Managing Contractor Risks
It’s time to place greater emphasis on reducing the risks from contractors working on your site.
by Henry Chajet
On May 1, 2008, the Acting Assistant Secretary of Labor for the Mine Safety and Health Administration (MSHA), Richard Stickler, stated the following:
“One disturbing trend we have seen in metal/non-metal fatalities is contractor deaths. From 2000 through 2006, contractor employees have experienced 21 percent of the fatal accidents. Last year, 32 percent of the fatalities in metal/non-metal operations were contractors. We must take a hard look at why this happens and get it under control.”
Not only are these deaths terrible tragedies, they pose significant risks of severe enforcement and civil liability. When Stickler states, “We must take a hard look,” I suggest that he intends to apply the heavy hand of government to accident investigations, and the resulting enforcement actions and penalties. Given the newly adopted fines of up to $220,000 per “flagrant” violation, and the increasing risk of criminal penalties, a review of contractor risks and compliance programs seems worthwhile; particularly given the election-year politics at work during the upcoming months.
The recent Congressional focus on alleged enforcement failures by the Occupational Safety and Health Administration (OSHA) and the Mine Safety and Health Administration (MSHA) was aimed directly at the agency leadership and the Administration. It is part of the political process during this election year. New legislation passed by the House of Representatives and awaiting Senate action was preceded by hearings and reports that skewered the agencies for lax enforcement and negligence. Like Stickler, every senior OSHA and MSHA regional official is well aware of these Congressional indictments of his or her performance. The response is to increase enforcement severity and ignore the industry’s enviable safety record, measured on an hours-worked basis, as compared to the rest of the world. The result is a massive increase in enforcement and financial risks that require aggressive risk-reduction programs, particularly those aimed at contractors and subcontractors.
Throughout the United States, state workers’ compensation programs set fixed compensation for accidental workplace injuries and illnesses suffered by employees in exchange for prohibiting lawsuits by employees and their heirs against employers. However, contractor and subcontractor employees can often sue the site operator, even though they are barred from suing their own employer — the contractor company — by the state’s workers’ compensation shield.
Under the Mine Safety and Health Act and the Occupational Safety and Health Act, MSHA and OSHA can issue citations and penalties to both the contractor and/or the site operator/employer, even if a subcontractor caused the violations. Plaintiffs’ lawyers can use these enforcement actions as evidence in lawsuits against the site operator, increasing the risk of liability and punitive damages.
Stickler’s remarks represent the reality of today’s enforcement atmosphere and provide clues for risk-reduction strategies. He states that the “MSHA Web site can be a useful tool to help assess the safety performance of contractors before they come on your property….the contractor’s accident frequency rate…details of violations and accidents charged against the contractor” can be reviewed. He is correct — if the MSHA information is placed in the context of a feasible contractor risk-management program.