As OSHA Stiffens Penalties, Construction Firms Should Check Compliance and Safety Measures

New Report from Assurex Global flags risks for firms with temp workers

COLUMBUS, OHIO – Construction companies and contractors that employ temporary or leased workers now have added incentives to make sure they’re in compliance with federal and state labor regulations along with their reporting requirements. In a new report, Assurex Global observes that the U.S. Occupational Safety and Health Administration (OSHA) will soon impose substantially larger penalties for workplace safety violations, the first such increases in 25 years.

The new penalties, established under the Bipartisan Budget Act of 2015, take effect beginning Aug. 1, 2016, in all states regulated by federal OSHA. Under them, construction companies and other employers may face fines ranging from $12,600 for serious violations to $126,000 for willful or repeat violations.

Classifying workers. According to the report, construction firms need to become familiar with various standards for classifying employees. There are four primary types of employees:

  • Direct employees, who receive W-2 forms and, if eligible, participate in employee benefit plans. Notably, their payroll counts toward the calculation of the employer’s workers’ compensation insurance premium.
  • Temporary employees, who are used on a short-term basis, such as to meet seasonal demands. These employees are paid by the temporary help agency.
  • Leased employees, who are provided by Professional Employer Organizations (PEOs) and used on a non-temporary basis. In some instances, PEOs supply the vast majority of a company’s workforce on a permanent basis.
  • Borrowed employees, who come from another company, which may or may not be a temporary help agency (but not a PEO).

“Unfortunately, differences in worker classes may not be as straightforward as they appear,” said Jim Marquet, vice president and co-leader of the construction practice at The Graham Company, an Assurex Global Partner firm. “For many employers, issues arise from the range of different standards to determine the correct classification for an individual worker.”

Notably, standards for classifying workers vary in federal tax, wage and hour, benefits and anti-discrimination laws, as well as from one state to another. For instance, some states have multiple tests, depending on whether the analysis is for employment law, workers’ compensation law, wage and hour law or other state employment statutes.

OSHA “joint employer” risks. For construction firms with temporary workers, the notion of “joint employers” represents a potential exposure. According to OSHA, temporary workers are “… hired and paid by a staffing agency and supplied to a host employer to perform work on a temporary basis.” However, OSHA may deem the staffing agency and host employer as “joint employers” of the worker, potentially leaving both employers culpable for OSHA violations.

In deciding an employer’s culpability, OSHA determines whether an employer is responsible for creating the hazard or exposing workers to it, as well as for correcting a hazard. It also evaluates whether the employer has supervisory authority for the worksite, including the power to correct any safety or health violations or requiring others to do so.

According to the Assurex Global report, construction firms should review contracts to ensure OSHA compliance “is the responsibility of the party with whom your company is contracting.” They should also check their work practices and management relationships to ensure a joint employment relationship is not established.

Additionally, construction firms should examine their safety policies and establish procedures to:

  • Review contractor safety records during the selection process and remove unsafe employees or contractors.
  • Ensure training on company safety rules and programs, PPE utilization, exposure monitoring and medical surveillance.
  • Ensure the company conducts on-site safety inspections and suspends work until safety violations are corrected.
  • Complete or review required documentation for temporary employees, including making sure temporary workers aren’t completing paperwork that should be done by their own employees.

“Construction firms should maintain effective OSHA compliance and audit programs to identify and correct any violations at their facilities and worksites,” said Mr. Marquet. “They should also designate expert subcontractors, and require them to observe all safety rules and OSHA regulations.”

For a complimentary copy of the Assurex Global report, Risk Management Considerations for Temporary Workers, visit the Assurex Global website Library.


About Assurex Global

Founded in 1954, Assurex Global is an exclusive partnership of the most prominent independent agents and brokers in the world. With $28 billion in annual premium volume and more than 600 partner offices, Assurex Global is the world’s largest privately held commercial insurance, risk management and employee benefits brokerage group. An international insurance powerhouse, the partnership combines the local expertise and global reach of international brokers on six continents.