LEL News-Jul09

The full text of many cases is now available free on-line. Where that is the case, links are provided.

Many worksites today include employees and contractor employees working together. Which employer is liable under OSHA for dangerous conditions that exist in such a workplace? The contracting employer has oversight and control of the workplace but may not be aware of all the dangers to which employees of subcontractors are exposed. Subcontractors may not have the power to abate hazards to which their employees are exposed. Construction worksites have had long experience with these sorts of conditions, and for decades OSHA held a general contractor responsible for abating the hazard if it had control of the worksite.

In 2007, the Occupational Safety and Health Review Commission (OSHRC) issued a controversial decision that overturned longstanding precedent that made the general contractor liable for overall safety. Earlier this year, that decision was overturned by the Eighth Circuit Court of Appeals. The OSHRC decision was based on a plain reading of the OSH Act that states that an employer must 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 injury to his employees.” In other words, the plain language of that statute says that since a subcontractor’s employees are not the general contractor’s employees, the general owes no duty to subcontractor employees. The OSHRC 2007 decision (and 2004 administrative law judge's decision appealed from) may be found here.

OSHRC has now issued a new decision that essentially reinstates the prior test. Secretary of Labor v. Summit Contractors, Inc., OSHRC Case No.03-1622 (July 27, 2009).
http://www.oshrc.gov/decisions/html_2009/03-1622.htm

It may be that the logic of these cases will only apply to the dangers of a construction site; however, worksites that include employees and contractor employees might want to be aware of the potential for liability for safety violations under OSHA. The new OSHRC decision states:

Under the Eighth Circuit’s plain reading of § 1910.12(a), the Secretary “may issue citations to general contractors at construction sites who have the ability to prevent or abate hazardous conditions created by subcontractors through the reasonable exercise of supervisory authority regardless of whether the general contractor created the hazard . . . or whether the general contractor’s own employees were exposed to the hazard.” . . . In determining the liability of a general contractor for safety violations of its subcontractors, the Eighth Circuit has considered factors such as the “degree of supervisory capacity” and the “nature and extent of precautionary measures taken.”

OSHRC also said that “a controlling employer is one who ‘has general supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them.’” Therefore, “Under this policy, a controlling employer ‘must exercise reasonable care to prevent and detect violations on the site,’ although the extent of measures a controlling employer must implement to satisfy the duty of reasonable care ‘is less than what is required of an employer with respect to protecting its own employees.’”

When ERISA was enacted, Congress’ focus was on protecting defined benefit pension plans. As a result, ERISA provides fewer protections for the types of employee benefits that have become increasingly common, in particular, defined contribution plans and health plans. Recently, the courts have stepped in to address these protection gaps through interpretations of ERISA’s provisions on remedies and fiduciary obligations. A recent case from the 9th Circuit Court of Appeals finds that defined contribution plan participants have standing to bring a lawsuit, even though they have withdrawn all their assets from a plan. The case also raises other issues that often arise in ERISA and other cases. Harris v. Amgen, Inc., Case No.08-55389 (9th Cir. July 14, 2009) http://www.ca9.uscourts.gov/datastore/opinions/2009/07/14/08-55389.pdf

To understand this and other ERISA cases, it is helpful to know the differences between types of plans. Briefly, an employee participant in a defined contribution pension plan has an individual account made up of the employer and employee’s contributions to that individual account and any returns on those investments, if any. Unlike a defined benefit plan, the employee is not guaranteed any specific benefit amount from a defined contribution plan. Employee participants in defined benefit pension plans, on the other hand, are guaranteed a pension whose amount is set by the terms of the plan.

In this case, the plaintiffs sued the plan fiduciaries for breaching their duties to the participants in defined contribution plans. They plaintiffs claimed that the defendant managers of the plans included company stock in the plans even though the defendants knew that the stocks’ price was “artificially inflated because of improper off-label drug marketing and sales.” ERISA allows participants to sue fiduciaries for certain acts. A person is a fiduciary based on actions in relation to an ERISA plan, not titles. An example of an ERISA fiduciary is a person who exercises any discretionary authority or discretionary control respecting management of an ERISA plan or exercises any authority or control over the management or disposition of plan assets.

The defendants asked the court to dismiss the case because one of the plaintiffs had withdrawn all the assets from his account. The defendants argued that this meant the plaintiff lacked standing to bring the case. Standing can be complex, but basically it means that a plaintiff has a legal right to bring a case. Federal court standing comes from the Constitution’s requirement that there be a case or controversy, and statutes define when a harm is an injury that allows a case to be brought. In this case, ERISA § 502(a)(2) gives a plan participant standing to sue a defendant who has breached a fiduciary duty under a plan. The court held that the plaintiff’s account assets would have been higher had the defendants not breached their fiduciary duties to him. As a result, he had potentially not received all the money that was due to him under the plan and had suffered a legal injury. These cases involve an appeal from an early dismissal and will now go back to the district court. Because the cases were filed as class actions, other ERISA plan participants who had withdrawn their account money would also have the right to participate in the case.

Employee rights to privacy in their workplace email may also be protected by a number of federal statute, including applying laws enacted decades ago to new technologies. In a recent case, a mayor violated the Stored Communications Act when he accessed the email account of a town commissioner whom he had defeated when she ran for mayor. The decision also discusses the application of other statutes, including the Omnibus Crime Control and Safe Streets Act of 1968, also known as the “Wiretap Act” and the federal Computer Fraud and Abuse Act. Steinbach v. Village of Forest Park, Case No.08-4215 (N.D. Ill. July 14, 2009). http://hr.cch.com/cases/steinbach.pdf

Caution is warranted in this area of the law. Each of these acts has somewhat different coverage and complex definitions. For example, the court said, “The Stored Communications Act is violated by unauthorized access to electronic communication while in electronic storage. 18 USC § 2701(a)(1) (2006). ‘Electronic storage’ is defined as (a) temporary, intermediate storage; and (b) storage for purposes of backup protection. 18 USC § 2510(17)(A), (B) (2006). There is some controversy regarding what it means for an email to be stored for backup protection.” The judge then discussed how that definition applied in this case, as well as the application of other statutes.

COBRA Continuation Coverage - Assistance Appeals Project (service provided by MAXIMUS Federal Services, part of MAXIMUS (www.maximus.com)
http://www.continuationcoverage.net/

Congressional Research Service, Job Loss and Infrastructure Job Creation During the Recession R40080 March 17, 2009
http://opencrs.com/document/R40080

Congressional Research Service, Limiting the Exclusion for Employer-Provided Health Insurance: Background and Issues, July 20, 2009 R40673 http://opencrs.com/document/R40673/

Government Accountability Office, Contingency Contract Management: DOD Needs to Develop and Finalize Background Screening and Other Standards for Private Security Contractors GAO-09-351, July 31, 2009

Government Accountability Office, Electronic Health Records: DOD and VA Efforts to Achieve Government Accountability Office, Full Interoperability Are Ongoing; Program Office Management Needs Improvement GAO-09-775, July 28, 2009
http://www.gao.gov/new.items/d09775.pdf

Government Accountability Office, Teacher Quality: Sustained Coordination among Key Federal Education Programs Could Enhance State Efforts to Improve Teacher Quality GAO-09-593, July 6, 2009
http://www.gao.gov/new.items/d09593.pdf

Government Accountability Office, U.S. Postal Service: Restructuring Urgently Needed to Achieve Financial Viability GAO-09-958T, August 6, 2009 http://www.gao.gov/new.items/d09958t.pdf

Government Accountability Office, Unemployment Insurance Measures Included in the American Recovery and Reinvestment Act of 2009, as of July 2009 GAO-09-942R
http://www.gao.gov/new.items/d09942r.pdf

Government Accountability Office, Federal Contracting: Application of OMB Guidance Can Improve Use of Award Fee Contracts GAO-09-839T, August 3, 2009 http://www.gao.gov/new.items/d09839t.pdf

NLRB, Introduction to the NLRB Public Website http://www.nlrb.gov/nlrb/shared_files/media/SiteTour/SiteTour.html

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