ma/Pa probably would not receive a citation.

1. Host operates a factory. 2. Host contracts with Walton’s Service Co. for chemical service.

3. Host fails to cover drums of a chemical after repeated requests to do so.

4. This results in airborne concentrations of the chemical that exceed the Permissible Exposure Level (PEL).

5. Which company receives the citation(s)?

Host is the cited employee.

1. Host is the creating employer because it caused Walton’s employees to be exposed to the air contaminant above the PEL.

2. Host failed to implement measures to prevent the accumulative air contaminant.

1. Cornhusker Inc. hired Dingy Tank Co. to clean two of their storage tanks. 2. In the contract, Cornhusker Inc. maintains responsibility for the safety and health conditions of the workplace. 3. During the cleaning operations, three Dingy Tank employees enter a tank. 4. Cornhusker has no confined space program.

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5. Which company (ies) receive(s) the citation(s)???

Both companies receive citations. 1. Who is the exposing employer? Dingy Tank

2. Who is the controlling employer? Cornhusker

3. Who has the responsibility for safety? Dingy Tank and Cornhusker have the responsibility to maintain safety and correct deficiencies.

Supplemental:

A question I received regarding OSHA regulations and independent contractors from another country has no simple answer. However here is my best shot at it.

1. Any independent contractor no matter where they come from, the US, Mexico, Canada, Europe, etc., must adhere to your company safety policies, rules and programs. There is no exception to this. It is up to the host company to make sure the contractor complies with all safety policies rules, and programs. It is important to very carefully lay out the safety rules of your facility and make sure contractors adhere to them. My experience has been that many workers from other countries are rather foot loose and fancy free when it regards safety.

2. I would recommend you have a copy of a contractor's compensation insurance before they begin to work on your site. It is advisable to have a file with any contractor's insurance documents on hand.Many foreign countries do not require worker's compensation insurance. They usually have nationalized healthcare and worker's compensation insurance is not required. It is important for US companies to have contractual agreements in place to cover this. OSHA would not get involved in such a situation. OSHA's primary role would be to make sure the US contracting company has the right safety programs in place and enforces them.

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3. As for contractors, foreign or US based, they must follow your company policies, rules, and programs whenever they are in your facility. It is your responsibility to review and enforce any policies or procedures that pertain to the job they are doing on your site with them before they begin working. The foreign company that sends them to your plant must agree in writing before work begins, regarding which party is responsible if their employee is injured, this is often in a work agreement with the foreign company. However, it is often difficult to enforce such agreements. Injuries to foreign contract workers do not need to be recorded on your OSHA 300 log.

4. Note: For example, Germany has nationalized healthcare similar to most other European countries so Worker's Compensation Insurance isn't necessary. Sometimes they have private plans as well. If a foreign contractor is hurt in a US company and needs immediate medical attention, I think the US company's insurance is on the hook if it escalated to that level. Sometimes employers purchase foreign voluntary compensation if they are sending employees overseas.

5. Your liability for foreign contract workers is not of any interest to OSHA, only the work practices and conditions. Your insurance carrier will have to determine whether to pay it or not.

Employee vs. Independent Contractor – Seven Tips for Business Owners

Seven things every business owner should know about hiring people as independent contractors versus hiring them as employees . . . .

1. The IRS uses three characteristics to determine the relationship between businesses and workers:

o Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.

o Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.

o Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

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2. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.

3. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.

4. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.

5. Workers can avoid higher tax bills and lost benefits if they know their proper status.

6. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.

7. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS website or by calling the IRS at 800-829-3676 (800-TAX-FORM).

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