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General contractor was liable for sole proprietor-subcontractor’s willful safety breach

By Brandi O. Brown, J.D.

In a dispute over who should have to pay the $173,500 fine for willful OSHA violations at a construction site that resulted in serious injuries to two workers, the First Circuit upheld an administrative law judge’s determination that the general contractor and its subcontractor had acted as a single employer. Substantial evidence supported the ALJ’s conclusion that there was only one employer, with a single line of management that ran from the general contractor through the subcontractor, a sole proprietor who acted as a supervisory employee, and to the workers. The general contractor’s petition for review was denied (A.C. Castle Construction Co., Inc. v. Acosta, February 7, 2018, Kayatta, W.).

Long-time working relationship. Friends for over 30 years, Brian LeBlanc, the sole owner/manager of A.C. Castle, and Daryl Provencher, the sole proprietor of Provencher Home Improvements (PHI), had worked together on many construction projects. In fact, 95 percent of Provencher’s income was derived from A.C. Castle and 75 percent of his projects came from his friend’s business. LeBlanc scheduled the roofing projects and arranged for the building materials to be delivered. He told his friend when to hire more employees, placed ads in the newspaper on Provencher’s behalf, and would help Provencher “get rid of” absentee workers. Provencher paid his workers only after he received payment from LeBlanc on Fridays. In fact, Provencher did not have a business license or a credit card and was unable to bid on projects.

LeBlanc would conduct spot inspections of worksites for safety issues and it was A.C. Castle’s safety program and instructions that were used and imparted to Provencher’s workers. LeBlanc provided loans to Provencher to purchase equipment and materials and he would tell Provencher when he needed to purchase new equipment.

OSHA citations. LeBlanc had instructed Provencher to fix the scaffolding (by doubling up the planks). However, those instructions were not followed, and two workers were seriously injured after falling more than twenty feet when a single-plank scaffolding snapped in half. The Secretary of Labor cited both A.C. Castle and PHI for OSHA violations, asserting both that the two entities constituted a single employer and the theory that Provencher was a supervisory employee of A.C. Castle.

They challenged the citations and after a three-day hearing, the ALJ concluded that Provencher was a supervisory employee for A.C. Castle, applying the common-law agency test set forth by the U.S. Supreme Court in Nationwide Mut. Ins. Co. v. Darden. The ALJ relied on that finding to support for her conclusion that the two entities could be treated as a single employer. However, she did not find that Provencher’s status an employee of A.C. Castle was an independent and sufficient basis upon which to justify the citation of A.C. Castle. Provencher died after the hearing but before the ALJ ruled, so the claims against him were dismissed as moot, and the Occupational Safety and Health Review Commission declined A.C. Castle’s petition for review.

‘Unusual’ amount of control. On appeal, the First Circuit explained that the ALJ had properly focused on A.C. Castle’s exercise of control—the most crucial factor in Darden. She found the degree of control LeBlanc exercised over Provencher’s actions to be “unusual” and “atypical of a traditional contractor/subcontractor relationship.” She examined the specifics of their working relationship, including the “source of instruments and tools, the assignment of work, the length of the relationship, and the hiring of other workers.” She noted that LeBlanc had directed Provencher to double up the planks—a directive that was ignored on the day when the accident occurred—and that LeBlanc was involved in the hiring and firing of workers. While it is true that “close coordination” is often needed in contractor/subcontractor relations, in this case there was a “recurring relationship” between one general contractor and one subcontractor in which the former exercised control over not only the schedule and scope of work, but also the details of how it was performed and managed, the appeals court observed.

There was evidence to the contrary, including a small amount of work Provencher performed for other customers and the type of income reporting forms he used, but it was overshadowed by evidence showing the extent of control exercised by A.C. Castle. In fact, the appeals court explained, prior to this legal battle, the general contractor had portrayed the relationship differently. For building permit applications, LeBlanc asserted in affidavits that he was an employer with employees, rather than a general contractor with subcontractors (which was an available option on the form). He also prevented Provencher from describing himself to customers as a subcontractor and Provencher and the other workers wore tee-shirts bearing the A.C. Castle name while on the job.

“Single line of management.” Furthermore, the ALJ had given A.C. Castle “a second bite at the apple” by analyzing the relationship under the single-employer test. She could have ended the analysis after determining that Provencher was a supervisory employee for the general contractor. The ALJ’s findings of fact under the three-factor formulation were supported by substantial evidence. She found that the two entities shared a common worksite, that their operations were interrelated and integrated (PHI had no safety program of its own), and there was common management. While the first two factors weighed only slightly in favor of the single-employer finding, the third factor provided “the added heft necessary to tilt the balance in favor of the ALJ’s single-employer determination.” The ALJ’s finding that Provencher was a supervisory employee was strong support for the conclusion that there was common management or supervision, “as it leaves a single line of management running from LeBlanc through Provencher to the workers supervised by Provencher.”

Willfulness. The appeals court also upheld the finding of a willful violation, noting that the planks purchased by Provencher did not meet OSHA regulations and that he “seemed not to care that the planks were of a quality insufficient to support the weight required.” When asked about it, Provencher admitted that even if he had known the boards were not suitable for the use to which he was putting them, he might have used them anyway.