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Employers Can Expect Leniency, Not Freedom From U.S. Regulators

May 22, 2020, 7:45 PM

Employers can expect leniency from federal regulators as they ramp up operations after virus-induced shutdowns, as long as they are able to demonstrate substantial good-faith efforts to adhere to recent updates to agency rules and guidance.

A new executive order President Donald Trump signed this week was intended to boost economic recovery in part by instructing agencies to overlook certain regulatory violations if a business tries to follow federal best practices for preventing the spread of the novel coronavirus.

But even with the order, agencies still have plenty of legal authority to bring an enforcement action if they choose. That puts the onus on the Department of Labor and other agencies that enforce workplace laws to carry out Trump’s directive by developing a process to give businesses the confidence to reopen, but without offering a free pass to willful violators, several management and labor attorneys said. New guidance to clarify the parameters of good-faith compliance envisioned by the order would be helpful, lawyers said.

“When it comes to addressing the economic urgency, I think that DOL’s going to take some special care to make workplace obligations as crystal clear as humanly possible,” said Jonathan Berry, who left as DOL’s head of policy in April.

“I wouldn’t expect rules that go to core rights and obligations changing,” he said. “Certain kinds of recordkeeping, for example, I can see those being at least looked at,” Berry, now a partner at administrative law firm Boyden Gray & Associates in Washington, added.

Trump’s order responded to one of the business community’s top requests as employers navigate the risk associated with reopening. It directs agency heads to provide businesses the guidance they need to reopen; recognize employers’ efforts to comply with often-complex regulations in swiftly changing circumstances; and commit to fair administrative enforcement and adjudication.

In that spirit, agency heads may “decline enforcement against persons and entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards,” the order said.

Not a Full Shield

DOL leaders have repeatedly said the Occupational Safety and Health Administration, the department’s main workplace safety enforcement agency, will use a provision of law known as the general duty clause to cite employers for virus-related issues, when the agency doesn’t have a rule specifically addressing hazards posed by communicable disease. The clause in the Occupational Safety and Health Act requires employers to provide workplaces that are free of known, serious hazards that can be feasibly mitigated.

OSHA in April issued enforcement guidance stating the agency will use discretion in some circumstances where employers determined protective measures weren’t feasible, a DOL spokesman said. However, employers are encouraged to document their compliance efforts in order to be considered for a “good faith” exemption.

During the pandemic, the general duty clause might be applied to cases where workers were exposed to the virus at workplaces and government lawyers can prove that employers ignored Centers for Disease Control and Prevention, OSHA, or industry guidelines for protecting workers.

Attorneys who have prosecuted and defended employers cited for general duty clause violations prior to the pandemic have differing opinions on how a good-faith exemption could be applied to general duty clause cases.

“There is no good-faith defense to the general duty clause in the statute,” said Patricia Smith, the Labor Department’s top attorney during the Obama administration.

“OSHA could institute a nonenforcement policy for any of its standards and the general duty clause based upon good faith,” Smith said. The decision to invoke a good-faith exemption may not be reviewable by courts, she added, because agencies have wide discretion to institute enforcement policies.

Baruch Fellner, an industry-side attorney and partner with Gibson, Dunn & Crutcher LLP, said general duty citations are part of “a very fact-intensive inquiry.”

“By its terms, there’s little room for the consideration of good faith when an employer allegedly ignores a recognized hazard,” Fellner said.

Jonathan Snare, a management-side attorney with Morgan, Lewis & Bockius LLP in Washington who served as OSHA’s acting administrator during the George W. Bush administration in 2005 and 2006, said he believes DOL should issue guidance on how the executive order will be carried out.

Snare views the executive order as extending good-faith review to any virus-related citation OSHA can issue, not just to subjects, such as respirators, on which OSHA has already told inspectors to consider whether employers made a genuine attempt to comply.

If OSHA decides to pursue a general duty clause citation, the employer could include the company’s good-faith efforts to comply as part of its defense, Snare said.

Higher Adjudication Standard

Employers also could see some protection from a section of the order directing agency heads to “consider the principles of fairness in administrative enforcement and adjudication.” The listed principles include that liability should be imposed only for violations of statutes or duly-issued regulations, after notice is provided and companies are given an opportunity to respond.

This section could give employers a significant upper hand in investigations. Certain aspects of it raise concerns for workers, said Terri Gerstein, director of the state and local enforcement project at Harvard’s Labor and Worklife Program. She cited a principle calling for enforcement to be “free of unfair surprise.”

“In the workplace enforcement field, you have to do unannounced inspections and investigations,” said Gerstein, former labor bureau chief in the New York attorney general’s office. “If they’re announced, people get coached, evidence gets destroyed, places get cleaned up.”

“All of this is really a call for states and localities to stand up and protect people, as well as private lawyers and public interest lawyers,” Gerstein added.

Is Anyone at Fault?

The executive order is “actually pretty tailored” to the current emergency situation, said Patrick Hedren, vice president of litigation and deputy general counsel at the National Association of Manufacturers.

During the pandemic’s early stages, there were situations in which CDC and OSHA directives were pointing in slightly different directions, and combined with orders from states and municipalities, businesses were faced with layers of guidance about what they should or shouldn’t do, he said.

Yet even with essential businesses’ best efforts to adhere to applicable guidance, the virus continues to spread, Hedren said. “There may or may not be really any fault on the part of an employer or a business owner or somebody in doing that; it’s a highly transmissible disease,” he said.

Federal agencies are getting better at aligning their guidance, Hedren said, but confusion could increase as businesses reopen.

Joshua Ditelberg, an employment attorney at Seyfarth Shaw LLP in Chicago, said regulations and guidance are going to have ambiguities no matter how well drafted they are. “You’re never going to confront a perfect system where every interpretive question is clear,” he said.

Guidance that stems from the order is going to be valuable to practitioners as they advise clients in real time with respect to regulatory ambiguities, Ditelberg said.

The Worker Adjustment and Retraining Notification Act has a good-faith defense built into the statute, so relying on guidance from DOL or some other agency can be of use in trying to invoke that kind of defense in an enforcement action, Ditelberg said.

“One thing that would be helpful to practitioners, regardless of who you represent, is additional clarity from the Department of Labor’s perspective on key concepts,” Ditelberg said. “For example, what layoffs and terminations are reasonably foreseeable, particularly with giving notice, especially as the employment situation evolves over time?”

To contact the reporters on this story: Cheryl Bolen in Washington at cbolen@bgov.com; Bruce Rolfsen in Washington at BRolfsen@bloomberglaw.com; Ben Penn in Washington at bpenn@bloomberglaw.com; Fatima Hussein in Washington at fhussein@bloombergenvironment.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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