BERTRAND GOLDBERG ASSOCIATES
OSHRC Docket No. 1165
Occupational Safety and Health Review Commission
August 12, 1976
[*1]
Before BARNAKO, Chairman; MORAN and CLEARY, Commissioners.
COUNSEL:
Francis V. LaRuffa, Regional Solicitor, U.S. Department of Labor
John S. Adler and William B. Goodstein, for the employer
OPINIONBY: CLEARY
OPINION:
DECISION
CLEARY, Commissioner:
On February 19, 1974, Judge Jerome C. Ditore rendered a decision in this case n1 vacating the Secretary of Labor's (complainant) citations and proposed penalties for three serious violations of the Act n2 as well as complainant's citation for five "nonserious" violations. The Judge's action is founded on his conclusion that Bertrand Goldberg Associates (respondent) was "not in that class of employers subject to the federal construction safety and health standards."
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n1 This case was originally consolidated for purposes of the hearing with Grossman Steel & Aluminum Corp., Contractors Layout Company Inc., and Julius Nasso Concrete Corp., Nos. 1127, 1135 and 1190, 7 OSAHRC 355, BNA 1 OSHC 3337, CCH OSHD para. 17,342 (1974). It has been severed for review.
n2 The Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq.
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On March 21, 1974, former Commissioner James F. Van Namee, pursuant to section 12(j) n3 of the Act, ordered review of the Judge's decision on the following issues:
1. Whether the trial Judge committed reversible error in concluding that the standards contained in 29 CFR Part 1926 [construction safety and health standards] were not applicable to the Respondent under the circumstances of this case.
2. Assuming an affirmative answer to the aforesaid question, does the evidence of record establish a violation of 29 CFR § 1926.500(e)(1) and § 1926.401(j)(1).
Both parties have filed briefs on review. Having considered the entire record of the case, we reverse the Judge's disposition to the extent that it is inconsistent with the following.
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n3 29 U.S.C. § 661(i).
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The facts
Respondent was employed by the State of New York as architect and manager of a construction project on the campus of the State University in Stony Brook, Long Island. Under its contract with [*3] the State, respondent was responsible for the development and design of the project, the preparation of documents, the administration of contracts held by contractors hired to build the project, as well as the inspection of the worksite to insure that the plans were properly executed and specifications met. In order to meet its responsibilities, respondent hired inspectors and other "field employees". While these persons were actually hired by respondent and placed on respondent's payroll, the State had a "say" on each employment determination. In addition, the State completely reimbursed respondent for the salaries of these employees.
In its contracts with certain of the builders, the State specifically assigned safety responsibilities. n4 As manager of the project, however, it was respondent's duty to see that the builders complied with the terms of their contracts, which included matters of safety. In executing this task, respondent's inspectors continually surveyed the worksite. Should an inspector have come upon a condition that in some manner was noncomplying, i.e., failure to meet project specifications, a safety hazard, etc., he had the authority to stop the work [*4] if, in his opinion, the circumstances warranted such action.
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n4 Note that each employer's statutory duty under the Act cannot be delegated to others by contractual arrangements. R.H. Bishop Co., No. 637, 8 OSAHRC 930, BNA 1 OSHC 1767, CCH OSHD para. 17,930 (1974); Robert E. Lee Plumbers, Inc., No. 2431, 17 OSAHRC 639, BNA 3 OSHC 1150, CCH OSHD para. 19,594 (Cleary, Commissioner, concurring, 1975).
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On June 1, 5, and 6, 1972, the Secretary's representative conducted an inspection of the Stony Brook worksite. While touring the project, the compliance officer observed an employee of respondent on a stairway at the T-2 level of the tower. The stairway was completely unguarded contrary to the requirements of the standard at 29 CFR § 1926.500(e)(1) n5 and light bulbs in the vicinity of the stairway were not equipped with guards as prescribed by the standard at 29 CFR § 1926.401(j)(1). n6 These observations by the compliance officer resulted in, among other things, the two items conditionally placed at issue by [*5] former Commissioner Van Namee's order for review.
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n5 The standard reads as follows:
§ 1926.500 Guardrails, handrails, and covers
* * *
(e) Stairway railings and guards. (1) Every flight of stairs having four or more risers shall be equipped with standard railings or standard handrails as specified below, the width of the stair to be measured clear of all obstructions except handrails.
n6 The standard reads as follows:
§ 1926.401 Grounding and bonding
* * *
(j) Temporary lighting
(1) Temporary lights shall be equipped with guards to prevent accidental contact with the bulb, except that guards are not required when the construction of the reflector is such that the bulb is deeply recessed.
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Is respondent an employer under section 3(5) of the Act?
The Act, at section 3(5), n7 defines the term "employer" as "a person engaged in a business affecting commerce who has employees, but does not include the United States or any State or political subdivision of a State." While admitting that it [*6] has employees and affects commerce, respondent contends that, as representative of the State University Construction Fund, it is an instrumentality of the State of New York and, as such, exempt from the provisions of the act.
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n7 29 U.S.C. § 652(5).
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Administrative Law Judge Robert P. Weil, in Weinap Construction Corp., No. 3378, BNA 3 OSHC 1765, CCH OSHD para. 20,072 (Administrative Law Judge, 1975), encountered a situation quite similar to that now before us. In that case, respondent Weinap was engaged as "sponsor" of a "turn-key" project for the New York City Housing Authority. It averred that as "sponsor" it was operating as a subdivision of the State and thus exempt from the duties of an employer under the Act.
Judge Weil found that Weinap was not an instrumentality of the State, but an independent entity that dealt with the State at an "arm's length." The Judge noted that Weinap entered into a contract with the City of New York to "sponsor" the project and any profit or loss resulting from the venture belonged [*7] to Weinap alone. We agree with the Judge's well-reasoned opinion.
Respondent Goldberg is a separate and distinct entity. It was not created by nor is it an instrumentality of the state of New York. It entered into an agreement with the State after "arm's length" dealings and any profit or loss resulting from the agreement is Goldberg's alone. Therefore, we find respondent to be an employer within the definition of that term found at section 3(5) of the Act.
Is respondent subject to the construction safety and health standards at 29 CFR Part 1926?
This issue is grounded on two arguments by respondent. First, Goldberg contends that the standards at 29 CFR Part 1926 are not applicable to the situation before us since its contract with the State of New York was executed before the effective date of the standards. This argument has been considered previously by the Commission and rejected. See Underhill Construction Corp., No. 1307, 15 OSAHRC 336, BNA 2 OSHC 1556, CCH OSHD para. 19,276 (1975) aff'd 526 F.2d 53 (2d Cir. 1975); Kesler & Sons Construction Co., No. 306, 20 OSAHRC 440, BNA 3 OSHC 1589, CCH OSHD para. 20,062 (1975) on remand from 513 F.2d 553 [*8] (10th Cir. 1975). Since these previous decisions speak for themselves, nothing more need be said.
Respondent next argues that the construction safety and health standards are not applicable since it was "non physically doing construction work or responsible for doing any of the actual construction work". Here again, respondent employs an argument that is no stranger to the Commission.
In Bechtel Power Corp., No. 5064, BNA 4 OSHC 1005, CCH OSHD para. 20,503 (1976) (appeal docket No. 76-1365, 8th Cir., May 6, 1976), respondent Bechtel, n8 manager of the construction site, averred that it was not "engaged" in construction and that managers of construction projects "who do none of the actual construction" should be exempt "from the requirements of 29 CFR Part 1926, the Safety and Health Regulations for Construction." The Commission rejected this position and found that Bechtel "was an integral part of the total construction system at the site. Its functions were inextricably intertwined with the actual physical labor." We concluded that "because respondent's [Bechtel] work was so directly and vitally related to the construction being performed, and because its employees work at [*9] this construction site, it was 'engaged' in construction, and performed work 'for' construction, within the meaning of the regulations." We find our decision in Bechtel Power Corp. to be dispositive of the issue before us. Respondent Goldberg is an employer under the Act and subject to the construction safety and health regulations found at 29 CFR Part 1926.
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n8 Interestingly, respondent Goldberg, in its brief to the Commission on review, cites to an earlier decision involving the Bechtel Corporation and urges us to recognize the similarity of position and function between itself and Bechtel. In that earlier decision, Bechtel Corp., No. 1038, 12 OSAHRC 774, BNA 2 OSHC 1336, CCH OSHD para. 18,906 (1974), the Commission majority, sub silentio, rejected the argument that managerial personnel are not within the coverage of 29 CFR Part 1926, the Safety and Health Regulations for Construction. See Bechtel Corp., No. 1038, supra (Cleary, Commissioner, dissenting).
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The Items at Issue
In [*10] Anning-Johnson Co., Nos. 3694 & 4409, BNA 4 OSHC 1193, CCH OSHD para. 20,690 (May 12, 1976), n9 we stated that
[i]n the typical case arising under section 5 (a)(2) of the Act . . . the Secretary carries his burden of proving a violation by establishing (1) that a specific standard applies to the facts, (2) that there was a failure to comply with the specific standard, and (3) that employees of the cited employer had access to the hazard. (footnotes omitted)
We went no to note that a respondent may either directly rebut the Secretary's showing or, in the case of a subcontractor who neither created nor controlled the hazard, seek to establish certain affirmative defenses.
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n9 See also Grossman Steel & Aluminum Corp., No, 12775, ANA 4 OSHC 1185, CCH OSHD para.20,691 (May 12, 1976).
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in the case before us, the Secretary has established the applicability of the standards at 29 CFR § 1926.500(e)(1) and § 1926.401(j)(1) to the hazardous conditions at issue. Moreover, he has established that there was a failure [*11] to comply with these standards and that respondent's employees had access n10 to the hazards.
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n10 See Gilles & Cotting, Inc., No. 504, BNA 3 OSHC 2002, CCH OSHD para. 20,448 (1976), On remand from 504 F.2d 1255 (4th Cir. 1974).
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Respondent, on the other hand, was not able to rebut the Secretary's showing nor does it qualify as a noncreating, noncontrolling subcontractor. If anything, respondent's position is more akin to that of a general contractor and, as such, it possessed "sufficient control over the entire worksite to give rise to a duty under section 5(a)(2) of the Act to either comply fully with the standards or to take the necessary steps to assure compliance." Anning-Johnson Co., Nos. 3694 & 4409, supra; see Grossman Steel & aluminum Corp., No. 12775, supra. We find, therefore, that Judge Ditore erred in vacating the items at issue and that respondent should be held to have violated the Act for its failure to comply with the standards at 29 CFR § 1926.500(e)(1) and [*12] § 1926.401(j)(1).
The Penalties
The Secretary has proposed penalties totalling $645 for respondent's violations of the Act. We have reviewed the case for the purpose of assessing penalties pursuant to section 17(j) of the Act, n11 and have taken particular note of respondent's good faith n12 as well as the relatively small number of its employees actually having access to the hazards. In light of these circumstances, we find it appropriate n13 to reduce the penalty proposed for respondent's failure to comply with the standard at 29 CFR § 1926.500(e)(1) from $600 to $200 and to reduce the amount proposed for the "non-serious" item under the standard at 29 CFR § 1926.401(j)(1) from $45 to $25.
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n11 29 U.S.C. § 666(i).
n12 A contractor had been secured to install safety guards and railings as required by the standards at 29 CFR § 1926.500(b)(1), (d)(1) and (e)(1).
n13 Once a citation is contested, the Commission acts de novo with respect to penalty assessment. Brennan v. O.S.H.R.C. and Interstate Glass Co., 487 F.2d 438 (8th Cir. 1973).
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Accordingly, it is ORDERED that the decision of Judge Jerome C. Ditore be reversed to the extent that it is inconsistent with this opinion and that the Secretary's citations alleging respondent's failure to comply with the standards at 29 CFR § 1926.500(e)(1) and § 1926.401(j)(1) be affirmed; it is further ORDERED that penalties totalling $225 be assessed for respondent's violations of the Act.
CONCURBY: BARNAKO
CONCUR:
BARNAKO, Chairman, Concurring:
I agree that, under our decision in Bechtel Power Corp., Goldberg was required to comply with the construction safety standards under the circumstances of this case. * I concur in finding Goldberg in violation of 29 C.F.R. 1926.500(e)(1) and 401(j)(1), and with the assessment of penalties totalling $225.
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* I do not agree with the statement in footnote 8 that this issue was resolved sub silentio in the decision in Bechtel Corp., 12 OSAHRC 774, BNA 2 OSHC 1336, CCH OSHD para. 18,906 (1974).
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I also agree that Goldberg's argument that it is exempt [*14] from the Act because it is an "extension of the state" of New York should be rejected. The record shows that Goldberg is a private employer who entered into a contract to perform certain services for a state agency. In construing a provision of the Fair Labor Standards Act, 29 U.S.C. 203(d), similar to Section 3(5) of the Occupational Safety and Health Act, courts have consistently held that this circumstance does not operate to exempt the employer from the statute. Public Authority of Birmingham v. Goldberg, 298 F.2d 367,369 (5th Cir. 1962); Mitchell v. Singstad, 177 F. Supp. 376,382 (D.Md. 1959); Walling v. McCrady Construction Co., 60 F. Supp. 243,245 (W.D. Pa. 1945), aff'd 156 F.2d 932 (3rd Cir. 1946), cert. denied, 329 U.S. 785 (1946).
The facts of this case show no unusual circumstances which would justify a different result. Indeed, the contract between Goldberg and the State negates Goldberg's contention that its employees on the project were essentially employees of the state. For example, with the exception of the project coordinator, Goldberg was to assign personnel to the project without prior consultation with the State, and Goldberg certified that the [*15] personnel thus assigned were qualified for the tasks they were to perform. The contract further provided that Goldberg would indemnify the fund for any liability incurred as a result of the negligence of Goldberg's employees. Nothing in the contract suggests anything but an "arms-length" transaction between separate entities.
I would also note that footnote 4 of the lead opinion should be qualified. The cases cited therein held that each employer was responsible for any violations to which its employees were exposed. This rule has been modified with respect to multi-employer construction worksites. Grossman Steel & Aluminum Corp., Docket No. 12775, BNA 4 OSHC 1185, CCH OSHD para. 20,691 (May 12, 1976); Anning-Johnson Co., Docket Nos. 3694 & 4409, BNA 4 OSHC 1193, CCH OSHD para. 20,690 (May 12, 1976). Under these decisions, contractual responsibility of one employer for a particular violation is a relevant factor in determining whether another employer with exposed employees is also responsible for that violation.
DISSENTBY: MORAN
DISSENT:
MORAN, Commissioner, Dissenting:
Judge Ditore reached the only correct result in this case. His disposition should be affirmed.
It is clear from an [*16] examination of the record before us that respondent was the agent of the State and was therefore excluded from coverage of the Act by 29 U.S.C. § 652(5). n14
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n14 That section provides that:
"The term 'employer' . . . does not include . . . any State or political subdivision of a State."
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The parties have stipulated that the agreement between the State and its contractors contained the following provision:
"Section 2.01 ARCHITECT'S STATUS
(1) The Architect, as the Fund's representative, shall provide general administration of the Contract and inspection of the work. The Architect will not be responsible for construction means, methods, techniques, sequences or procedures, or for safety precautions and programs in connection with the work, and he will not be responsible for the Contractor's failure to carry out the work in accordance with the Contract Documents. The Architect's duties, services and work shall in no way supersede or dilute the Contractor's obligation to perform the work in conformance with [*17] all contract requirements, but he is empowered by the Fund to act on its behalf with respect to the proper execution of the work and to give instructions when necessary to require such corrective measures as may be necessary in his professional opinion to insure the proper execution of the Contract or to otherwise protect the Fund's interest." (Emphasis added.)
The State University Construction Fund Architect's Agreement, indicates that respondent was to act the owner's representative in spearheading the administration of the construction contracts for the State. For example, this agreement provides in part:
"I. Architect's Services. The Architect shall provide complete professional services necessary to complete the design and construction of the Project. Such services shall include, but are not limited to the following:
* * *
B. Specific Services
* * *
5. Construction Phase - General Administration of Construction Contracts.
* * *
b. Furnishing such field administration and inspection of the work of the contractor or contractors as is necessary to guard the Fund against inferior materials or workmanship. The Architect shall use all reasonable care and diligence [*18] and exercise his best efforts to see that the Project is constructed in accordance with the drawings and specifications.
* * *
d. Furnishing a Resident Engineer or Clerk-of-the-Works, and such assistants to him as are required, to give constant personal inspection, administration and attention to all the work to be performed by the contractor or contractors where the same is requested or approved in writing by the Fund."
The overall meaning of the architect's agreement is summarized by the testimony of respondent's office manager as follows:
Q. Mr. Center, would you, in light of the architect's agreement, in your own words would you explain what the role of the architect was on this particular project?
A. Yes. Bertrand Goldberg Associates was engaged by the fund to perform certain services for them, professional [in] nature which included the development and design for the project through the various stages working with the personnel in the construction fund in that development, preparation of the construction documents, which consist of the project manual referred to here, and the plans that go with it which constitute the contract documents or the contract with a particular [*19] contractor upon award of bid.
Beyond that, we also provide certain services during construction in the nature of inspections and administration of the various contracts awarded by the construction fund as an agent of theirs or on their behalf, to see that the project is constructed in compliance with the contract documents, which are the plans and specifications, and these are basic functions in this contract.
He also testified that employees of the architect at the site were employees of the State in that the fund participated in their hiring by interviewing and approving all employees and reimbursing the architect for their salaries.
This evidence refutes any determination that the State and respondent were engaged in an "arm's length" agreement. Though I am awed by the fact that Commissioner Cleary is relying on an Administrative Law Judge's decision to support his conclusion, n15 that decision is not apropos in this case. The respondent, a construction contractor, [*20] as the "sponsor" was in charge of construction in that case. In this case, the State retained a tight control over the project; indeed, respondent's basic duty was to see that the project was completed according to the State's requirements.
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In this case, however, Commissioner Cleary relies on a Judge's decision that has not been reviewed by, or become a valid final order of, the Commission.
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Furthermore, I do not find that Chairman Barnako's concurring opinion adds any credence to a determination that respondent was a [*21] private employer acting in its own behalf. The terms of the Architect's Agreement support Mr. Center's testimony that the employees hired through respondent were essentially employees of the State. Article II thereof provides:
"B. The Architect shall not employ, contract with or use the services of any consultant without obtaining the prior written approval of the Fund. No provision of this Agreement shall, however, be construed as an agreement between the Fund and any consultant of the Architect or with any person, firm or corporation employed by, contracted with or whose services are utilized by the Architect.
C. All personnel assigned by the Architect to the supervision of the Project shall be required to cooperate fully with personnel assigned by the Fund to the Project, and, in the event the Architect's personnel fail to so cooperate, they, on request of the Fund, shall be relieved of their duties from working on the Project.
D. The Architect shall designate one person who, on his behalf, shall be responsible for coordinating all of the services to be rendered by the Architect hereunder. Such designee shall be subject to the approval of the Fund."
These sections are [*22] apparently the ones upon which Chairman Barnako relies for the conclusion that "[n]othing in the contract suggests anything but an 'arm's-length' transaction between separate entities." I find that they support a contrary conclusion.
Moreover, the cases relied upon by Chairman Barnako are easily distinguishable. In Public Building Authority of Birmingham v. Goldberg, 298 F.2d 367 (5th Cir. 1962), the city of Birmingham had nothing whatsoever to do with the hiring or firing of employees by the management corporation that managed its building. In Walling v. McGrady Const. Company, 60 F. Supp. 243 (W.D. Pa. 1945), the Court concluded, without discussion, that "[t]here is no evidence showing any employer-employee relationship between defendant's employees and the contracting States or political subdivisions thereof." 60 F. Supp. at 245. There is no such lack of evidence in this case. Finally, Mitchell v. Singstad, 177 F. Supp. 376 (D. Md. 1959), is distinguishable because the Court determined that the defendants were not agents of the State "for the purpose of hiring [or firing] employees of the Commission." 177 F. Supp. 382.
I can come to no other conclusion than that [*23] the respondent was the instrumentality through which the State of New York could take charge of and administer the construction contracts. Respondent was not only designated its representative but was the agency through which the State operated with respect to the construction project. Since the Act does not apply to a State and its sovereign activities, its direct agent is also excluded. "The action of the agent is'the act of the government.'" Yearsley v. W.A. Ross Const. Co., 309 U.S. 18, 22 (1940). n16
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n16 Also see United States v. Lynah, 188 U.S. 445, 465 (1903); Ernst v. General Refractories Co., 202 F.2d 485 (6th Cir. 1953).
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Additionally, even if respondent were not an agent of the State, the citations should be vacated because the regulations upon which the citation was based specifically excluded building contracts like those at issue in this case. Respondent's contract with the State had been executed before the effective date of the construction regulations. Those regulations provide [*24] that:
"Except where different effective dates are specifically provided in § 1926.1051, the safety and health standards published in Subparts C through U of this part shall become effective on April 24, 1971, for all Federal and federally assisted advertised contracts subject thereto which are advertised after that date and on April 27, 1971, for all such negotiated contracts for which negotiations begin after that date."
29 C.F.R. § 1926.1050. In my dissenting opinion in Secretary v. Underhill Construction Corporation, 15 OSAHRC 366, 370-373 (1975), I pointed out that the exclusionary dates in the above-cited section apply to private as well as Federal and federally assisted contracts. The contract between the State and this respondent was dated April 30, 1968. Thus, respondent's activities at the worksite clearly fall within the stated exemption. n17 The citations are therefore jurisdictionally defective and should be vacated in their entirety.
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n17 See my dissenting opinion in Secretary v. Underhill Construction Corporation, supra, for a full discussion of the reasons for the exemption. Those reasons apply in this case.
[*25]
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Finally, the charges against respondent should be dismissed on the basis of the holding in Anning-Johnson Company v. OSAHRC, 516 F.2d 1081 (7th Cir. 1975), that employers are not liable under the Act for conditions which they neither created, caused or otherwise had responsibility for. The agreement quoted above provides that respondent was not responsible for safety in any way. Only the contracts between the State and the construction contractors included "matters of safety." n18 I have expounded at length in previous cases on the unfairness to employers and the impropricty of the Barnako-Cleary rule on subcontractor liability. n19 The decision of the Seventh Circuit requires vacation of the charges against respondent in this case since it is shown that respondent did not create or cause the noncompliant conditions and was not contractually responsible for them in any way. n20
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n18 Section 5.01 of the agreement between the State and each contractor, entitled Accidents and Accident Prevention, provides in part that: "The Contractor shall at all times take reasonable precautions for the safety of persons engaged in the performance of the work."
n20 I agree with Chairman Barnako that Contractual responsibility is relevant in affixing employer liability. This is consistent with the view expressed by the Seventh Circuit in Anning-Johnson that:
"Even if contractual liability was fairly alloted to the party at fault, the Secretary's policy of citing all employers at the site might necessitate litigation between the parties to finally affix liability. To require the parties in an ongoing relationship to resort to the courts to accomplish the objectives of fixing final responsibility for the abatement of minor hazards would seem to be an undesirable policy and one which Congress could not have intended."
[*26]
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