January 11, 2022

Fifth Circuit to Employers: "Your Past May Haunt You"

6 min

Every employer understands the importance of actively ensuring employee safety and compliance with Occupational Safety and Health Act (OSH Act) standards, but a recent federal appeals court decision provides additional incentive for employers to ensure that their supervisors share this understanding. Last month, a Fifth Circuit panel affirmed a $35,000 willful citation and penalty against a Texas highway construction business, ruling that the employer was liable for a project supervisor's intentional disregard of safety measures. Angel Bros. Enterprises, Ltd. v. Walsh, 2021 WL 5627103 (5th Cir., Dec. 1, 2021).

Before the court was an Occupational Safety and Health Review Commission determination that Angel Brothers Enterprises was properly cited for a willful violation as a result of an employee working in a trench without cave-in protection. Angel Brothers' safety manager had told the project supervisor to use a trench box to protect workers, but the supervisor disregarded that instruction and sent an employee into the trench without protection. An OSHA compliance officer observed the violation, and the company was cited for a willful violation of the trenching standard.

The issue on appeal was whether the supervisor's active involvement in the employee's violation rendered the employer liable. Angel Brothers argued that it was not liable for the violation because the supervisor's knowledge could not be imputed to it and that, even if knowledge could be imputed, it should not be liable because the violation resulted from the supervisor's unpreventable employee misconduct. In rejecting both claims, the Fifth Circuit provided new insight for employers and breathed new urgency into OSHA compliance.

Imputed Knowledge

Prima Facie Case

To establish a violation of the OSH Act, OSHA must demonstrate that the employer knew (actual knowledge) or should have known through the exercise of reasonable due diligence (constructive knowledge) of the conditions constituting the violation. One way that courts determine whether an employer satisfies the knowledge requirement is through the imputed knowledge of their supervisors: when an employer entrusts to a supervisory employee its duty to ensure employee compliance with safety standards, courts will charge the employer with the supervisor's knowledge.

The Fifth Circuit acknowledged that imputation is not always proper. Thus, when a supervisor's own conduct constitutes the violation, the court observed, the supervisor's knowledge is not automatically imputed to the employer. This explanation is not unusual—what is unusual is the court's narrow application of the exception.

The court found knowledge of the violation existed because the foreman told the employee to enter the trench, in violation of OSHA standards and the employer's rules. The court explained that the OSHA violation was the employee working in the unsafe trench, rejecting Angels' assertion that the supervisor's malfeasance—ordering the worker into the trench—was the violation and noting that authorizing a violation was not the same as committing it oneself. In other words, because the supervisor did not get in the trench himself, his direction to an employee to do so was, in the court's view, fairly imputed to be a direction from Angel Brothers, resulting in actual knowledge.

Willful Violation

The court applied the identical analysis to a separate inquiry: whether the violation was willful.

Generally speaking, an OSHA violation is willful if it is done voluntarily, with either an intentional disregard of or plain indifference to OSHA requirements. The Fifth Circuit held that a supervisor's willful actions may be imputed to an employer in the same way knowledge of violations can be imputed.

However, in assessing whether the violation was willful, the court summarily stated that "our conclusion that the [supervisor's] state of mind can be imputed to Angel Brothers" resolves the willfulness issue—a short statement, but one worthy of unpacking. Recall that the court's prior "conclusion" regarding imputation was that the supervisor's knowledge could be charged to his employer. The court's statement on willfulness necessarily means that the supervisor's knowledge of the violation can also be imputed to the employer to prove a willful violation, even though the supervisor's knowledge was based on his own failure to follow the employer's rules and instructions.

The court's easy willingness to ascribe the supervisor's state of mind to the company is troubling. If a supervisor's knowledge can be imputed to an employer for purposes of proving willfulness, then all violations arguably are per se willful, because supervisory knowledge is an element of every OSHA violation. This reasoning is particularly concerning for employers because in the current case the supervisor disregarded specific instructions from the company's safety director.

Unpreventable Employee Misconduct

The court also rejected the employer's argument that the violation was the result of unpreventable employee misconduct. To establish this defense, the employer must show that it has (1) established work rules designed to prevent the violation; (2) adequately communicated those rules to its employees; (3) taken steps to discover violations; and (4) effectively enforced the rules when violations were discovered.

The Fifth Circuit held that Angels Brothers could not establish the affirmative defense because it could not prove the effective enforcement element. That is not a novel proposition. What is novel, however, is the evidence the court utilized in reaching its conclusion.

In ruling that Angel Brothers did not demonstrate effective enforcement, the court utilized the employer's safety and discipline record as evidence. Of particular note, the court highlighted the employer's alleged failure to discipline the employee who entered the unsafe trench as a result of his failure to follow its rules.

The court also considered the employer's safety history. The court noted that although Angel Brothers performs more than a thousand excavations annually, it had documented only two instances where it had disciplined employees for rules violations. Furthermore, the court noted that the last five OSHA inspections of Angel Brothers resulted in four trenching citations. Taken together, the court held that the employer's discipline record assessed against its inspection record meant that it could not show effective enforcement of its rules.

Takeaways

Although it remains to be seen how the opinion in Angel Brothers will be followed, the decision highlights four critical points for employers seeking to avoid liability for supervisory misconduct.

First, the Fifth Circuit's decision appears to suggest, in the states within that circuit, that if a supervisor directs or authorizes violative work, the employer will automatically be charged with the supervisor's awareness. This point highlights the importance of meaningfully holding supervisors accountable for safety.

Second, and of more concern, is the court's finding that a "supervisor's willful actions may be imputed to an employer in the same way knowledge of violations may be imputed." Here, the evidence relied on by the court was the instruction by the safety director to use trench protection. In other words, the supervisor's failure to follow that direction was imputed to his employer even though it was arguably beyond the proper scope of his authority. Such an outcome could effectively impose strict liability on employers.

Third, the court's decision highlights the importance of effectively enforcing work safety rules, particularly through progressive discipline. An employer's failure to document and discipline employees for rules violations can be used to show the employer failed to effectively enforce safety rules. Such a failure will impact the ability to establish an employee misconduct defense.

Fourth, and finally, the decision highlights the importance of an employer's inspection history and a novel way in which it may be used to support the existence of a violation in a particular instance.

If your organization has any questions about the implications of this new ruling, please contact the authors of this article or any attorney in Venable's Labor and Employment Group.

Read the case in its entirety.