WHEN CAN A BUSINESS BE SANCTIONED FOR KNOWINGLY VIOLATING A FEDERAL SAFETY STANDARD?

In Comtran Group, Inc. v. U.S. Department of Labor, Case No. 12-10275 (decided July 24, 2013), the United States Court of Appeals for the Eleventh Circuit addressed when a business could be sanctioned for knowingly violating a federal safety standard. The case specifically addressed this question: If a supervisor violates a standard, is his knowledge imputed to his employer such that the employer can be deemed to have knowingly violated the standard?

The case involved a company that installed underground utilities. That work sometimes involved the digging of trenches. That activity is subject to specific regulations to prevent a trench from collapsing and injuring an employee. In the case at issue, a supervisor (foreman), working alone, was digging a trench. In the course of that work, he violated certain safety regulations. A federal safety inspector, who happened to be passing by, saw the violations. The U.S. Secretary of Labor charged the business with violations and assessed penalties of $9800. An administrative law judge affirmed the citations, but reduced the penalty. The Occupational Safety and Health Review Commission affirmed the sanction and the business appealed.

The case turned on whether or not the knowledge of the supervisor, who was working alone, could be imputed to the employer for the purpose of establishing that the employer knowingly violated the safety standard. When seeking to penalize a business for violating a regulation under the Occupational Safety and Health Act, the Secretary of Labor must show either that a supervisor had actual or constructive knowledge of the violation or that the employer failed to implement an adequate safety program. In this case, the Secretary of Labor did not attempt to show that the business had an inadequate safety program. However, the Secretary contended that because the person who violated the Act was a supervisor, even if he was acting alone, his knowledge would be imputed to his employer.

The Eleventh Circuit rejected that argument. Following precedents from other Circuits, the Court concluded that if the knowledge of a supervisor, acting alone, was imputed to an employer, then any supervisor’s misconduct would automatically constitute a knowing violation of the Act. If the supervisor was acting alone, someone else within the business needed to know of the violation for there to be a knowing violation.

The holding might seem like merely a fine legal point, but it has practical significance. It protects a business from being liable for the actions of a rogue employee. If a business had adequate safety programs that it enforces, it should not be sanctioned when a single employee, whatever his status, acts on his own and disregards that program.

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