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Article Excerpt
I. INTRODUCTION
II. WORKER SAFETY A. Occupational Safety and Health Act 1. Employer's Willful Violation of Standard Causing Death a. Elements of the Offense i. Employer ii. Willful Violation iii. Specific Standard, Rule, Order, or Regulation iv. Causes Death b. Defenses i. Preemption ii. Isolated Occurrence iii. Impossibility of Compliance iv. Greater Hazard v. General Defenses 2. False Representations 3. Enforcement 4. Penalties B. Federal Mine Safety and Health Act III. THE FAIR LABOR STANDARDS ACT A. Elements of the Offense 1. Employee 2. Employer 3. Willful Violation B. Penalties C. Enforcement IV. PAYMENT OR LOANS BY EMPLOYER TO EMPLOYEES OR LABOR ORGANIZATIONS A. Elements of the Offense 1. Employer 2. Willfulness 3. Pay or Lend Money or Thing of Value 4. Employee or Representative of an Employee 5. Requests or Receives B. Exceptions C. Penalties V. PROTECTING UNION FUNDS UNDER THE LABOR-MANAGEMENT REPORTING AND DISCLOSURE ACT A. Elements of the Offense 1. Officer or Employee 2. Appropriation of Union Assets for One's Own or Another's Purpose 3. Fraudulent Intent B. Defenses C. Penalties
I. INTRODUCTION
This article analyzes criminal statutes that punish employers for violations of occupational safety and employment standards. The regulatory scheme was enacted to ensure worker safety, eliminate labor conditions detrimental to the nation's commerce and the general welfare of workers, and provide labor unions with greater protection from corrupt union and management officials. Section II of this article discusses criminal sanctions relevant to worker safety under the Occupational Safety and Health Act ("OSH Act") (1) and the Federal Mine Safety and Health Act ("FMSHA"). (2) Section III analyzes criminal sanctions applicable to employment practices under the Fair Labor Standards Act ("FLSA"). (3) Section IV discusses the Labor Management Relations Act ("LMRA"), which prohibits employers from making payments and loans to employees or labor organizations. (4) Finally, Section V reviews [section] 501(c) of the Labor-Management Reporting and Disclosure Act ("LMRDA"), which prevents appropriations of union funds for non-union purposes. (5)
II. WORKER SAFETY
This section discusses criminal laws relevant to worker safety. Part A analyzes the OSH Act (6) by examining two offenses: (i) willful violation of a specific standard resulting in employee death and (ii) false representation. In addition, this section discusses enforcement of these provisions and the applicable penalties for offenses. Part B discusses FMSHA, (7) including the elements of the offenses.
A. Occupational Safety and Health Act
Congress enacted the OSH Act in response to increasing numbers of employee deaths and injuries in the late 1960s. (8) The OSH Act's general duty clause requires employers to furnish their employees with a working environment free from recognized hazards, (9) and the special duty clause requires employers to comply with the standards promulgated under this Act. (10) The statute also requires compliance with specific occupational safety and health rules promulgated by the Secretary of Labor. (11)
The OSH Act provides for criminal sanctions (12) in three situations: (i) when an employer's willful violation of a standard, rule, order, or regulation causes the death of an employee; (13) (ii) when an individual makes a false representation regarding OSH Act compliance; (14) and (iii) when any person gives advance notice of an inspection. (15)
1. Employer's Willful Violation of a Standard Causing Death
a. Elements of the Offense
Criminal sanctions may be imposed if (i) an employer (ii) willfully violates (iii) a specific standard, rule, order, or regulation, (iv) which causes the death of an employee. (16)
i. Employer
The OSH Act defines an employer as "a person engaged in a business affecting commerce who has employees, but does not include the United States ... or any State or political subdivision of a State." (17) Although corporate officers in their individual capacities may be criminally sanctioned under the OSH Act, (18) in the Third, Fifth, and Seventh Circuits a "mere employee" (one who is not an officer) cannot be held criminally liable for aiding and abetting an employer. (19)
In multiple-employer workplaces, the employer who creates or controls a hazard may be liable for hazards affecting employees of the other employers in that workplace. (20) This doctrine applies when more than one party's employees share a single workplace. (21) Of the courts to consider the multi-employer doctrine, only the Fifth Circuit has rejected it. (22) The D.C. Circuit has specifically avoided ruling on the issue. (23)
Significantly, the employer controlling the workplace may be liable for hazards to other employer's employees, even if the controlling employer did not create the hazard. (24) However, this long-standing principle has recently been called into question by a 2007 decision of the Occupational Safety and Health Review Commission. (25)
ii. Willful Violation
"Willful violation" is not defined in the OSH Act. Most courts have generally followed the Review Commission and Secretary of Labor's interpretation: a voluntary action, done with either intentional disregard of, or with plain indifference to, the statutory requirements. (26) Even a single violation may be found to be willful, regardless of whether the workplace is otherwise safe. (27) Some circuits impose liability without requiring a showing of malice or bad intent. (28) Finally, a simple good faith belief that alternative measures are in compliance with the purpose of a standard is not sufficient to avoid liability. (29)
iii. Specific Standard, Rule, Order, or Regulation
To violate the OSH Act, an employer must willfully or repeatedly fail to comply with a specific standard, rule, order, or regulation. (30) The Secretary of Labor has the burden of proving a willful violation occurred. (31) While employers are typically cited for willful violations of a specific safety standard, (32) they are still subject to the general duty clause requiring an employer to furnish a safe work environment. (33)
iv. Causes Death
For an employer to be held criminally liable, the willful violation must result in the death of an employee. (34) The OSH Act defines employee as "an employee of an employer who is employed in a business of his employer which affects commerce." (35) Causation has not been a significant issue because the legislative history of the OSH Act seems to support a lenient interpretation of the definition. (36)
b. Defenses
This section discusses possible defenses available to an employer: (i) preemption; (ii) isolated occurrence; (iii) impossibility of compliance; (iv) greater hazard; and (v) additional general defenses. The employer has the burden of raising and proving an affirmative defense. (37)
i. Preemption
An employer may be able to present an affirmative defense of preemption.
Occupation Safety and Health Administration ("OSHA") regulations governing the working conditions of employees (38) are preempted by regulations or standards affecting occupational safety and health enacted by other federal agencies. (39) Although the rationale supporting such preemption is broadly phrased, the determination of whether the OSH Act is preempted turns on whether other agencies have actually exercised their authority to regulate occupational safety. (40)
ii. Isolated Occurrence
The isolated occurrence defense (41) is one of the most frequently litigated defenses to OSH Act citations. (42) Under this defense, employers can assert that the violation in question resulted from an isolated occurrence caused by the inappropriate or unforeseeable action of an employee. (43) When there is a violation of the general duty clause and an employer asserts this defense, the burden of proof is on the Secretary of Labor. (44)
There is a split among the federal circuit courts as to who has the burden of proof when this defense is raised in the context of a violation of the special duty clause. In the majority of circuits, when the Secretary of Labor has made a prima facie case of violation of the special duty clause, the defense is considered affirmative. (45) These circuits require that, in order to assert the defense successfully, the employer must demonstrate that it: (i) established a safety rule; (ii) adequately communicated the rule to employees; (iii) took steps to discover noncompliance; and (iv) effectively enforced the rule when violations were discovered. (46) However, the Third, Fourth, and Tenth Circuits require the Secretary to establish, as part of his prima facie case, that the violation was not the result of unforeseeable employee misconduct. (47)
iii. Impossibility of Compliance
An employer can assert the defense of impossibility if compliance cannot be achieved. (48) To establish this defense, the employer must prove that: (i) compliance was not possible or would preclude performance of the work; (49) and (ii) alternative safety measures were used when available. (50)
iv. Greater Hazard
An employer may also assert the avoidance of a greater hazard as an affirmative defense. (51) To establish the greater hazard defense, the employer must prove that:
(i) the hazards of compliance are greater than the hazards of noncompliance; (ii) alternative means of protection were unavailable; (52) and (iii) a variance was unavailable or inappropriate. (53)
v. General Defenses
The OSH Act imposes a six-month statute of limitations on the issuance of citations. (54) In addition, an employer may claim that OSHA's failure to issue a citation "with reasonable promptness" is cause for vacating the citation. (55) However, courts have declined to credit this defense absent an affirmative showing that prejudice resulted from the delay. (56)
An employer can also claim vindictive prosecutions The four elements of vindictive prosecution are: "(i) the exercise of a protected right; (ii) the prosecutor's 'stake' in the exercise of that right; (iii) the unreasonableness of the prosecutor's conduct; and, presumably, (iv) that the prosecution was initiated with the intent to punish the plaintiff for exercise of the protected right." (58)
2. False Representations
The OSH Act provides that anyone who "knowingly makes any false statement, representation, or certification in any application, record, report, plan, or other document filed or required to be maintained pursuant to [the OSH Act]" may be criminally prosecuted. (59) Unlike the willful violation section of the OSH Act, criminal liability can be imposed on a broader class of individuals than just those falling under the definition of "employer." (60)
3. Enforcement
OSH Act violations are infrequently enforced. (61) Also, OSHA has used settlements in place of referring cases for criminal prosecution; recent settlements have combined monetary penalties with other sanctions. (62)
Because of poor enforcement, critics claim the OSH Act's criminal standards do not serve as a deterrent to employers. (63) Several solutions have been offered. One suggestion is to use the "knowing endangerment" provisions of the Clean Water Act (64) and the Resource Conservation and Recovery Act (65) to supplement the enforcement of the OSH Act. (66) Another approach employed by OSHA during the Bush Administration was to focus on three areas: strong, effective, fair enforcement; outreach, education, and compliance assistance; and partnerships and voluntary programs. (67) This three-prong approach was created to reach the "triple bottom line" of reduced occupational fatalities, reduced occupational injuries, and reduced occupational illnesses. (68) OSHA pledged to conduct 36,400 inspections in 2002, the highest total in eight years, and to add another 1,300 in 2003; it exceeded expectations with 37,493 actual inspections in fiscal year 2002 and almost 40,000 in 2003. (69) In FY2007, OSHA conducted 39,324 inspections. (70)
Several commentators have also argued that state criminal laws may be better suited to deter employer conduct than the federal scheme. (71) The OSH Act does not prohibit states from imposing certain state criminal sanctions that protect the public at large. In Gade v. National Solid Wastes Management Ass'n, the Supreme Court stated, in dicta, that "state laws of general applicability (such as laws regarding traffic safety or fire safety) that do not conflict" with the OSH Act would not generally be preempted. (72) Furthermore, the OSH Act does not preempt the application of traditional state criminal laws in the workplace context. (73) For example, employers whose OSH Act violations result in death may be prosecuted for homicide under state criminal statutes. (74)
4. Penalties
Congress provided for both civil and criminal penalties to enforce the OSH Act's worker safety mandate. (75) For a first conviction of a willful violation causing death to an employee, an employer faces a fine of up to $10,000, imprisonment for up to six months, or both. (76) For subsequent convictions, an employer faces fines of up to $20,000, imprisonment for up to one year, or both. (77) A person convicted of providing unauthorized advance notice of any inspection conducted under the OSH Act may be subjected to a fine of up to $1,000, imprisonment for up to six months, or both. (78) Convictions for making false representations in documentation required under the OSH Act are punished with fines of up to $10,000, imprisonment for up to six months, or both. (79)
B. Federal Mine Safety and Health Act
The Federal Mine Safety and Health Act of 1977 ("FMSHA") (80) protects mine worker health and safety through a combination of civil, criminal, and administrative enforcement mechanisms. (81) A mine is defined broadly as "an area of land from which minerals are extracted in non-liquid form or, if in liquid form, are extracted with workers underground." (82) This definition also includes private roads, tailing ponds, retention dams, and other facilities associated with a mine. (83)
The FMSHA imposes both criminal and civil liability for willful violations. (84) Corporate officers, directors, and agents of a corporate operator who knowingly authorize, order, or carry out a violation are subject to penalties under the FMSHAY. (85) However, agents of non-corporate operators are not subject to such penalties. (86) Criminal liability may also attach to any person who: (i) gives advance notice of any inspection to be conducted under FMSHA; (87) (ii) knowingly makes any false statement, representation, or certification in any application, record, report, plan, or other document filed or required to be maintained pursuant to FMSHA; (88) or (iii) distributes, sells, offers for sale, introduces, or delivers in commerce any non-complying equipment for use in a mine, including components and accessories of such equipment, which is represented as complying with FMSHA or other relevant provisions. (89)
III. THE FAIR LABOR STANDARDS ACT
The Fair Labor Standards Act ("FLSA") (90) of 1938 was enacted to eliminate labor conditions detrimental to the nation's commerce and the general welfare of workers. (91)
The FLSA prohibits an employer from: (i) failing to pay the federal minimum wage (92) or overtime compensation to an employee; (93) (ii) failing to keep individual work records for each employee; (94) (iii) discriminating on the basis of sex by paying different wages for equal work; (95) (iv) or using oppressive child labor. (96) The FLSA also makes it unlawful for an employer to discharge or discriminate against an employee due to the employee's filing of an FLSA complaint or instituting an FLSA proceeding. (97) Further, the FLSA prohibits the transport and sale of products manufactured by employees subjected to any of these unlawful practices. (98)
The FLSA also includes a "hot goods" ban, which makes it an offense to purchase goods from an establishment where an FLSA violation has occurred, unless the purchase was made in good faith and without knowledge of the business's violations, or the purchaser is the ultimate consumer. (99) The Wage and Hour Division of the Department of Labor advises companies to supervise their suppliers by specifying in the contract with the supplier that all goods purchased must be produced in compliance with the law or by checking occasionally on the supplier's employment practices. (100) The Wage and Hour Division will not prosecute companies for the violations of their suppliers as long as a company makes a "good faith effort" to avoid buying "hot goods." (101)
A cause of action under the FLSA preempts general federal criminal statutes. (102) Thus, the prosecution of employers for violations covered by the FLSA may proceed only under the FLSA provisions and only the penalties provided in the statute may be sought. (103) However, an action can be brought under state wage statutes, provided they are not in conflict with the applicable FLSA provisions. (104) The FLSA specifies that its minimum wage standards are the floor, not the ceiling, and that its provisions do not excuse an employer who violates a state or federal law that may set a higher minimum wage or a shorter workweek. (105) FLSA provisions cannot be waived even if the waiver is obtained through a collective bargaining agreement. (106)
Part A of this section reviews the elements of an FLSA offense; Part B addresses penalties under the FLSA; and Part C examines enforcement of the statute.
A. Elements of the Offense
Any person who willfully engages in an act prohibited by the FLSA may be punished by criminal sanctions. (107) This section will define (i) employee; (ii) employer; and (iii) willful violation.
1. Employee
The FLSA defines an employee as an individual "employed by an employer." (108) The court must look to the activities of the employee, as opposed to the business of the employer, to determine if the FLSA covers a particular individual. (109) Courts have frequently found an employer-employee relationship under the FLSA where one may not have existed at common law. (110) To "employ" in the context of the FLSA means "to suffer or permit to work." (111)
The FLSA differentiates between independent contractors and employees. No bright line rule exists for determining whether an individual is an independent contractor or employee under the FLSA. Instead, a case-by-case determination is necessary. (112) In determining whether a worker is an employee or independent contractor, courts look to the amount of control and supervision exercised by the employer over the work of the individual concerned. (113) If the employer exercises extensive control over the individual, then the court will treat the worker as an employee. (114) Thus, the "economic reality" of the work situation, rather than the variety of work performed, determines whether a worker is an employee or an independent contractor. (115)
The FLSA also has special provisions addressing the employment conditions of unique positions, such as domestic servants, hospital workers, firefighters, police officers, and transportation workers. (116) The FLSA does not offer employee status to volunteers of public agencies. (117) The FLSA also provides for the issuance of special certificates authorizing work at lower wages to encourage the employment of certain individuals traditionally denied opportunities to work. These individuals may include learners and apprentices, students, messengers, and handicapped workers. (118)
The FLSA further provides that "any employee employed in a bona fide executive, administrative, or professional capacity" is exempt from the overtime provisions of the FLSA. (119) The Wage and Hour Division has promulgated regulations and interpretations in determining whether an employee fits one of these exemptions. (120) Federal regulations once employed two tests for determining whether a person is an exempt employee. The "long test" applied to those who earned less than $250 per week, while the "short test" applied to those who earned $250 or more per week. (121) The Wage and Hour Division recently overhauled the regulations, promulgating a new rule replacing the "short" and "long" tests with a single standardized test. (122) The FLSA also contains many specific exemptions in addition to the general executive, professional, and administrative exemptions described above. (123)
2. Employer
The FLSA defines employer as "any person acting directly or indirectly in the interest of an employer in relation to an employee." (124)
An employer can be an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons. (125) Federal regulations acknowledge that an employee may be employed jointly by two or more employers. (126) In the corporate context, in addition to the corporation itself, corporate officers with operational control are considered employers and can be held jointly and severally liable in their individual capacities for unpaid wages. (127)
The statute covers individual employers in "industries engaged in commerce or in the production of goods for commerce." (128) The FLSA applies to individual employers and to employers constituting an "enterprise." (129) Liability applies to individual business entities if they constitute an "enterprise" where related activities are performed through a unified operation or where there exists common control for a common business purpose. (130) Much litigation has been devoted to determining which businesses constitute enterprises within the meaning of the statute. (131)
The definition of employer excludes any person acting as an officer or agent of a labor organization and the labor organization itself, except when the labor organization acts in the capacity of an employer. (132) Labor organizations are unique in that criminal, but not civil, remedies may be sought against them. Section 216(a) provides for criminal penalties for willful violations by "[a]ny person," (133) while [section] 216(b) allows for a civil action for monetary damages against "[a]ny employer." (134) The Act provides for enforcement against labor organizations by either injunctive proceedings instituted by the Secretary of Labor under [section] 217, or criminal prosecutions for willful violations under [section] 216(a). (135)
3. Willful Violation
To be subject to criminal sanctions under the FLSA, a person must willfully violate its provisions. (136) An employer willfully violates the FLSA if he either knew his conduct was illegal or showed reckless disregard of such illegality. (137) Thus, a violation is "willful" if the employer knew of the FLSA requirements, (138) had reason to inquire further about the requirements but did not, or took affirmative steps to conceal the violation. (139) However, where an employer can show that he made an effort to ascertain how the FLSA applies to his business, the employer is less likely to be found to have willfully violated the statute. (140) If an employer's violation resulted from good faith reliance on a ruling, interpretation, or enforcement policy, the employer may not be guilty of a criminal violation. (141)
B. Penalties
The criminal penalties for violations of the FLSA are provided in [section] 216(a): "Any person who willfully violates any of the provisions of [section] 215 shall upon conviction thereof be subject to a fine of not more than $10,000, or to imprisonment for not more than six months, or both." (142) Under [section] 216(a), a defendant convicted of a criminal FLSA violation cannot be imprisoned unless convicted of a prior FLSA violation. (143)
C. Enforcement
The Secretary of Labor may utilize several different methods to evaluate an employer's performance under the FLSA. Congress created a special Wage and Hour Division in the Labor Department to allow the Wage-Hour Administrator and the Secretary to make periodic investigations and reports to keep the law current and to detect violations. (144) The Wage and Hour Division may compel the attendance of witnesses at hearings (145) or the production of records during an investigation. (146) It may also require an employer to keep records of its employees and to make those records available to the Wage-Hour Administrator. (147) Moreover, the Wage and Hour Division is empowered to determine the applicability of exemptions from certain provisions of the FLSA. (148) The Secretary may also sue to restrain violations and, to a limited extent, recover unpaid benefits on behalf of employees. (149)
An employer-corporation has no self-incrimination privilege against production of its records. (150) The Administrator has the authority to obtain access to records without a prehearing to investigate whether an employer is subject to the FLSA. (151) Moreover, an employee bringing a wage suit is entitled to inspect the employer's wage and hour records pertaining solely to that employee. (152)
IV. PAYMENT OR LOANS BY EMPLOYER TO EMPLOYEES OR LABOR ORGANIZATIONS
Section 302 of the Taft-Hartley Act (153) ("Labor Management Relations Act" or "LMRA"), codified at 29 U.S.C. [section] 186, provides labor unions and their members protection from corrupt union and management officials by prohibiting bribery by employers and extortion by employee representatives. (154) Under the LMRA, an employer in an industry affecting commerce commits a criminal offense by giving anything of value to representatives of its employees or to union officials. (155) The LMRA also prohibits employees, employee representatives, and labor organizations from accepting such payments. (156) A violation occurs when an employer or employee willfully engages in any of the forbidden transactions. (157) The statute contains nine exceptions that permit the exchange of money or things of value between employers and employees and their representatives. (158) Any violation of the statute...
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