Community WebinarPresented by

Diana B. Henderson, ARM , CPDM, WCCPPresident, The Henderson Group

Cal/OSHA & AB 2774:The New Law That Could Impact

Your Client and Maybe You

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Cal/OSHA & AB 2774:

The New Law That Could Impact

Your Client and Maybe You

Presented byDiana B. Henderson, ARM, CPDM, WCCP

President, The Henderson Group949-417-5722

www.TheHendersonGroup.netdiana@thehendersongroup.net

What does AB 2774 do? What does it mean to the

employer? What are the implications? What steps can an employer take to

be pro-active and prepared? What impact could this new law

have on brokers?

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Federal Occupational Safety and Health Act of 1970.

Allows states to develop and enforce their own OSHA-approved state plan.

27 states and territories have obtained approval for state-run programs. http://www.osha.gov/dcsp/osp/faq.html#establishingyourown

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Alaska Arizona California Connecticut (Public

Employees Only) Hawaii Illinois (Public Employees

Only) Indiana Iowa Kentucky Maryland Michigan Minnesota New Jersey (Public

Employees Only)

New Mexico New York (Public

Employees Only) Nevada North Carolina Oregon Puerto Rico South Carolina Tennessee Utah Vermont Virginia Virgin Islands (Public

Employees Only) Washington Wyoming

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Implemented and enforced by Cal/OSHA. Issues citations with civil penalties to

employers for alleged violations of Cal/OSHA standards.

Citations are issued for violations in three categories:▪ Regulatory violations▪ General violations▪ Serious violations

The California Occupational Safety and Health Appeals Board (OSHAB) adjudicates employer appeals of citations issued by Cal/OSHA.

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An employer reports a fatality or serious injury or illness.

An employee complains. The issuance of a permit requires a follow-

up inspection. The Cal/OSHA general administrative plan

calls for inspections for a certain type of employer.

An industry has been selected as part of the Targeted Inspection and Consultation Program (TICP).

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Regulatory violationsGeneral violationsSerious violations

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The June 2009 open letter from Cal/OSHA to the California Occupational Safety and Health Appeals Board (OSHAB).▪ http://www.coshnetwork.org/node/337

Concerned that OSHAB policies and practices have effectively undermined Cal/OSHA.

In part, due to this letter, Federal OSHA initiated a special study of California’s program and appeals process. ▪ http://www.osha.gov/dcsp/osp/efame/

ca_efame_with_appendices.pdf

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Finding: “In its decisions OSHAB is not defining ‘serious

hazard’ or interpreting ‘substantial probability’ consistent with Federal OSHA interpretations, OSH Review Commission, and with the Court of Appeals decisions.”

Recommendation: “Cal/OSHA must take appropriate action –

administrative, judicial or legislative – to ensure that OSHAB’s interpretation of ‘serious hazard’ is consistent with and at least as effective as the Federal definition.”

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Finding: “The rules of evidence used by OSHAB prevent many

serious hazards from being appropriately classified without the use of ‘Expert’ testimony and relevant medical training on specific injuries. Federally, expert testimony is not always required to establish whether a hazard is serious. In some cases, expert testimony may be needed, but the OSHAB appears to be applying a test that far exceeds well-settled law in both the OSHRC and Federal courts.”

Recommendation: “Cal/OSHA must take appropriate action – administrative,

judicial, or legislative – to ensure that OSHAB’s test for acceptance of compliance officers’ testimony is at least as effective as the test at the federal level and results in a similar classification of violations as serious.”

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Makes it easier for Cal/OSHA inspectors to establish serious violations and makes it easier for serious violations to survive an appeal with the Division of Occupational Safety & Health.

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Repealed and replaced Labor Code Section 6432 of the California Labor Code.

Previously, the law required that Cal/OSHA was required to establish a serious violation by proving that there was a “substantial probability that death or serious physical harm could result from a violation.”

AB 2774 reduced Cal/OSHA’s burden in proving serious violations in three key ways.

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Changed the old “substantial probability” standard to the new standard of “realistic possibility.” Substantial probability is interpreted as:▪ “More likely than not.”▪ A likelihood of 51% or more.▪ Jerlane, Inc., Decision After Reconsideration, Docket Nos. 01-R3D2-

4344 through 4348, 2007 WL 2584817 (August 20, 2007).▪ Findly Chemical Disposal, Inc., Docket Nos. 91-R3D1-431 through

432, 1992 WL 528542 (May 7, 1992). AB 2774 suggests that the new standard of “realistic

possibility” is designed to be less than 51%.▪ But how low is this new standard?▪ “Realistic possibility” is not defined in AB 2774 or elsewhere.▪ Fodder for litigation??

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Expands the definition of “serious physical harm” as used in Labor Code Section 6432.

“Serious physical harm” was previously undefined.

Had been interpreted by the OSHAB to mean an injury or illness occurring in a place of employment or in connection with any employment which: Required inpatient hospitalization for a period in

excess of 24 hours for other than medical observation;

Involved a loss of any member of the body; or Resulted in any serious degree of permanent

disfigurement.

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AB 2774 expanded Labor Code Section 6432 by expressly defining “serious physical harm”.

Two notable distinctions New definition drops the requirement that the

inpatient hospitalization last more than 24 hours.

Adds an additional separate category▪ “Impairment sufficient to cause a part of the body or

the function of an organ to become permanently and significantly reduced in efficiency on or off the job.”

▪ More litigation fodder??

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Cal/OSHA inspectors will now be able to provide testimony and offer expert opinions. Such testimony could include whether there is

a realistic possibility that death or serious physical injury could result.

OSHAB has previously rejected the testimony of Cal/OSHA inspectors due to lack of sufficient expertise (specific familiarity with the alleged condition at issue).

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A rebuttable presumption is created when Cal/OSHA issues a serious citation after making a “reasonable attempt to determine and consider” a variety of factors before issuing a citation.

Such factors that would be considered include: Employer training to prevent exposure; Procedures for discovering, controlling access to, and

correcting the hazard; Supervision of employees exposed or potentially

exposed; Procedures for communicating to employees; and Any other information the employer wishes to provide to

establish that it did not know or could not have known of the existence of the serious violation.

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Cal/OSHA is required to deliver to the employer a notice containing a description of the alleged violations it intends to cite as serious and solicit information from the employer. The notice must be delivered at least 15 days before

issuing the serious citation. This new form is entitled Cal/OSHA 1BY

Can be downloaded at the Cal-OSHA Reporter website by subscription holders

Otherwise, not yet available on the Cal/OSHA website.

As of today, the DOSH Policy & Procedures Manual has not been updated.

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If Cal/OSHA fails to provide Form 1BY or offers information at a hearing that is inconsistent with the form, OSHAB may draw negative inferences against Cal/OSHA.

If the employer responds to the form but offers information at a hearing that is inconsistent with the form, OSHAB may draw negative inferences against the employer.

HOWEVER, if the employer fails to respond to the form, it may still offer information at the hearing and no negative inference may be drawn.

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An employer must demonstrate and prove the following: It took all of the steps a “reasonable and

responsible” employer could be expected to take in the same situation.

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(c) If the division establishes a presumption pursuant to subdivision (a) that a violation is serious, the employer may rebut the presumption and establish that a violation is not serious by demonstrating that the employer did not know and could not, with the exercise of reasonable diligence, have known of the presence of the violation. The employer may accomplish this by demonstrating both of the following:

(1) The employer took all the steps a reasonable and responsible employer in like circumstances should be expected to take, before the violation occurred, to anticipate and prevent the violation, taking into consideration the severity of the harm that could be expected to occur and the likelihood of that harm occurring in connection with the work activity during which the violation occurred. Factors relevant to this determination include, but are not limited to, those listed in subdivision (b).

(2) The employer took effective action to eliminate employee exposure to the hazard created by the violation as soon as the violation was discovered.

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Walter & Prince, LLP, a California-based law firm specializing in OSHA and related laws authored an interesting article entitled, “To 1BY, or Not To 1BY”. www.walterlaw.com/e-zine_41.html This article pointed out that the 1BY form failed to note that

Labor Code Section 6432(d) specifically says that no negative inference will be made if the employer chooses not to complete the 1BY.

Eugene McMenamin, an attorney with Atkinson, Andelson, Loya, Ruud & Romo, authored a commentary in the Cal-OSHA Reported entitled, “AB 2774 and Mom’s Advice”. www.cal-osha.com/AB-2774-and-Moms-Advice.aspx Mr. McMenamin concludes that the employer should continue

to hold the cards close to the vest. One conclusion that can be reached following a read of

these two articles is that an employer should consult with the experts before completing Form 1BY.

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Greater exposure now exists for workers and/or their attorneys to allege Serious & Willful Misconduct violations following an industrial injury (Labor Code Section 4553). Employers found in violation would be

subject to a penalty of an increase of up to 50% of the total cost of the claim.

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Some questions to ask of your E&O advisor Can a client or past client come back against the

broker who provided a “canned” IIPP? Note that an incomplete or amateur IIPP can

generate as much as a $5,000 fine for an employer.

Recommendation If involved in employer safety programs, strive to

do a professional job and provide advice and materials that are exemplary.

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Title 8, Section 3203 of the General Industry Safety Orders and Labor Code Section 6401.7.

All employers, including those with only one employee, must have a written injury and illness prevention program.

The Cal/OSHA website provides guidance and examples. http://www.dir.ca.gov/dosh/etools/09-031/

index.htm

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Encourage your clients to be proactive and to prepare for the new standards and procedures under AB 2774. Review and update its Injury and Illness Prevention Program (IIPP)

as well as other safety policies and procedures. Review and ensure implementation of any revised or updated IIPP. Review and update training materials. Conduct and document training of supervisors and employees

regarding general safe practices as well as particular hazards that may result in death or serious injury.

Conduct a privileged audit to determine the existence of serious violations and then promptly correct them.

Seek employee suggestions on how to improve the safety program and culture.

In the case of a citation for a serious violation, consult with counsel on whether or not to respond to Form 1BY.

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Laurie Infantino laurie@insurancecommunitycenter.com 714 803 5830

Marjorie Segale marjorie@insurancecommunitycenter.co

m 714 206 9583

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