TROUBLESOME CONTRACTORS:

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1 TROUBLESOME CONTRACTORS: THE IMPACT OF BRIDGINGAGREEMENTS ON WORK PLACE SAFETY PRACTICES, CONDUCT POLICES AND LITIGATIONEXPOSURES Laura Alaniz Partner Thompson Coe Mark Clark Partner Thompson Coe

2 Topics Contractor s Have One Set of Safety Rules, Company has Another. BSEE and now OSHA Expand Bridging Agreements Liability Issues In Employment Practices Federal Agencies Push Open the Definition of Joint Employer NLRB, DOL and EEOC Standards Liability Issues for Those Hiring Contractors Crafting the Service Agreement to Protect Against Liability

3 Bridging Agreements

4 Bridging Agreements What are They In the offshore context it is a document intended to align the lease operator's safety and environmental management system (SEMS) with drilling contractor's safe work practices (CSWP). Also making its way into other industrial facilities, refineries, chemical plants and manufacturing facilities where contractors are frequently performing services.

5 Origins in Deep Water Horizon Following Deep Water Horizon BSEE Implemented its Final Rule for Safety and Environmental on April 4, The rule required companies offshore to develop and implement a comprehensive SEMS program for every facility. New Federal Regulations passed with specifics of the SEMS.

6 Regulations Require a Document Setting Forth an Agreement on Safety When selecting a contractor, you must obtain and evaluate information regarding the contractor's safety record and environmental performance. You must ensure that contractors have their own written safe work practices. Contractors may adopt appropriate sections of your SEMS program. You and your contractor must document an agreement on appropriate contractor safety and environmental policies and practices before the contractor begins work at your facilities. 30 C.F.R

7 The Bridging Agreement I acknowledge receipt of this Contractor/Vendor Bridging Document. I further acknowledge that I have read the document and agree to abide by the safety rules, practices, codes, standards, and regulatory requirements that apply to the projects, and will disseminate appropriate information to my employees, contractors, and subcontractors.

8 Complex Bridging Documents Chart of duties Whose Safety Process will Apply to What Tasks. Clear chain of command. All documents shared and used to train. API Well Construction Interface Document Guidelines

9 October 2016 OSHA Releases First Updated Recommended Practices Since 1989 Recommended Practices for Safety and Health Programs

10 New OSHA Guidelines Issued October 2016 The host employer communicates with contractors and staffing agencies to determine which among them will implement and maintain the various parts of the safety and health program, to ensure protection of all onsite workers before work begins. These determinations can be included in contract documents that define the relationships between the parties.

11 New OSHA Guidelines Continued Include in contracts and bid documents any safety-related specifications and qualifications and ensure that contractors and staffing agencies selected for the work meet those requirements.

12 New OSHA Guidelines Issued October 2016 Host employers coordinate with contractors and staffing agencies to: Harmonize their safety and health policies and procedures to resolve important differences, so that all workers at the site have the same protection and receive consistent safety information.

13 Liability Issues in a Changing Landscape Independent Contractor Defense Chapter 95 Defense In Texas Generally no duty to ensure safety Federal Regulations increase standard of care but do not create a duty Beware of recent case law holding that inadequate SEMS can create a hazard which imposes a duty on the SEMS creator

14 Independent Contractor Defense The well-established, long-standing, common-law rule, as recited in section 409 of the Restatement (Second) of Torts, is that the employer of an independent contractor is not liable for physical harm caused to another by an act or omission of the contractor or his servants, and that is the rule in Texas and Louisiana.

15 Chapter 95 Defense In Texas Contractor on Property to engage in construction, make renovations, modifications or repairs. No Premises Liability for Property Owner Unless Owner controls some part of the work and has actual knowledge of hazard and fails to warn.

16 Generally No Duty to Ensure Safety of Contractor A general contractor must use reasonable care to make and keep the premises safe; however, a general contractor has no duty to ensure an independent contractor safely performs its work. Exception for a general contractor that assumes control over the contractors work. Redinger v. Living, Inc., 689 S.W.2d 415, 418 (Tex. 1985

17 Federal Regulations Do Not Create Duty The Fifth Circuit has held that federal drilling regulations did not give rise to liability that would otherwise be barred by the independent contractor doctrine. Romero v. Mobil Exploration, 939 F.2d 307 (5 th Cir. 1997). Tajonera v. Black Elk, 2015 WL (E.D. LA. Nov. 5, 2015).

18 Beware of Creating Hazard Triggering Duty with Improper SEMS Where Plaintiffs argued and presented evidence that offshore platform owner approved unsafe work plan the court found that unsafe work plan could have created a hazard and therefore created independent negligence on part of platform owner. Tajonera v. Black Elk, 2015 WL (E.D. LA. Nov. 5, 2015

19 Tips For Compliance and Crafting Lack of bridging agreement may impact standard of care. More Than a Statement, Use a Safety Integration Document Craft in Conjunction with HSE Professional Matter of Time Before Offshore Regs Move to Broad Spectrum of Industries

20 Independent Contractor v. Joint Employer The Latest from NLRB, DOL, and EEOC

21 NLRB and Browning-Farris

22 Joint Employer Standard before Browning-Farris The Board examined whether: Two separate entities share or codetermine the essential terms and conditions of employment; and The control over those employment matters is direct and immediate.

23 Browning-Ferris Indus. of California, Inc., 362 NLRB No. 186 (N.L.R.B. Aug. 27, 2015) Joint Employer determination under Browning-Ferris: Whether the separate entities are employers under common law; and Whether they share or codetermine the essential terms and conditions of employment. Control exercised indirectly - such as through an intermediary - may now establish joint-employer status. Control now may be direct, indirect or even a reserved right to control.

24 Rationale for Browning-Ferris Joint-employment arrangements are increasing. It is the Board's responsibility to adapt the Act to the changing patterns of industrial life. A new standard was needed to address these changes.

25 DOL and Joint Employment under FLSA

26 Department of Labor In January 2016, DOL's Wage and Hour Division (WHD) issued: Joint Employment Under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act Administrator s Interpretation No

27 Reason for Interpretation WHD regularly encounters situations where more than one business is involved in the work being performed. Businesses are varying organizational and staffing models. Such as: Independent contractors, Staffing agencies, and Labor providers.

28 Vertical Joint Employment Joint employment may exist when an employee of one employer is also, with regard to the work performed for the intermediary employer, economically dependent on another employer. See 29 C.F.R (h)(5). Referred to as vertical joint employment.

29 Elements of Vertical Joint Employment Is the employee of the intermediary employer also employed by another employer (potential joint employer)? Has the other employer contracted with the intermediary employer to provide it with labor or other functions? Does the employee s work also benefit the other employer?

30 Vertical Joint Employment Considerations Economic realities analysis is employed. BUT the focus is not only on control. Hiring and firing is not determinative. Whether the employer directly determines employee hours or pays the employee is not a deciding factor.

31 Determination under FLSA There is no requirement that joint employers: continuously monitor workers, have near absolute control over the workers, or be constantly looking over the workers' shoulder. Control may be restricted or exercised only occasionally, but the employer may still be considered a joint employer under FLSA.

32 Guidance Example Example: A laborer is employed by ABC Drywall Company. 1. ABC Drywall is an independent subcontractor on the construction project. ABC Drywall was engaged by the General Contractor to provide drywall labor for the project. ABC Drywall hired and pays the laborer.

33 Guidance Example (Con t) The General Contractor provides: the training for the project, the necessary equipment and materials, and workers compensation insurance. The General Contractor is responsible for the health and safety of the laborer Is responsible for all of the workers on the project.

34 Guidance Example (Con t) The General Contractor reserves the right to remove the laborer from the project, controls the laborer s schedule, and provides assignments on site. Both ABC Drywall and the General Contractor supervise the laborer. The laborer has been continuously working on the General Contractor s construction projects.

35 Guidance Example (Con t) Is the General Contractor an joint employer? YES

36 DOL s New Focus The possibility of joint employment should be regularly considered in FLSA cases, particularly where: the employee works for two employers who are associated or related in some way with respect to the employee; or the employee s employer is an intermediary or otherwise provides labor to another employer.

37 EEOC

38 EEOC s Definition Joint employer defined: Two or more employers that are unrelated or that are not sufficiently related to qualify as an integrated enterprise, But that each exercise sufficient control of an individual to qualify as his/her employer. EEOC Compliance Manual

39 Determining Control - Factors Some of those factors include: Whether the contractor has right to control when, where, and how the worker performs the job; Whether the contractor furnishes the tools, materials, and equipment; Whether the contractor sets the hours of work and the duration of the job;

40 Determining Control Factors (con t) Whether the contractor has the right to assign additional projects to the worker; Whether the work is performed on the premises of the contractor; Whether there is a continuing relationship between the worker and contractor; Whether the work does not require a high level of skill or expertise;

41 Determining Control Factors (con t) Whether the worker is paid by the hour, week, or month rather than for the agreed cost of performing a particular job; Whether the worker has a role in hiring; and Whether the work performed by the worker is part of the regular business of contractor. No one factor is decisive, nor do a majority of the factors have to be satisfied.

42 Liability for Acts of Discrimination of Worker Who Is Not Your Employee Under EEOC standards, an entity may be deemed a joint employer--but is only liable for the underlying acts of discrimination: if it knew or should have known about the acts of discrimination; and the actions taken by the joint employer in response to the acts of discrimination.

43 Proponent of a Broad Joint Employer Standard The EEOC is a proponent of a broad joint employer standard and has convinced some courts to adopt its standard. EEOC v. Skanska USA Building, Inc., 550 F. App x. 253 (6th Cir. 2013). EEOC has not been successful in all jurisdictions. EEOC v. Valero Refining-Texas, L.P., 2013 U.S. Dist. LEXIS (S.D. Tex. March 13, 2013).

44 Proponent of a Broad Joint Employer Standard The EEOC filed an amicus brief in Browning-Ferris stressing that the Board s joint employer standard will influence judicial interpretation of Title VII.

45 Best Practices Make sure the agreement with a contractor supports that you are not joint employer. Example language: 1. ABC s employees are solely employed by ABC; the parties do not intend to create a joint employer relationship. 2. ABC alone retains the sole right to...and then include a list of employment decisions...such as hire its employees, determine their wages and benefits, assign, schedule, train, discipline, and terminate its employees. 3. General contractor shall not and does not have the right to...and include all of the rights ABC alone has in this list.

46 Best Practices (con t) Minimize control if you can. Include joint employer claims in your indemnity clauses. Require the contractor to indemnify you for any costs incurred in opposing a joint employer claim. Add a cooperation clause. 1. Example: Contractor will cooperate with you in presenting your defense to the joint employer claim by making available management representatives to prepare for hearings and to testify at hearings, and to provide documents reasonably requested by you relating to this issue. Consider whether the contractor should reimburse you for the cost of collective bargaining?

47 Best Practices (con t) Determine whether the contractor has its own employment polices. Make sure your anti-discrimination policies and complaint procedures contemplate consideration and investigation of all complaints of discrimination. Include investigation of complaints made by a direct employee and complaints by an employee of a contractor.

48 Final Thoughts Troublesome Contractors and New Regulations Mean Possibility of Liability Against Companies that hire Contractors. Joint Employer Expansion Could Create Broader Liability for the Violations of Contractors.

49 Thank You Laura Alaniz Mark Clark