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Thursday, August 28, 2014

Proactively Managing OSHA RISK and Effectively Responding to OSHA Citations—Part 2

     A. Introduction
     This is the second installment of a two-part series detailing: (1) strategies and approaches to prevent OSHA citations; and (2) effectively responding to OSHA citations.  In the first article, methods for preventing OSHA citations were described.  In this issue, OSHA citation procedure and methods for effectively responding to an OSHA citation are identified.

     B. Effectively Responding to OSHA Citations

     In the event that an employer receives an OSHA citation, decisive and informed action must be taken immediately.  Upon receipt of a citation, an employer only has 15 working-days to take the following actions:  (i) request and participate in an informal conference; (ii) pay the proposed penalty or settlement amount; or (iii) formally contest the citation.  After the 15 working-day period expires, the citation and proposed penalties become final and the options available to the employer become extremely limited.  

      I. Informal Conference

     In an informal conference, the employer is permitted to meet with a representative from the OSHA area office and present any evidence it believes would support an adjustment to the citation and/or penalty.  The Informal Conference is strongly recommended because OSHA is typically amenable to a reduction in the proposed penalty during the informal conference.  It is critical to note, however, that an informal conference does not toll the 15-working day period to file a notice of formal contest.  It is recommended, therefore, that an employer file a request for informal conference simultaneously with a notice of intent to contest the citations to protect its rights.  In the event that the employer is unable to negotiate an acceptable settlement during the informal conference, the employer will then have an opportunity to proceed to a formal contest.

      II. Formal Contest

     If an employer is unable to reach an acceptable settlement with OSHA during the informal conference, the employer may proceed to formally contest the citations.  As indicated above, the notice of intent to contest the citations must be filed within 15 working-days of receipt of the citation.
The form and content of the notice of intent to contest is simple, and can be found at  Upon receipt of the notice of intent to contest, the OSHA area office will forward the notice to the Occupational Safety and Health Commission (the “Commission”), the adjudicatory body designated to process OSHA contests.

     The Commission will then “docket” the case and it will be assigned to an administrative law judge and the Secretary of Labor solicitor responsible for prosecuting the citation on behalf of OSHA.

     Once the citations have been formally contested, the matter will be assigned to either simplified proceedings or conventional proceedings. Simplified proceedings are appropriate for cases that involve less complex issues and for which more the more formal procedures used in conventional proceedings are deemed unnecessary to assure the parties a fair and complete contest. Cases appropriate for simplified proceedings are those with one or more of the following characteristics:

       • relatively simple issues of law or fact with relatively few citation items;
       • total proposed penalty of not more than $30,000.00;
       • a hearing that is expected to take less than two days; or
       • a small employer whether appearing with or without an attorney.

Cases having willful or repeated violations or that involve a fatality are not appropriate for simplified proceedings. In a simplified proceeding, a complaint and answer is not required, and discovery and motions are discouraged and permitted only when ordered by the judge.  The hearing under simplified proceedings, the Commission-equivalent to a trial, is less formal, and the Federal Rules of Civil Procedure, which govern conventional proceedings, do not apply.  If an employer’s citation meets the criteria above, simplified proceedings may be an efficient and cost-effective way to contest the citation.

Conventional proceedings are more similar to traditional litigation.  There is an answer and a complaint, and discovery is permitted freely.  Hearings are governed by the Federal Rules of Evidence and are more formal than hearings conducted pursuant to simplified proceedings. Each party is given the opportunity to submit a post-hearing brief to the judge with its proposed findings of fact and conclusions of law with reasons why the judge should decide in its favor.

Regardless of whether a contest is referred to simplified proceedings or conventional proceedings, the Commission encourages settlement of cases, and cases can be settled at any time.  Any party can also request that a Settlement Judge be appointed to facilitate a settlement.  A Settlement Judge is similar to a mediator, in that he or she can request statements of the issues, which are similar to mediation summaries, confer privately with each party to address the relative strengths and weakness of their position, and is required to keep all statements made and presented during the course of settlement proceedings confidential.

      III. Whether to Settle During the Informal Conference or Contest the Citations

Generally speaking, it is advisable to settle any OSHA citations during an informal conference.  There are, however, situations where an employer may decide not to accept a settlement.  For example, occasionally the proposed financial penalties in the citation(s) are so high that even the reduced penalty offered in a proposed settlement agreement by OSHA will financially devastate the employer’s business. In a formal contest, the Commission retains discretion to reduce penalties based upon firm size, the good faith of the employer, and the employer’s history of previous violations, even if the citation itself is affirmed by the Commission. An employer may also disagree with OSHA’s classification of the citation.  For example, an OSHA inspector may classify an OSHA violation as “repeat” or “willful” based upon his or her application of the facts to the law.  Repeat and willful citations carry a multitude of unpalatable consequences.  For example, repeated or willful violations can carry a proposed penalty of up to $70,000.00. An employer may choose to contest a relatively minor citation if he or she believes that there is a significant risk of receiving a similar violation in the future.  Similarly, an employer risks higher insurance premiums as a result of multiple OSHA citations.

Ultimately, the decision whether to formally contest a citation is based upon the facts specific to the situation.  However, if an employer decides to contest the citations, there are several different approaches that can be taken in order to pursue the employer’s goal in the most effective manner. 


The Soto Law Group, P.A.
2400 E. Commercial Blvd., Suite 400
Fort Lauderdale, FL  33308
TEL:  954-567-1776
FAX:  954-567-1778

Dale A. Evans Jr. is an associate with the firm whose primary practice areas are construction and business law. Dale represents owners, municipalities, general contractors, subcontractors and material suppliers in all phases of business, construction, and insurance defense litigation, and has experience in lien foreclosure, payment and performance bond claims, construction defects, delay claims, and breaches of contract. In addition, Dale assists clients with contract review and drafting, negotiation, licensing, and OSHA defense.

Managing OSHA RISK and Effectively Responding to OSHA Citations—Part 1

A. Introduction
     Enacted in 1970, the Occupational Safety and Health Act (the “Act”) was created “to assure safe and healthful working conditions for working men and women by authorizing enforcement of the standards developed under the Act.”  The Act also created the Occupational Safety and Health Administration (“OSHA”) to enforce the Act’s safety regulations, and the Occupational Safety and Health Review Commission (“OSHRC”), an independent adjudicatory body designated to preside over formal contests between employers and OSHA.

     While many employers are familiar with OSHA’s authority to inspect construction job sites without prior notice and their ability to issue citations for violations of the Act’s regulations, many employers fail to establish the internal procedures necessary to minimize the financial risk posed by OSHA Citations. This article is the first of two articles on OSHA Citations.  This article identifies certain internal procedures that an employer should establish to limit the probability of future citations while simultaneously reducing the severity of OSHA Citations in the event that a Citation is assessed.  Part 2 of this series will describe OSHA’s processes and procedures in the unfortunate circumstance that an employer receives a citation.

B. Proactively Managing OSHA Risk

     To err is human, and the construction industry is certainly not exempt from this maxim.  No matter how extensive an employer’s safety training and monitoring program, an employer can never completely eliminate the risk that an employee will violate OSHA safety regulations while on the jobsite. Fortunately, employers can establish proactive internal safety and recordkeeping procedures that will simultaneously reduce the risk of such violations in the first place, which is of paramount importance, while also reducing the employer’s legal exposure to OSHA in the event that a citation is assessed.  A frequently cited but difficult to establish defense to an OSHA citation is known as “unpreventable employee misconduct.”  The defense of unpreventable employee misconduct is premised upon the idea that the employer could have not have discovered the violative condition with the exercise of reasonable diligence and requires proof of the following four factors:

     1. the employer has established work rules designed to prevent violations such as those alleged in the citation;
     2. the employer has adequately communicated those rules to its employees;
     3. the employer has taken steps to discover such violations; and
     4. the employer has effectively enforced the rules when violations are discovered.

     If an employer follows these guidelines and retains the requisite documentation, the defense of unpreventable employee misconduct can be an effective tool to prevent a citation in the first place or reduce the severity of the fine if an employee is found to have violated an OSHA regulation outside of the presence of a supervisor or officer of the employer.

              I.    Established Work Rules Designed to Prevent Violations
This requirement is fairly straightforward.  Employers should ensure that it has a written safety rules and procedures manual that is specific to the particular industry in which it operates.  Employers should ensure that the manual is kept up-to-date and accurate.  The specific content of an employer’s safety manual is beyond the scope of this article, but there are many resources available to assist in the creation of safety manual for purposes of OSHA compliance—offered both by OSHA itself as well as private entities. Employers should make their written safety rules and procedures available in the languages spoken and understood by their employees.
             II.    Adequate Communication
An employer must utilize multiple avenues of communication to ensure that it has adequately communicated its safety rules to its employees in the eyes of OSHA. The following examples are not intended to serve as an exhaustive list but are oft-cited examples of the elements of adequate communication.
As an initial matter, an employer should immediately provide each newly hired employee with a copy of the safety rules and procedures manual.  An employer should review the safety manual with each employee, instruct the employee on the procedures required therein, and provide the employee an opportunity to demonstrate their proficiency, as well as ask any questions and request clarification of any rules they do not understand.  It is advisable to require employees to sign an acknowledgement that the employee is aware of and understands the employer’s safety and rules manual and agrees to abide by it.
An employer should also communicate its safety rules and methods via other means on a regular and consistent basis. For example, an employer should conduct frequent “toolbox” safety meetings at the jobsite addressing the safety topics germane to the current job.  Less frequent, but more in depth training sessions, either through in-house instruction or a third-party safety management company are also recommended.  A meticulous written record should be maintained of such meetings, including, but not limited to the name of the instructor, the topic of discussion, the date, and signatures of all employees in attendance.  Also recommended are OSHA’s 10-hour and 30-hour safety training courses.  The 10-hour course is recommended for entry-level workers while the 30-hour course is more appropriate for supervisors or workers with safety responsibility.
            III.    Active Discovery of Violations
Whether an employer’s supervision is adequate to discover violations of OSHA regulations is an inherently fact-based determination.  It has been found, however, that “insisting that each employee be under continual supervisor surveillance is a patently unworkable burden on employers.”  Most importantly, the employer should be able to produce documentation supporting its decision to provide its designated level of supervision, as well as evidence that the appropriate level of supervision was indeed carried out.  Ultimately, the employer’s duty is to take reasonably diligent measures to inspect its worksite and discover hazardous conditions; so long as an employer does so, it is not in violation simply because it has not detected or become aware of every instance or hazard.  It is also recommended that the employer’s safety manager and safety director (which for smaller companies might be its president or owner) make regular, unannounced visits to the worksites.  The visits should be supported by written reports of the conditions encountered and any corrective action taken.
          IV.      Effective Enforcement of the Rules 

In order to utilize the unpreventable employee misconduct defense, it is critical that an employer enforce its rules when violations are discovered.  A satisfactory disciplinary program requires progressive discipline, for example, beginning with an oral reprimand and progressing through a written reprimand, docking pay, and termination.  While flexibility based on the severity of the violation and the attitude of the employee being corrected is permissible, the progression should be generally followed.  It is imperative that an employer maintain a record of all written warnings and reprimands.  The disciplinary program should be reduced to writing in both the safety rules and procedures manual and on the written warning/reprimand itself. 

            V.   Conclusion

The foregoing discussion of the defense of unpreventable misconduct is not a failsafe method to prevent OSHA citations and is not intended to be a conclusive “how-to” list to establish the defense.  If, however, the proactive employer implements these policies and procedures, the chances of receiving a citation for an OSHA violation in the first place will be reduced, and in the event that an OSHA citation is assessed, the employer will be in a much better position to negotiate a reduced penalty and/or successfully contest the citation on the merits. 


The Soto Law Group, P.A.
2400 E. Commercial Blvd., Suite 400
Fort Lauderdale, FL  33308
TEL:  954-567-1776
FAX:  954-567-1778

Dale A. Evans Jr. is an associate with the firm whose primary practice areas are construction and business law. Dale represents owners, municipalities, general contractors, subcontractors and material suppliers in all phases of business, construction, and insurance defense litigation, and has experience in lien foreclosure, payment and performance bond claims, construction defects, delay claims, and breaches of contract. In addition, Dale assists clients with contract review and drafting, negotiation, licensing, and OSHA defense.

Thursday, May 15, 2014


     If you or your company have had any exposure to adversarial proceedings you are likely familiar with the terms ordinary course, new value and contemporaneous exchange for new value. Apart from these “better known” defenses to preference claims, the Bankruptcy Code provides for additional defenses which you may not be as familiar.

     These “lesser known” defenses are: the Earmarking, Conduit and Agency defenses. Because they utilize the similar terminology and application, they are easily confused. In fact, often times they are improperly combined into a single defense! Just like the “standard” preference defenses listed above, if any of these defenses apply, they are a complete defense to an otherwise avoidable transfer.

      The Earmarking Defense: In large construction projects developers/owners (in this case the “debtor”) will often seek funding from a third party lender (bank) in order to finance the project. These third party lenders (bank) agree, via lending agreements, to apply funds of the debtor to pay the costs of construction (i.e. contractors and suppliers). Payments made to contractors, subcontractors and suppliers are then exchanged for lien releases. Payment of “funds from the estate” made in exchange for lien release may not fall into the preference trap. These payments simply exchange one secured creditor (bank) for another (supplier/contractor) whose security comes from having lien or bond rights. The effectiveness depends on the lien or bond rights being perfected.

      The Conduit Defense: This defense applies when the debtor transfers money through your company to a third party. The recent case of In Re. Custom Contractors, decided by the 11th Circuit, serves to illustrate the application of this defense. In Custom Contractors the debtor, in order to meet its tax obligations, made certain payments to the IRS. The IRS argued it was a mere conduit and could not be held liable for the payments because the payments made were refunded to the debtor. The funds merely passed through the IRS and were not made in payment of a preexisting debt. The Bankruptcy Court agreed with the IRS. The Court further explained that in “[Order] to meet the mere conduit or control test and avoid liability . . . [it must also be found] that they acted in good faith as an innocent participant in the fraudulent transfer” In Re Custom Contractors, LLC., 2014 U.S. App. Lexis 5501 (11th Cir. 2014).

      The Agency Defense: The Agency Defense is triggered when the debtor transfers money to the Defendant, who in turn transfers those same funds to a third party under an express agreement. The key here is the existence of a prior agreement specifying that the debtor does not transfer any interest in the property. The Defendant is a legal agent of the debtor.

      Defending Adversarial claims by a Trustee or Debtor in Possession requires a complete appreciation of the specific facts, legal principles and jurisdictional nuisances at play. If you are ever faced with defending a preference claim you are urged to contact your legal counsel to discuss what legal theories can be utilized in your defense. If you have any questions please feel free to contact us. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Additionally, the information above is not intended to be legal advice. Please consult with an experienced lawyer if you have a specific issue or dispute.


The Soto Law Group, P.A.
2400 East Commercial Boulevard
Suite 400
Fort Lauderdale, FL  33308
TEL:  954-567-1776
FAX:  954-567-1778  

Monday, February 17, 2014


     In December 2013, the Sixth Circuit Court of Appeals held that a general contractor could be liable under Title VII for a hostile work environment claim brought by a subcontractor’s employee under a “joint employer theory.” EEOC v. Skanska USA Building, Inc., No. 12-5967 (6th Cir. Dec 10, 2013). In Skanska, the subcontractor’s employees complained directly to the general contractor about the hostile work environment, alleging that they were the subject of racial slurs and epithets including “the n-word” and were subjected to graphic depictions such as a picture of a Caucasian person shooting an African-American posted in the port-a-potty. The alleged offenders were employees of the general contractor, other subcontractors, and third parties. Despite having knowledge of the complaints, the general contractor took no action to remedy the problem, instead directing the subcontractor to fire the complaining employee due to them being a “poor fit.”

     Why was the general contractor liable under a “joint employer theory”? The court found that the general contractor supervised and controlled its subcontractor’s employees’ daily activities, directed their performance, their hours and daily assignments, assigned supervisors, handled complaints, and handled employee disagreements. Further, the court found that the general contractor did not consult the subcontractor’s owners regarding the employees’ complaints. Additionally, the court considered the subcontractor a “nonentity” who did “nothing” with respect to its employees.

     This case is a cautionary tale to not only general contractors but to all employers. It evidences a changing tide in EEOC practice and discrimination jurisprudence, making it likely that the EEOC and other state agencies could extend this theory to borrowing employers, temporary labor companies and others using subcontractors. Therefore, under the joint employer theory, it is possible that an innocent general contractor or borrowing employer could be held responsible for discriminatory conduct and hostile comments from subcontractors or otherwise temporary employees.

    Title VII holds employers responsible for protecting their employees from other employees, customers and third-parties and prohibits employers from discriminating against any individual with respect to compensation, terms, conditions or privileges of employment because of that individual’s race, color, religion, sex or national origin. Other state and federal laws prohibit discrimination based on age, disability, veteran status, and other characteristics.

     In order to protect your business, it is imperative that you implement practices and procedures that prohibit such discriminatory conduct. The following practice pointers will help limit your liability under a joint employer theory:

 ▪          - Ensure that your subcontractors and independent contractors implement, maintain and enforce written 
              EEO policies, including anti-discrimination, anti-harassment and anti-retaliation policies
            - Incorporate such EEO policies by reference into any contract for services.
            - Carefully train all employees, supervisors and managers on how to better prevent, identify and remediate                            such issues.
            - Keep a written record of the complaint, how the employer addressed the complaint and how the                                             issue was resolved.
▪           - Handle complaints in a timely, discreet and confidential manner.
            - Thoroughly investigate any complaints and keep records of the investigation.
    - Take timely, appropriate action based on your findings. 

By: Christina L. Feyen, Esq.