11/18/2015

Fall 2015 General Counsel’s Report

Fall 2015 General Counsel’s Report

General Counsel reported at the recent Board meeting on the following matters:

1. OSHA issued a final rule on Construction Industry confined space which went into final effect for all, but contractors in residential construction on October 2, 2015. Among other things this rule requires any contractor in the construction industry to have a competent person survey each new jb site for confines spaces and to identify any into which any of the contractors employees might have occasion to enter during their work on the site. Any confined spaces into which an employee of the contractor may enter must be further evaluated to identify whether it is a permit or non-permit required confined space. Any permit confined spaces must be posted with appropriate warning signs.

2. When President Obama signed the new budget bill on November 2^nd, he signed a piece of legislation that had buried within it language that requires OSHA to increase all monetary fines and penalties by 80% by August 1, 2016. This will raise the maximum fine for a serious citation to approximately $12, 600.00 and the maximum fine for a repeat or willful violation to $126,000.00. In addition the bill provides that fines will be increased each year in accordance with the consumer price index. Treating safety on the jobsite just became a lot more expensive in the case of an OSHA compliance inspection.

3. OSHA compliance inspections are also on the increase in light of the new reporting rules on 1/1/15. You should all be aware by now that you are required to report all accidents involving the hospitalization of one or more employees to OSHA within 24 hours of learning of the hospitalization. This requirement has resulted in a significant increase in reported incidents. The increase has necessitated OSHA in establishing procedures for determining which reports merit an immediate inspection. So far, if the accident involved a fall or heat illness an inspection will result. In the remaining cases OSHA has been sending Rapid Response Inquiries. These are similar to an informal complaint letter and must be responded to within five working days of receipt. How you respond to this and the information you include with it will determine if and when OHSA will inspect the cause of the incident. I cautioned each of you to involve experienced OSHA defense counsel in any such response to ensure that you report what is required, but that you do not volunteer additional information that could result in an inspection.

4. OSHA recently (September 28, 2015) issued an interpretative letter on extension cords. It seems that some manufacturers are including information on the tags on the cords that indicate that the cord should not be plugged into another cord to extend to the length needed. OSHA advised the company raising the question that it would enforce compliance with such labeling under 29 CFR 1926.403(a)(2). Because electrical standards have the purpose of protection employees from fire as well as electrocution hazards, OSHA will likely cite this as a serious violation.

5. OSHA recently published a new edition of the Field Operations Manual (FOM). Among many other things the new manual confirms that as a “rule of thumb” OSHA will go back up to five years to establish a repeat violation.

6. On July 15, 2015 the Administrator of the Wage and Hour Division of the Department of Labor issued new guidelines concerning the misclassification of employees as independent contractors. These are important as they show that another agency is cracking down on employers who try to avoid obligations under a myriad of laws by calling people who work for them independent contractors than recognizing that they are really employees. I am contacted quite a few times each year by employers in the construction industry who are trying to address an OSHA citation, or a workers’ compensation premium issue or some other obligation on the grounds that the people who were doing the work observed were not employees, bur independent contractors. To call someone who is really an employee an independent contractor without fully considering the facts of their working relationship with you is a slippery slope. There are various tests available in both the states as well at the federal level. To misclassify an employee can result in IRS, Wage-Hour, workers’ compensation and OSHA issues to name just a few. Each of these is exclusive of the other and a violation of one can often result in a referral by that agency to another. The Wage-Hour director laid out six points as an “economic realities” test:

• Is the work an integral part of your business?
• Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
• How does the worker’s relative investment compare to the employer’s investment? (i.e. an independent contractor is expected to make some investment, and be at some risk for a loss, to show that he is an independent contractor).
• Does the work performed require special skill and initiative?
• Is the relationship between the worker and the employer permanent or indefinite?
• What is the nature and degree of the employer’s control?

At the end of the memo the Administrator concludes that “most workers are employees under the FLSA. To be safe, employers should assume that workers are employees for FLSA purposes, even if the same workers can be fairly classified as independent contractors under a different regulatory scheme” (under a state law, for example).

7. On June 15, 2015 the Colorado Supreme Court held that an employer lawfully terminated an employee for the off-duty use of medical marijuana. Coats v. Dish Network 2015 CO 44. NO. 13SC394. The employee had a state license to use medical marijuana to treat muscle spasms, and uses it as permitted by state law. While working for the employer in 2010 he tested positive for THC during a random drug test. He was subsequently terminated for violating the company’s drug policy. The employee sued under Colorado’s “lawful activities statute.” This makes it unfair and discriminatory to discharge an employee based on the employee’s “lawful” outside-of-work. The Court held that the term “lawful” is not restricted in any way, and declined to impose a state law limitation on the term. Therefore, an activity such as medical marijuana use that is unlawful under federal law is not a “lawful” activity under Colorado’s “lawful activities” statute.

8. Manhattan Beer Distributors, LLC, 362 NLRB No. 192 (August 27, 2015). In this case an employee who is a delivery driver was observed by a member of management of smell strongly of marijuana. He was also observed to have glassy eyes. The employee was informed that he would need to submit to a drug test before commencing his route. The employee agreed, but stated that he wanted a hop steward present. Neither shop steward was present and neither could be required to come to work to attend the drug test. The employee was terminated for refusing to submit to the test based upon the employer’s policy to treat a refusal to take a drug test as a positive test result. The NLRB found that the physical presence of a union representative was reasonably necessary, as the representative could have independently observed the employee’s condition and contested the grounds for management’s suspicions. In addition the union representative could have ensured that proper testing protocol was observed. The Board briefly acknowledged that the employer had a legitimate need to conduct the drug and alcohol testing in a timely manner. The Board did state that the employer was not required to postpone the test indefinitely, but it had to afford the employee a reasonable time (not defined by the Board) to obtain union representation. The Board supported this statement by noting that marijuana stays in the system for three months. But, the Board did not acknowledge that the level required for intoxication may dissipate in a much shorter time (less than 24 hours).