Predecessor Company's Violations Count, OSHRC Holds

In a Nov. 18 decision that was a case of first impression, the commission held that a company's change in legal status does not prevent a repeat violation from being upheld against the successor company.

Changing its legal status may not prevent an employer from being cited for a repeat violation of a standard the earlier entity had violated, the Occupational Safety & Health Review Commission ruled Nov. 18. The case, Secretary of Labor v. Sharon & Walter Construction, Inc., Docket No. 00-1402, is an old one, having been decided in 2001 by an OSHRC administrative law judge.

The decision by OSHRC's three commissioners said this issue of changed legal status was one of first impression for OSHRC, meaning it had not decided the question until now. The case arose on April 20, 2001, when an employee of S&W Corporation, Robert H. Bell III, fell from a steeply pitched metal roof at a job site in Pittsfield, N.H. He and another worker on the job were not protected by any means of fall protection, according to the decision.

The commissioners affirmed a willful citation with a penalty of $7,000 and a repeat citation with a penalty of $3,750, holding that the employer (called S&W II in the decision) and its predecessor, S&W I, were essentially the same entity. The same person, Walter Jensen, was sole proprietor of both S&W II, which was incorporated in New Hampshire on July 12, 1995, and S&W I, which had filed for bankruptcy Aug. 16, 1994, and ceased operating six weeks before S&W II was created. The two provided essentially the same construction services, used the same offices and same phone number, and S&W II paid a bill from an S&W I account, according to the decision.

OSHA issued the two citations on the day of the April 2000 accident. In the repeat citation, OSHA noted S&W I had been cited twice for violating the same standard S&W II had allegedly violated -- 29 CFR 1926.503(a)(2).

The commission said Section 17(a), which provides for enhanced penalties against "[a]ny employer who ... repeatedly violates" the OSHA Act, was designed to deter employers from committing violations primarily by creating the potential that a future violation's penalty will be significantly greater. The commissioners wrote, "we conclude that the statutory language in section 17(a) is most reasonably read to permit, in appropriate circumstances, the [Labor] Secretary's application of a 'repeat' characterization to cases where the cited employer has altered its legal identity from that of the predecessor employer whose citation history forms the basis of that characterization. Such an interpretation is not only consistent with the Act's purpose, but also ensures the effectiveness of its enforcement scheme."

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