Courts Reject Prosecution of Parent Company for Training Lapses So Far

Can OSHA hold a holding company liable for the alleged training inadequacies of employees who work for a subsidiary?

That's what the government is trying to do with MYR Group Inc. and its wholly-owned subsidiary L.E. Myers co., according to Corey Rubenstein, a lawyer defending the companies in a criminal case mounted by the Departments of Labor (DOL) and Justice (DOJ) late last year.

The case raises disturbing policy questions, according to Rubenstein and other labor lawyers familiar with the matter.

"By going after MYR Group for training failures, OSHA seems to be discouraging parent companies from providing training help to subsidiaries," commented Rubenstein. "If parent companies stay out of safety training completely, wouldn't they limit their liability?"

Because parent companies often have more resources to do safety training, decentralization could hurt safety in the long run.

If the government succeeds in holding MYR Group liable, one legal source argued, the government could conceivably hold any safety training company liable in the event of an OSHA violation.

Late last year, the Departments of Labor and Justice (DOJ) won a four-count criminal indictment of the MYR Group and L.E. Myers for willfully violating OSHA standards that allegedly caused the electrocution deaths of two high-voltage transmission tower linemen. The fatalities occurred in separate incidents in the Chicago area in 1999 and 2000.

So far the government's effort to hold MYR Group criminally liable for the deaths has failed: two federal judges have already dismissed the indictment. But DOJ has decided to try again. The trial, originally scheduled for Sept. 8, was postponed indefinitely pending the outcome of the government's decision to appeal its most recent defeat in the 7th Circuit of the district court.

The OSHA regulations that MYR is accused of violating are 29 CFR 1910.269(a)(2)(i) and (ii), which spell out training requirements for workers in the electric power generation, transmission and distribution industries.

The district court judge dismissed the indictment of MYR Group because, "while MYR was technically an employer as defined by the [OSH] Act, it was not the employer of the deceased workers and could therefore not be liable for their deaths." The judge held that because MYR Group was not the employer, it could not have violated the OSHA training requirements.

The government argues MYR can be held liable because of the 'multi-employer doctrine.' But according to another legal source familiar with the case, the government is "pushing the envelope" of the multi-employer doctrine, because the doctrine was intended to apply primarily to construction sites and the relationship between general contractors and sub-contractors.

The district court judge, in dismissing the indictment, held that even if MYR did not do an adequate job of training, this only creates a hazard and since MYR did not violate an OSHA standard, the agency cannot apply the multi-employer doctrine to the company.

Yet another thorny question raised by the case, according to one legal source, is how OSHA should enforce training requirements of temporary workers outside the construction industry.

In a separate civil action, OSHA cited L.E. Myers for one serious and six willful alleged violations, with proposed penalties of $423,500. The case remains stayed before the Occupational Safety and Health Review Commission.

Because the civil and criminal cases are still being litigated, both OSHA and DOJ declined to comment.

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