Recent Court Decisions Make SCM Software a Necessity

Author: Rene Garcia


OSHA has the authority to cite general contractors for any violations that subcontractors commit, according to a recent ruling by the 5th Circuit Court of Appeals. This decision upends a previous decision going back as far as 1981 that ruled that contractors were only responsible for their employees and not the employees of their subcontractors. Now that the firewalls for accountability have been removed, it’s more important than ever to have as much visibility on supply chains as possible – right down to the individual employee.

Decisions, Decisions

In 1981, the U.S. Court of Appeals for the 5th Circuit ruled that “OSHA regulations protect only an employer’s own employees” in the case of Melerine v. Avondale Shipyards, Inc. This decision was cited as precedent in a more recent case in 2017 involving Hensel Phelps Construction Co. The details of that case are as follows: In 2014, Phelps Construction subcontracted another company, Haynes Eaglin Watters, which hired another company, CVI Development. During the project, CVI’s employees worked in a hazardous situation which was described as “at the base of an unprotected wall of excavated soil”.

Since a precedent had been set, the judge in the Phelps Construction case relied on it to limit the responsibility of the violation. However, a more recent decision by the U.S. Supreme Court in the 1984 case Chevron USA, Inc. v. Natural Resources Defense Council, Inc. was cited by the 5th Circuit Court of Appeals to overrule the judge in the Phelps Construction case. In the Chevron decision, the Supreme Court ruled that courts should defer to an agency’s interpretations of its own statutes as long as that interpretation is reasonable, and Congress has not addressed the particular issue clearly.

As a result, Phelps Construction was fined $70,000 for one willful citation as the “controlling employer” under OSHA’s Multi-Employer Citation Policy. This policy has been active since December 1999. A “controlling employer” is considered the “general supervisory authority” over a worksite and has the power to correct safety violations.

More Visibility, Less Citations

The takeaway from the Phelps Construction case is that it’s more important than ever to have employee-level verification for any supply chain. It is no longer enough to prequalify suppliers and subcontractors at the company level without knowing anything about the people who are carrying out the work. Are they qualified? Have they completed required training? Fortunately, Avetta’s Worker Management solution can provide the answers to those questions.

The process is straightforward. Avetta configures qualification and training requirements by role and location. Contractors upload licenses and certifications and complete training to prove compliance before workers arrive on site. The controlling employer can then assess worker compliance from any smart device.

Employers can take advantage of customizable dashboards to get a high-level view of contracted workers by company, role, and location. Additionally, induction training becomes much easier when it can be deployed online and retention can be tested via assessments.  See how Avetta’s Supply Chain Risk Management Solutions can lead to better quality of work, safer workers, and reduced supply chain risk


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