The Second Circuit Court of Appeals, which covers New York, Connecticut and Vermont, recently affirmed the Occupational Safety and Health Review Commission’s (“OSHRC”) ruling that OSHA improperly cited a nursing home for a repeat violation based on prior citations against affiliate companies.
In 2002, OSHA cited Loretto-Oswego Residential Health Care Facility (“Loretto-Oswego”) for several violations of the Occupational Safety and Health Act (the “Act”), including several repeat violations. OSHA based the citations for repeat violations on prior citations against two affiliate nursing homes: Loretto-Utica Residential Health Care Facility and Loretto-Rest Residential Health Care Facility (the “Affiliates”). Another company, Loretto Management Corporation (“LMC”), oversaw Loretto-Oswego and the Affiliates. The four companies also shared the same CEO and CFO.
Loretto-Oswego agreed to settle most of the OSHA citations but contested the citations for repeat violations. An administrative law judge (“ALJ”) initially heard the case and ruled that the citations for repeat violations were appropriate because LMC and the Affiliates operated as a “single employer.” Loretto-Oswego appealed the ALJ’s decision to OSHRC which reversed the ALJ’s decision finding that Loretto-Oswego and the Affiliates were not a “single employer” under the OSHRC’s three-factor test. To determine whether companies constitute a single employer, the OSHRC analyzed whether they: (1) share a common worksite such that employees of both companies have access to the same hazardous conditions; (2) have interrelated and integrated operations, and (3) share a common president management, supervisor or ownership. OSHRC found that LMC oversaw Loretto-Oswego’s affairs in certain respects but rarely intervened or dictated policy to Loretto-Oswego. In addition, the OSHRC found that LMC and Loretto-Oswego did not share a common worksite and handled safety issues separately.
The Second Circuit affirmed OSHRC’s decision. The Court stated that the “single employer inquiry turns on whether the entities in question handled safety matters as one company.” The court found that Loretto-Oswego personnel, not LMC employees, were primarily responsible for safety matters at Loretto-Oswego’s facility and concluded that Loretto-Oswego and the Affiliates were not a single employer.
This case demonstrates that employers should review OSHA citations issued to affiliate companies to ensure that similar OSHA violations do not exist at their workplace. Any citations issued to an affiliate company that would be considered a single employer may be used as the basis for a repeat violation. This decision, however, provides some comfort to employers with affiliate companies that handle safety matters separately and have different physical locations. Based on this case, those employers would not be considered a single employer with their affiliates.