OSHA S Multi-Employer and U.S. Department of Labor Joint Employee Doctrines
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1 OSHA S Multi-Employer and U.S. Department of Labor Joint Employee Doctrines June 13, 2016 By: William J. Wahoff, Esq. Nelva J. Smith, Esq. Steptoe & Johnson PLLC
2 The Presenters William J. Wahoff Nelva J. Smith
3 Does My Facility Need to Be Concerned About OSHA? OSHA states that statistics show that a hospital is one of the most hazardous places to work Injury and Illness rates in hospitals remain nearly double the rate for private industry Hospitals have unique challenges that contribute to the risk of injury and illness Hospitals have a wide variety of occupations that face a wide range of hazards Nurses and Nursing Aides are among the occupational groups most at risk of injury, particularly musculoskeletal disorders
4 Does My Facility Need to Be Concerned About OSHA? Is my facility a multi-employer under OSHA s directive? Consider how many different types of employers work in your facility staffing agencies in particular Construction work at facility Gift shops, eating places
5 Top Ten Frequently Cited Standards in Health Care* Hospitals/Medical Centers Failure to train under BBP Failure to implement and maintain exposure plan under BBP Failure to engineer out hazards/ensure handwashing under BBP Poor housekeeping under BBP Failure to use PPE under BBP Failure to keep BBP training records and sharps injury log Failure to implement and maintain hazard communication program Failure to provide MSDS sheets Failure to ensure proper labeling of chemicals *from 2010 to 2011 Physicians Offices and Clinics Failure to implement and maintain exposure plan under BBP Failure to train under BBP Failure to engineer out hazards/ensure handwashing under BBP Poor housekeeping under BBP Failure to implement and maintain hazard communication program Failure to make Hep B vaccination available under BBP Failure to prepare exposure determinations under BBP Failure to use PPE under BBP Failure to provide post exposure Hep B vaccination under BBP Failure to train under hazard communication program
6 Department of Labor Concerns How will the new DOL overtime rules affect my facility? Take a close look at your non-exempt employees in consideration with the new salary threshold Consider joint employment scenarios under the DOL could you be liable for other employer s employees? Nurses: DOL fact sheet states registered nurses who are paid on an hourly basis should receive overtime pay Sometimes a registered nurse registered by the appropriate State examining board generally meet the duties requirement for the learned professional exemption, if paid on a salary basis Licensed practical nurses and other similar health care employees, however, generally do not qualify as exempt, regardless of work experience and training Independent Contractor Concerns Labeled as an independent contractor, but are they really an employee? Medical coders, therapists, etc. Review your relationship with any other employers in your facility are their records compliant with the DOL?
7 DOL NEW OVERTIME RULES Effective December 1, 2016 White-collar exemptions go from $23,660 a year ($455 per week) to $47,476 a year ($913 per week) Highly compensated employee exemption will increase from $100,000 to $134,004 annually In addition, employers will be allowed to use nondiscretionary bonuses and incentive payments (productivity and profitability bonuses and commissions) to satisfy up to 10% of the required salary level, as long as they are paid at least quarterly Contains a catch-up provision for employers to bring employees up to the required salary level for a calendar quarter if their bonuses or commissions for the quarter are lower than expected
8 DOL NEW OVERTIME RULES Effective December 1, 2016 Requires that salary level for white-collar exemptions be increased automatically every three years to match the 40 th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region DOL will publish rates at least 150 days before their effective date First automatic revision will take place on January 1, 2020 Highly compensated employee exemption will also be revised every three years to equal the 90 th percentile of annual earnings of full-time salaried workers nationally
9 DOL NEW OVERTIME RULES Effective December 1, 2016 DOL estimates the changes will affect more than 14% of the American workforce during fiscal year 2017 DOL predicts the changes will cost employers about $1.2 billion a year in transfer of income between employers and employees in the form of higher earnings, as well as about $295 million in regulatory familiarization, adjustment costs, and managerial costs.
10 New OSHA Recordkeeping Rule Effective January 1, 2017 Employers of certain industries are required to electronically submit to OSHA injury and illness data that had been previously kept on the OSHA 300 logs These new requirements will be phased in over a two year period All submissions must be submitted electronically to OSHA, therefore, keeping records in electronic format should be required for ease of submission
11 Exempted Industries Not Required to Keep OSHA Injury and Illness Records Offices of Physicians (NAICS Code 6211) Offices of Dentists (NAICS Code 6212) Offices of Other Health Practitioners (NAICS Code 6213) Outpatient Care Centers (NAICS Code 6214) Medical and Diagnostic Laboratories (NAICS Code 6215) BUT: still required to report any fatality, in-patient hospitalization, amputation or loss of an eye to OSHA Therefore, new recordkeeping rule not required for above-noted industries
12 Note About Exempted Industries (b)(1): The partial industry classification exemption applies to individual business establishments. If a company has several business establishments engaged in different classes of business activities, some establishments may be required to keep records, while others may not. Hospital owns several separate doctor s offices hospital is required to keep OSHA logs; however, physicians offices do not
13 New OSHA Recordkeeping Rule Effective January 1, 2017 First phase: Establishments with 250 or more employees in industries covered by the recordkeeping regulation must submit information from their 2016 Form 300A by July 1, 2017 Same employers will be required to submit information from all 2017 forms (300A, 300, 301) by July 1, 2018 Beginning in 2019, and every year thereafter, the information must be submitted by March 2 nd
14 New OSHA Recordkeeping Rule Effective January 1, 2017 Second phase: Establishments with employees in certain high risk industries must submit information from their 2016 Form 300A by July 1, ectronicsubmission.pdf for high risk industries Same employers will be required to submit information from their A by July 1, 2018 Beginning in 2019 and every year thereafter, the information must be submitted by March 2 nd
15 Health Care Related High Risk Industries According to OSHA The following are required to comply with the new recordkeeping rule in the Second phase ( employees): Other ambulatory health care services (6219) General medical and surgical hospitals (6221) Psychiatric and substance abuse hospitals (6222) Specialty (except psychiatric and substance abuse) hospitals (6223) Nursing care facilities (6231) Residential mental retardation, mental health and substance abuse facilities (6232) Community care facilities for the elderly (6233) Other residential care facilities (6239)
16 New OSHA Recordkeeping Rule Effective January 1, 2017 OSHA wanted employees to feel free to report injuries or illness without fear of retaliation so included these provisions in the rule: Employers must inform employees of their right to report work-related injuries and illnesses free from retaliation may be met by posting the OSHA worker rights poster An employer s procedure for reporting work-related injuries and illnesses must be reasonable and must not deter or discourage employees from reporting An employer may not retaliate against employees for reporting work-related injuries or illnesses
17 OSHA S Multi-Employer Policy
18 OSHA S Directive December 1999 On multi-employer worksites more than one employer may be citable for a hazardous condition that violates an OSHA standard OSHA determines what type of employer you are: Creating Employer Exposing Employer Correcting Employer Controlling Employer
19 Creating Employer An employer that caused a hazardous condition that violates an OSHA standard A citation will be issued even if the only employees exposed to that hazardous condition are those of other employers at the site
20 Exposing Employer An employer whose own employees are exposed to the hazard If the violation was created by another employer, the exposing employer is liable if: Knew of the hazardous condition or failed to exercise reasonable diligence to discover the condition Failed to take steps consistent with its authority to protect its employees if it has authority to correct the hazard it must do so If the exposing employer lacks authority, it is still liable if it fails to do each of the following: Ask the creating and/or controlling employer to correct the hazard Inform its employees of the hazard Take reasonable alternative protective measures In extreme situations (imminent danger situations), the exposing employer can be liable for failing to remove its employees from the job to avoid the hazard
21 Correcting Employer An employer engaged in a common undertaking, on the same worksite, as the exposing employer and is responsible for correcting a hazard Typical where an employer is given the responsibility of installing and/or maintaining particular safety/health equipment or devices The correcting employer must exercise reasonable care in preventing and discovering violations and meet its obligations of correcting the hazard
22 Controlling Employer An employer who has general supervisory authority over the worksite, including power to correct safety and health violations itself or require others to correct them Control can be established by contract or, in the absence of explicit contractual provisions, by the exercise of control in practice Must exercise reasonable care to prevent and detect violations on the site However, the controlling employer is not normally required to inspect for hazards as frequently or to have the same level of knowledge of the applicable standards or of trade expertise as the employer it has hired
23 Controlling Employer Reasonable Care Factors Relating to Reasonable Care Standard as to how frequently and closely the controlling employer must inspect: Scale of the project The nature and pace of the work, including the frequency with which the number or types of hazards change as the work progresses How much the controlling employer knows about the safety history and safety practices of the employer it controls and about that employer s level of expertise More frequent inspections are required if the controlling employer knows the other employer has a history of non-compliance or at the beginning of the project and the controlling employer has never worked with this employer before Less frequent inspections may be appropriate if the controlling employer sees strong indications that the other employer has implemented effective safety and health efforts Consistently high level of compliance Effective, graduated system of enforcement for non-compliance with safety and health requirements coupled with regular jobsite safety meetings and safety training
24 Controlling Employer Reasonable Care Evaluating Reasonable Care: Did the controlling employer conduct periodic inspections of appropriate frequency? Did the controlling employer implement an effective system for promptly correcting hazards? Did the controlling employer enforce the other employer s compliance with safety and health requirements with an effective, graduated system of enforcement and follow-up inspections?
25 Types of Controlling Employers Control established by contract a specific contract right to require another employer adhere to safety and health requirements and to correct violations the controlling employer discovers Control established by a combination of other contract rights combination of rights give it broad responsibility at the site involving almost all aspects of the job so broad enough will encompass safety Authority to resolve disputes between subcontractors, set schedules and determine construction sequencing are significant as they will affect safety Architects and Engineers only if the breadth of their involvement in a project is sufficient to bring them within the parameters described previously Control without explicit contractual authority if in actual practice, it exercises broad control over subcontractors at the site
26 Multiple Roles May be an exposing employer in combination with other roles May be a correcting employer if they are authorized to correct the hazard
27 OSHA Standards with Requirements for Multiple Employers Hazard Communication Lockout/Tagout Permit-required Confined Spaces Process Safety Management
28 JOINT EMPLOYMENT AND OSHA
29 OSHA and Joint Employment Host employers need to treat temporary workers as they treat existing employees. Temporary staffing agencies and host employers share control over the employee, and are therefore jointly responsible for temp employee s safety and health. It is essential that both employers comply with all relevant OSHA requirements. David Michaels, Ph.D. Assistant Secretary for OSHA
30 OSHA Recommended Practices to Staffing Agencies and Host Employers Evaluate the Host Employer s Worksite Both employers should jointly review the worksite in order to identify and eliminate potential safety and health hazards and identify necessary training and protections for each worker Train Agency Staff to Recognize Safety and Health Hazards Teach agency representatives about basic safety principles and hazards commonly faced Ensure the Employer Meets or Exceeds the Other Employer s Standards Assign Occupational Safety & Health Responsibilities and Define the Scope of Work in the Contract Contract should clearly state which employer is responsible for specific safety and health duties, i.e. PPE state what equipment will be needed and who will supply it Inform the worker
31 OSHA Recommended Practices to Staffing Agencies and Host Employers Injury and Illness Tracking Both employers should track and, where possible, investigate the cause of injuries OSHA standards require the log be kept by the employer who is providing dayto-day supervision of the worker, i.e. the host employer Conduct Safety and Health Training and New Project Orientation Shared staffing agencies provide general safety and health training while host employers provide specific training tailored to particular hazards at their workplaces Each should provide (separately or jointly) safety and health orientations to all workers either for a new project or new to a project Host employers should provide temporary workers with safety training that is identical or equivalent to that provided to the host employers own employees performing the same or similar work First Aid, Medical Treatment, and Emergencies Procedures in place for both reporting and obtaining treatment for injuries and illnesses
32 OSHA Recommended Practices to Staffing Agencies and Host Employers Injury and Illness Prevention Program Recommended to have program to reduce the number and severity of workplace injuries and ensure that their temporary workers understand it and participate in it Employers are required to have hazard-specific programs, i.e. bloodborne pathogens, hearing conservation, hazard communication, respiratory protection, and lockout/tagout Maintain Contact with Workers Staffing agency should establish a method to keep in contact with temporary workers Has a duty to verify that the host has fulfilled its responsibilities for a safe workplace
33 OSHA and Joint Employer Per OSHA: The key is communication between the agency and the host to ensure that the necessary protections are provided Staffing agencies have a duty to inquire into the conditions of their workers assigned workplaces. They must ensure that they are sending workers to a safe workplace. Ignorance of hazards is not an excuse Staffing agencies need not become experts on specific workplace hazards, but they should determine what conditions exist at their client (host) agencies, what hazards may be encountered, and how best to ensure protection for the temporary workers The staffing agency has the duty to inquire and verify that the host has fulfilled its responsibilities for a safe workplace Host employers must treat temporary workers like any other workers in terms of training and safety and health protections
34 Temporary Worker Initiative Bulletins Issued by OSHA Bulletin No. 1 Injury and Illness Recordkeeping Requirements Bulletin No. 2 Personal Protective Equipment Bulletin No. 3 Whistleblower Protection Rights Bulletin No. 4 Safety and Health Training Bulletin No. 5 Hazard Communication
35 JOINT EMPLOYMENT AND THE DEPARTMENT OF LABOR
36 Administrator s Interpretation No When two or more employers jointly employ an employee, the employee s hours worked for all of the joint employers during the workweek are aggregated and considered as one employment, including for the purposes of calculating whether overtime pay is due Further, all joint employers are jointly and severally liable for compliance with Fair Labor Standards Act
37 Administrator s Interpretation No Horizontal Joint Employment An employee has employment relationships with two or more employers and the employers are sufficiently associated or related with respect to the employee such that they jointly employ the employee Home health care providers that share staff and have common management Employee often will perform separate work and work separate hours for each employer
38 Administrator s Interpretation No Horizontal Joint Employment Example: Brenda, a registered nurse, works at Nursing Home A for 25 hours in one week and Nursing Home B for 25 hours during that same week. If A and B are joint employers, Brenda s hours for the week are added together, and the employers are jointly and severally liable for paying Brenda for 40 hours at her regular rate and for 10 hours at the overtime rate. Brenda should receive 10 hours of overtime compensation in total (not 10 hours from each employer).
39 Administrator s Interpretation No Horizontal Joint Employment Factors to consider: Who owns the potential joint employers Do the potential joint employers have any overlapping officers, directors, executives, or managers Do the potential joint employers share control over operations Are the potential joint employers operations intermingled Does one potential joint employer supervise the work of the other Do the potential joint employers share supervisory authority for the employee Do the potential joint employers treat the employees as a pool of employees available to both of them Do the potential joint employers share clients or customers Are there any agreements between the potential joint employers
40 Administrator s Interpretation No Vertical Joint Employment An employee has an employment relationship with one employer (i.e. staffing agency, subcontractor, labor provider) and the economic realities show that he/she is economically dependent on, and thus employed by, another entity involved in the work Janitorial staff at hospital employed by staffing agency, but the hospital handles the payroll, set hours and schedule, hospital involved in hiring and supervising employee, employee works on hospital premises, employee has ongoing or permanent relationship with hospital, and the employee s work is integral to the hospital s business
41 Administrator s Interpretation No Vertical Joint Employment The factors below are used because they are indicators of economic dependence and should be viewed qualitatively to assess the evidence of economic dependence Directly, controlling or supervising the work performed beyond a reasonable degree of contract performance oversight can be indirect Controlling employment conditions can exert indirectly Permanency and duration of relationship
42 Administrator s Interpretation No Vertical Joint Employment Factors continued: Repetitive and Rote Nature of Work relatively unskilled and/or requires little or no training shows dependency Integral to business Work performed on premises Performing administrative functions commonly performed by employers handling payroll, providing WC insurance, housing, transportation, etc.
43 Administrator s Interpretation No Definitions Employee: any individual employed by an employer Employer: any person acting directly or indirectly in the interest of an employer in relation to an employee Employ: includes to suffer or permit to work
44 DirecTV May 2015 Wage and Hour Investigation between DirecTV and Washington employer, Lantern Light Corp. dba Advanced Information Systems Found violations of FLSA minimum wage, overtime and recordkeeping provisions with cable installers DirecTV claimed to not be the installers employer and therefore not responsible for the violations Lawsuit filed by DOL alleged DirecTV fissured the relationship to avoid liability However, facts showed the installers worked only on DirecTV installations, all conditions of employment controlled by DirecTV, drove DirecTV vans, and wore DirecTV clothing Court ruled DirecTV was a joint employer and thus liable for the violations DirecTV ordered to pay $395,000 in back wages and damages to 147 employees
45 ICS, New Century Integrity Corp. and Teddy July 2015 Direct mail processer ICS utilized two staffing agencies in PA to supply its labor Agency failed to pay overtime or failed to pay properly for overtime Ordered to pay 160 workers $1.45 million in back wages and damages DOL Regional Solicitor: Companies that use temporary agencies have a responsibility and duty to pay legally required wages. ICS violated the law when it failed to pay its workers the wages they earned. The company cheated its employees and sought an unfair business advantage over competitors that abide by the law.
46 J&J Snack Foods October 2015 Wage and Hour investigation found that temporary production line workers at a NJ plant were not properly paid overtime Staffing firm that employed workers paid the workers straight time for overtime hours In response, J&J agreed to pay $1.2 million in back wages and liquidated damages to those workers In another investigation at the same time in PA, another staffing agency failed to pay workers at least the federal minimum wage and overtime In that case, J&J agreed to pay $920,000 in back wage and liquidated damages It was determined that J&J jointly employed those staffing agency workers based on the economic realities In total, J&J Snack Foods had to pay more than $2.1 million in back wages and liquidated damages to 677 workers
47 J&J Snack Foods Quotes from Department of Labor Following are quotes from the DOL after this investigation and result was released: Dr. Weil: When a joint-employment relationship exists, we will hold those companies accountable when wage violations occur and workers are cheated. Dr. Weil: As profit margins get squeezed along the labor supply chain, there is a greater likelihood of wage violations. Mark Watson: Companies may find temporary staffing services useful in addressing their staffing needs, but their use should not come at the expense of fair and legal wages for temporary workers. Those who contract with outside companies for temporary help have an obligation to ensure these workers are paid in compliance with the law.
48 Examples of Multi-Employer/ Joint Employer in Health Care Setting Janitorial Staff Restaurants Cafeteria Gift Shops Construction Work Valet Parking Parking Garages
49 Due Diligence Questions To Your Staffing Agency Has it conducted a wage and hour audit? What indemnification would it provide in the event of a joint employer lawsuit? Does it have Employment Practices Liability Insurance? What happens if both companies are sued-are they both on their own or is there joint and several liability?
50 They Are an Independent Contractor Let s Examine that Relationship Administrator s Interpretation DOL states that it will reject the parties understanding of their relationship, as well as whether they have an agreement regarding the nature of their relationship DOL emphasizes the extent to which the services at issue integrated into the business of the entity receiving them and de-emphasizing whether the business has control over the service provider
51 Administrator s Interpretation Key Points made by Wage & Hour Division Regarding Factors for IC vs. EE Integral to Business Described as compelling and appears to have heightened importance in analysis Work can be found integral even if the work is just one component of the business and it is performed by hundreds or thousands of other workers Will be important to the growing on-demand business model Potential for Profit/Loss Explicitly rejects the theory that a worker s ability to work fewer or more hours at their own discretion equates an opportunity for profit or loss A worker truly in business for himself faces the possibility of a loss appears to be a requirement under this test
52 Administrator s Interpretation Key Points made by Wage & Hour Division Regarding Factors for IC vs. EE Relative Investments The worker s investment must be significant in nature and magnitude relevant to employer s investment Adds a quantitative analysis to the equation, but fails to provide an acceptable ratio, WHD has previously dismissed investments of 35K to 40K as inconsequential Skill/Initiative Requirement Emphasizes worker s business skill, judgment, and initiative and not his technical skills Seems to dismiss any consideration of worker s technical ability and focus solely on worker s business acumen
53 Administrator s Interpretation Key Points made by Wage & Hour Division Regarding Factors for IC vs. EE Permanency of Relationship The key is whether the lack of permanence is due to the operational characteristics intrinsic to the industry Staffing agency workers have been viewed as employees Degree of Control Specifically de-emphasized the importance of this factor and says should not play an over-sized role A company s exercise of control due to the nature of their business, regulatory requirements, or their desire to maintain high customer satisfaction are not permissible reasons to exert control over independent contractors and still indicate an employee relationship The fact that workers control their hours is largely insufficient where such freedom is typical in the worker s specific industry
54 QUESTIONS? QUESTIONS?
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