“_______________________________ :SECRETARY OF LABOR : : Complainant : : v. : Docket Nr. 97-1230 & 97-1626 :TEAM AMERICA CORPORATION, : : Respondent :_______________________________:AppearancesFor Complainant: For Respondent: Patrick L. DePace, Esq William W. Johnston, Esq Office of the Solicitor Worthington, Ohio U.S. Department of Labor Cleveland, OhioBefore: JOHN H FRYE, III, Judge_DECISION AND ORDER_The responsibility for OSHA violations rests with the employer who ownsthe business in which they occurred or with a person who, based on acommonality of economic interests with the business owner, has theability to control that business. The statutory and case law is all tothis effect. Here, OSHA seeks to depart from that principle based on theexistence of an employer-employee relationship between a group ofexposed employees and an employer that has no interest in and noknowledge of the business in which the exposure occurred, and oncontract provisions that appear to give that employer the authority tocontrol some aspects of that business.TEAM America Corporation is a professional employer organization, thatis, an organization that provides human resource services to small andmedium sized businesses and becomes the administrative employer of itsclient’s workers. Professional employer organizations have found amarket for payroll and similar services because these often prove tooburdensome for small and mid-sized businesses. TEAM America entered intosuch an arrangement with Epro, Inc., a small ceramic tile manufacturerlocated at 156 East Broadway Street, Westerville, Ohio. In the words ofa management official at Epro, Team America \”bought\” Epro’s employees.On June 20, 1997, OSHA began an inspection at Epro’s premises. As aresult of this inspection, identical citations were issued to both Eproand TEAM America.[1] Epro abated the violations and settled the matterwithout a trial. TEAM America contested the citations and theseproceedings resulted. TEAM America admits jurisdiction of theCommission. Its sole defense is that it is not responsible for theseviolations under the Occupational Safety and Health Act. It does notcontest the merits of the citations. I heard the case in Columbus, Ohio,on May 27, 1998.The Secretary makes two arguments to support her position. First, as theemployer of the exposed employees, the Secretary urges that TEAM Americais liable for the alleged violations. The Secretary maintains that TEAMAmerica has an obligation to provide a safe workplace for its employeesregardless of the degree to which it controls the worksite. It isundisputed that all of the employees who worked at Epro at the time ofthe inspection were employees of TEAM America (Tr. 6-7, 16-18, 101-103).The contract between TEAM America and Epro provides that \”[t]o theextent permitted by law, TEAM America shall be the employer of theemployees.\” (GX 1). Therefore, the Secretary urges, to find that TEAMAmerica is not liable for the alleged violations requires a determination that under certain circumstances an employer is notobligated to provide a safe workplace for its employees. Such adetermination, she points out, would be contrary to the Act itself andmany years of Court and Commission interpretation of the Act.The difficulty with the Secretary’s position is that it fails torecognize the realities of the relationships among TEAM America, Epro,and the exposed employees. There is no dispute that the business of TEAMAmerica is leasing employees and not manufacturing ceramic tile. TEAMAmerica has no interest in the business of Epro.[2] It functions solelyas the administrative employer, discharging payroll and similarresponsibilities.[3] The Secretary and TEAM America stipulated that thelatter \”… was an employer employing employees in said business at theaforesaid workplace.\”[4] ‘Said business’ refers to Respondent’s\”business as a lessor of personnel\”,[5] and ‘the aforesaid workplace’refers to \”156 East Broadway Street, Westerville, Ohio,\”[6] the locationof Epro’s factory.[7] Here the cited party, TEAM America, provided theservices rendered by the affected workers in Epro’s workplace, usingEpro’s machinery and equipment, and in furtherance of Epro’s business.The Secretary assumes that the exposed employees are employed by TEAMAmerica for purposes of the Act. However, ‘ 3(6) of the Act defines’employee’ as \”… an employee of an employer who is employed in abusiness of his employer ….\” (Emphasis added.) The manufacture ofceramic tile is not a business of TEAM America. Thus it appears that theexposed employees were not \”employed in a business of [TEAM America],\”and consequently fall outside the sweep of the definition of ’employee’in ‘ 3(6).While the Secretary has cited numerous cases for the proposition that anemployer has the obligation to provide his employees a safe workingenvironment wherever they may be, none of those cases involved employeeswho were working in a business that was different from their employers’businesses. Indeed, all were engaged in performing work that wasnormally undertaken by their employers. And in one of them, Dayton Tire& Rubber Company, 2 OSHC 1528, 1529 (Rev. Com. 1975), the Commissionreached a result that is consistent with the view that an employee issomeone who is engaged in the business of his or her employer. Daytonhad leased employees, and stood in the same place as Epro stand s here.The citation charged that Dayton had not maintained certain requiredOSHA forms. Dayton argued that that responsibility rested with thelessor of the employees, who had maintained the forms. The Commissionrejected that argument, holding that Dayton was the employer forpurposes of recordkeeping, and that the company leasing the employees toDayton was a mere agent furnishing personnel services. The Commissionnoted that, while Dayton might contract with the lessor to perform thefunction, it could not avoid the responsibility.[8]The definition of employee as someone \”employed in a business of hisemployer\” recognizes the economic reality that an employer is unlikelyto be able to control the conduct of a business that it does not own,and will not be able to correct violations of OSHA standards occurringin that business. Thus the conclusion that the exposed employees in thiscase were not engaged in TEAM America’s business might well end thisinquiry. However, TEAM America’s response to the OSHA inspection,coupled with certain provisions of the contract between TEAM America andEpro, provide a reasonable basis on which to question whether TEAMAmerica had a greater role than that of an agent providing personnelservices. Consequently, it is necessary to look at the facts concerningthe extent of TEAM America’s involvement in the supervision and controlof the employees and Epro’s operations.Scott Feil, the compliance officer, described the events that occurredwhen he arrived on Epro’s premises as follows: Q Do you recall when you first learned that Team America might be involved? A Upon arrival to the site was the first hint I had. Q And, do you recall who told you that? A I would say it would have been Ms. Brooks, Nancy Brooks, or Mr. Marteney. It happened very soon, whoever the first person I talked with discussed it because it was a relatively new situation and they wanted me to be immediately aware of it and they did. * * * Q Do you recall what you were told? A That the employees were not employees any longer of Epro, that — I think the terminology that was used was that they bought the employees of Epro and that they received their pay checks from Team America and it was at that point that I determined very definitely that I needed to make contact with Team America and find out a little more about the situation. Q And, what did you do then? A Eventually I was able to speak with Kyle Seymore. * * * I explained to Mr. Seymore the purpose of the investigation, the nature of the visit. I discussed all the rights and responsibilities as they were related to a standard OSHA inspection, that we cover an opening conference as we do in any other inspection. At that point one of the initial things I do is identify who is available to represent the employer, this employer being Team America and Mr. Seymore identified that either Ms. Brooks or Mr. Marteney or both could act in conjunction for the company in regards to the work place inspection. At that time, as well, he intimated that this was not an unusual situation for them, that they were, in fact, the Team America reps in terms of safety on the site during that same phone conversation that was discussed. Q Who was Kyle Seymore? A His job title is like a service rep, an account rep. I don’t recall the exact title. My understanding was that he serviced the Epro account is how it was presented to me. Q He’s an employee of Team America? A He was a management employee of Team America. Q How did you know to call him? A I don’t know that necessarily I placed the phone call. I don’t believe I placed the phone call, I believe one of the Epro employees contacted Mr. Seymore and then they talked briefly and then I spoke with him and discussed the things I previously mentioned. Q Did you tell him that Team America had the right to have somebody accompany you during your inspection? A Yes, and it was at that point that he indicated that Ms. Brooks or Mr. Marteney, or both, could perform that function. Q And, did they accompany you on your inspection? A Yes, predominantly throughout the course of the inspection from the beginning to the end Mr. Marteney did that. Ms. Brooks was involved with various parts of it as well. Q Did anybody else accompany you during the inspection? A Mr. Seymore did arrive on site later that day on the first date on-site. We were into the walk-around portion of the inspection, it was — I don’t recall the amount of time that had elapsed from the phone call, it was fairly quickly, within a two hour period, I would estimate. As I recall, he was not on-site during the second day where I performed the employee exposure monitoring where I was there for a full eight hour day basically.[9]TEAM America’s response to Mr. Feil indicated that it had assumed atleast some of the responsibility for safety at the Epro plant, and thisjustified the inference that it had the ability to exercise the controlnecessary to provide a safe workplace. This inference is furthersupported by provisions in the contract between TEAM America and Epro,which provides TEAM America with a variety of ways to control theactivities of the workers at Epro. In particular, the Secretary relieson the following provisions of the contract between TEAM America and EPRO:1. TEAM America has the exclusive right \”[t]o supervise through TEAMAmerica personnel or agents the employees’ performance of their dutiesunder criteria established by TEAM America\” (Govt Ex 1, & 2.A.ii.);[10]2. TEAM America may inspect the workplace (Govt Ex 1, & 6.D.);3. TEAM America has the right \”[t]o determine and control all otherconditions incidental to employment of employees\” (Govt Ex 1, & 2.A.xi.);4. TEAM America may designate an on-site supervisor who may \”determinethe procedures to be followed by employees regarding the time andperformance of their duties\” (Govt Ex 1, & 2.C.iii.); and5. EPRO must \”comply, at its expense, with any specific directives ofTEAM America, TEAM America’s workers compensation carrier or anygovernmental agency having jurisdiction over Health Laws\” (Govt Ex 1, &6.B.).The testimony at the hearing indicated that TEAM America did not, infact, unilaterally exercise any of these enumerated powers in theoperational area. Ms. Edgar, the owner of Epro, testified that she hadbeen told by TEAM America that they had safety consultants available andwould assist Epro in developing a safety program. She indicated that nosuch services were provided. (Tr. 13, 21, 22.) She further testifiedthat TEAM America provided no training, conducted no inspections, doesnot control Epro’s worksite, and did not maintain the OSHA 200 log. (Tr.13-16, 31.) She indicated that, should Epro request it, TEAM America hadthe authority to discipline employees. (Tr. 15.)Mr. Cash, testifying on behalf of TEAM America, pointed out that thecontract specifically states that TEAM America does not undertake tocontrol Epro’s business premises, and that it has no authority under thecontract to correct violations of OSHA standards occurring on thepremises. (Tr. 113, 115-16, 119.) He indicated that TEAM America couldnot refuse to allow employees to work in unsafe conditions, but that itcould, if it became aware of a problem, tell a client to follow OSHAstandards and could treat the client’s future failure to do so as abreach of the contract justifying termination.[11] (Tr. 120.) The gistof Mr. Cash’s testimony was that, in exercising any of the enumeratedcontractual powers in the area of Epro’s operations, TEAM America wouldonly act at the instance of Epro. (Tr. 121-26.)Indeed, it is hard to imagine how the relationship between TEAM Americaand Epro could be otherwise. It is self-evident that no business ownerwould willingly relinquish control of the operation of his or herbusiness to an organization that possessed no knowledge of thatbusiness. The realities of the relationship between TEAM America andEpro dictate the conclusion that TEAM America, if it wanted to preservethat relationship, would not venture into the area of Epro’s operationswithout an invitation.The Secretary correctly points out that the Commission has held that indetermining whether a company has an employment relationship with anindividual, the key factor is control of the workplace. The Secretarycites several cases, two of which, \/MLB Industries, Inc.\/, 12 OSHC 1525(Rev. Comm. 1985), and \/Vergona Crane Co.\/, 15 OSHC 1782 (Rev. Comm.1992), are instructive.\/MLB Industries, Inc., supra\/, supports the conclusion that the exposedemployees were not employees of TEAM America for purposes of the Act. Inthat case, Crown Zellerbach was the owner of and general contractor fora construction project in upstate New York. MLB had entered into acontract with Crown Zellerbach to complete some work on a warehouse inconnection with this project. MLB had a contract with the local unionand thus access to union labor, but Crown did not. Crown called on MLBto furnish laborers to it, representing that it had an emergencysituation on its hands at a location one-quarter mile from MLB’swarehouse project and that it would take responsibility for furnishingtools and supervising the work. MLB obtained the laborers from thehiring hall and billed Crown for their wages and payroll costs, adding10% markup to cover its costs.The work involved the removal of six or seven sections of concreteflooring. In the course of the work, a floor collapsed, causing anemployee to fall. OSHA cited MLB for failing to require the employees touse safety belts, and the citation was affirmed by the AdministrativeLaw Judge. On appeal, the Commission reversed. After noting that \”…Crown had the power to direct the employees’ activities and to insurethat the work was done safely,\” the Commission stated: In contrast to Crown’s direct control over the employees’ activities …, MLB’s power to control the employees and to modify their working conditions was largely indirect or theoretical. Although MLB selected and contacted the employees about the job, there was no showing that MLB’s initial contact with the employees had an impact upon how they performed their work or their safety. Although MLB may have had the authority to withdraw the laborers from the worksite, to fire them, and to assign other laborers to do the work, MLB was not performing any work at the [worksite] and did not take any role in determining how the concrete floor was to be removed. Further, there is no indication that MLB knew of any circumstances that would have required it to take action with respect to the workers’ employment, either for safety purposes or for any other reason. Therefore, MLB did not have sufficient control of the work environment or employees’ activities to support a finding that it was an employer under the Act.12 OSHC at 1529 (footnote omitted). While the relationship between TEAMAmerica and Epro differs slightly from that described above, TEAMAmerica’s control over the work and work place is just as indirect ortheoretical as MLB’s. \/MLB Industries, Inc.\/ supports the conclusionthat TEAM America lacked sufficient control of the operational aspectsof the work and work place to hold it responsibile for violations ofOSHA standards.\/Vergona Crane Co., supra\/, involved a situation in which Vergona hadleased a crane to a construction company that had, at Vergona’s request,put the crane operator and oiler on its payroll. Vergona was cited forhazards to which the operator and oiler were exposed, and defended onthe ground that these individuals were employees of the constructioncompany. The Commission rejected this defense, noting that the right tocontrol the work of the operator and oiler rested with Vergona, not theconstruction company. Similarly, here the right to control the work ofthe exposed employees remained with Epro, not their administrativeemployer, TEAM America.CONCLUSIONS OF LAWI conclude that the exposed employees were not employees of TEAM Americawithin the definition of employee set out in ‘ 3(6) of the OccupationalSafety and Health Act, and that because TEAM America lacked the abilityto control the operational aspects of their work and their work place,TEAM America is not responsibile for violations of OSHA standards towhich they may have been exposed.ORDERThe citations filed against TEAM America are vacated. JOHN H FRYE, IIIJudge, OSHRCDated:Washington, D.C.————————————————————————[1] In Team America’s cases, one serious and one other-than-seriouscitation in Docket Number 97-1230 cover three alleged safety violations,and one serious citation in Docket Number 97-1626 covers allegedexposure to silica dust. The recommended penalties against Team Americadiffered from those recommended against Epro because of the applicationof the adjustment factor for size.[2] Tr. 27-28, 111-13; Govt Ex 1, & B.[3] Tr. 9.[4] Stipulation 4, JX 1.[5] Stipulation 2, JX 1.[6] Stipulation 3, JX 1[7] Tr. 6, 8, 41, 42.[8] Here, Epro maintained the OSHA 200 log. (Tr. 14.)[9] See Tr. 42-45.[10] The supervisors at the Epro worksite were employees of TEAM America(Tr. 12, 20, 22, 118). The Secretary maintains that TEAM America’s powerto establish criteria gives it the authority and ability to assure asafe workplace at Epro.[11] In \/IBP v. Secretary\/, 144 F.3d 861 (D.C. Cir. 1998), the courtheld that the power to terminate a contract was not, by itself,sufficient to give its holder the power to control the work.————————————————————————OSHRC Home “