When it comes to general contractor and subcontractor liability for Occupational Safety and Health Administration (OSHA) violations, there is a new way of looking at things that overturns a ruling set in place back in 1981.

On Nov. 26, 2018, the United States Court of Appeals for the Fifth Circuit, in the "R. Alexander Acosta, Secretary, Department of Labor, Petitioner, v. Hensel Phelps Construction Company, Respondent, On Petition for Review of a Final Order of the Occupational Safety and Health Review Commission," case, ruled OSHA can cite general contractors for subcontractor safety violations (such as failing to control hazardous situations at multi-employer worksites), even if the employees of the general contractors are not directly affected (exposed to the hazards that employees of the subcontractors are). The Fifth Circuit ruling stated Hensel Phelps could be held responsible as a "controlling employer" for safety on the multi-employer site.

This ruling overturns a Fifth Circuit ruling from 1981, which stated "OSHA regulations protect only an employer's own employees" (Melerine v. Avondale Shipyards Inc.).

The decision also overturns a more recent (April 2017) ruling ("United States of America Occupational Safety and Health Review Commission: Secretary of Labor, Complainant, v. Hensel Phelps Construction Co., Respondent"), in which the administrative law judge for the Occupational Safety and Health Review Commission's Denver regional office used the 1981 decision to rule Hensel Phelps Construction could not be held liable for OSHA violations by one of its subcontractors. The Department of Labor appealed this decision, leading to the November 2018 Fifth Circuit ruling.

According to the published ruling, Phelps Construction hired a subcontractor (Haynes Eaglin Watters), which subsequently hired another subcontractor (CVI Development) for "demolition, excavation and other work" at a library construction site in 2014 in Austin, Texas. One of CVI's excavation projects did not have a protective sloping system, and a "nearly vertical wall" of soil was stacked about 12 feet high. When CVI management attempted to have its employees work elsewhere on the site during a rainy morning, a Phelps Construction area superintendent and a City of Austin inspector told the CVI owner his workers had to go back to the excavation site in question. Subsequently, the Austin OSHA office received a complaint of hazardous working conditions at the site. Upon arriving at the site, the OSHA inspector saw three CVI employees working "at the base of an unprotected wall of excavated soil" in full view of the city inspector, Phelps Construction superintendents and others.

OSHA fined Phelps Construction $70,000 for one willful violation, because it was the "controlling employer" under OSHA's Multi-Employer Citation Policy, which went into effect in 1999. A "controlling employer" is one that has general supervisory authority over a work site, including the power to correct safety violations or compel others to correct such violations.

Phelps Construction appealed, leading to the Occupational Safety and Health Review Commission's 2017 ruling in favor of Phelps Construction. And, as noted, this ruling was overturned in favor of OSHA in the November 2018 by the Fifth Circuit court.