The Second Circuit Court of Appeals, which covers New York, Connecticut and Vermont, recently affirmed the Occupational Safety and Health Review Commission's ("OSHRC") ruling that OSHA improperly cited a nursing home for a repeat violation based on prior citations against affiliate companies.
In 2002, OSHA cited Loretto-Oswego Residential Health Care
Facility ("Loretto-Oswego") for several violations of the
Occupational Safety and Health Act (the "Act"), including
several repeat violations. OSHA based the citations for repeat
violations on prior citations against two affiliate nursing homes:
Loretto-Utica Residential Health Care Facility and Loretto-Rest
Residential Health Care Facility (the "Affiliates").
Another company, Loretto Management Corporation ("LMC"),
oversaw Loretto-Oswego and the Affiliates. The four companies also
shared the same CEO and CFO.
Loretto-Oswego agreed to settle most of the OSHA citations but
contested the citations for repeat violations. An administrative
law judge ("ALJ") initially heard the case and ruled that
the citations for repeat violations were appropriate because LMC
and the Affiliates operated as a "single employer."
Loretto-Oswego appealed the ALJ's decision to OSHRC which
reversed the ALJ's decision finding that Loretto-Oswego and the
Affiliates were not a "single employer" under the
OSHRC's three-factor test. To determine whether companies
constitute a single employer, the OSHRC analyzed whether they: (1)
share a common worksite such that employees of both companies have
access to the same hazardous conditions; (2) have interrelated and
integrated operations, and (3) share a common president management,
supervisor or ownership. OSHRC found that LMC oversaw
Loretto-Oswego's affairs in certain respects but rarely
intervened or dictated policy to Loretto-Oswego. In addition, the
OSHRC found that LMC and Loretto-Oswego did not share a common
worksite and handled safety issues separately.
The Second Circuit affirmed OSHRC's decision. The Court stated
that the "single employer inquiry turns on whether the
entities in question handled safety matters as one company."
The court found that Loretto-Oswego personnel, not LMC employees,
were primarily responsible for safety matters at
Loretto-Oswego's facility and concluded that Loretto-Oswego and
the Affiliates were not a single employer.
This case demonstrates that employers should review OSHA citations
issued to affiliate companies to ensure that similar OSHA
violations do not exist at their workplace. Any citations issued to
an affiliate company that would be considered a single employer may
be used as the basis for a repeat violation. This decision,
however, provides some comfort to employers with affiliate
companies that handle safety matters separately and have different
physical locations. Based on this case, those employers would not
be considered a single employer with their affiliates.
Originally published on the Employer's Law Blog
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.