Wisconsin Court of Appeals Upholds Worker’s Compensation Safety Violation Penalty

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October 31, 2013

The maximum penalty imposed on employers for safety violations in worker’s compensation is $15,000. Seldom does a safety violation case make its way through a hearing before an administrative law judge, to appeal to the Labor and Industry Review commission, to a circuit court appeal, and then finally to the Wisconsin Court of Appeals. The costs rarely justify the effort in light of the cap on the penalty. A recent case, however, has made its way through the court of appeals and has resulted in an opinion issued on August 7, 2013, that has been recommended for publication, Sohn Manufacturing, Inc. and Secura Insurance v. LIRC and Tany Wetor (Appeal No. 2012AP2566). The court of appeals upheld the application of the safety violation statute. While there is nothing surprising about the result, the case does clarify the nature of the violation. Since safety violation cases reach the court of appeals so infrequently, the Sohn decision presents a good opportunity to review the basics of safety violation claims in worker’s compensation.

The Statutes

Worker’s Compensation section 102.57 (the “Safety Violation Penalty”) provides that if injury is caused by failure of the employer to comply with any statute, rule, or order of the department, compensation and death benefits . . . shall be increased 15% but the total increase may not exceed $15,000. Failure of an employer reasonably to enforce compliance by employees with any statute, rule or order of the department constitutes failure by the employer to comply with that statute, rule or order.

Wisconsin’s “Safe Place Statute,” section 101.11 provides in part:

(1) Every employer shall furnish employment which shall be safe for the employees therein and shall furnish a place of employment which shall be safe for the employees therein and for frequenters thereof and shall furnish and use safety devices and safe-guards, and shall adopt and use methods and processes reasonably adequate to render such employment and places of employment safe, and shall do every other thing reasonably necessary to protect the life, health, safety and welfare of such employees and frequenters . . .

(2) No employer shall require, permit or suffer any employee to go or be in any employment or place of employment which is not safe, and no such employer shall fail to furnish, provide and use safety devices and safeguards, or fail to adopt and use methods and processes reasonably adequate to render such employment and place of employment safe, and no such employer shall fail or neglect to do every other thing reasonably necessary to protect the life, health, safety and welfare of such employees and frequenters; and no employer or owner, or other person shall hereafter construct or occupy or maintain any place of employment or public building, that is not safe, nor prepare plans which shall fail to provide for making the same safe . . . (Emphasis added.)

The Sohn Decision

The employee in the Sohn case, Tanya Wetor, injured her hand while attempting to clean a machine that was operating. It is apparent from the decision that the applicable OSHA standard, Lockout/Tagout, was not implemented. The administrative law judge and the LIRC awarded the additional 15%. Both the circuit court and the court of appeals upheld the penalty imposed by the commission. On appeal the employer asserted two arguments. First, the employer argued that federal law preempts state law. Second, the employer asserted that neither the Safe Place Statute nor federal regulations may form the basis of a violation of section 102.57.

Not surprisingly, the Wisconsin Court of Appeals rejected both of the employer’s arguments. In dispensing with the federal preemption argument, the court of appeals noted that Congress specifically exempted “any workmen’s compensation law” from the Occupational Safety and Health Act. Moreover, the court of appeals determined that the violation of Wisconsin’s Safe Place Statute or federal workplace safety regulations may indeed form the basis for increased compensation under the Safety Violation Penalty. The court of appeals explained that violation of the federal Lockout/Tagout safety standard was not the actual violation of section 102.57. Rather, the court of appeals clarified, the violation of the federal regulatory program was evidence that the Safe Place Statute had been violated. Therefore, the violation of the Safe Place Statute constituted the violation of “any statute” within the meaning of section 102.57.

The Basics of the Safety Violation Penalty

The court of appeals technical, legalistic distinction between the violation of the Safe Place Statute itself, as opposed to the violation of a federal workplace regulation that serves as evidence that the Safe Place Statute was violated, is as a practical matter a distinction without a difference. When Safety Violation Penalties are asserted in worker’s compensation, the Department of Workforce Development (“DWD”) typically requires counsel for the employee to specify the basis for the claim for increased compensation. Perhaps an OSHA regulation may be invoked, as it was in the Sohn case. Or possibly standards under such codes as the NEC or the NFPA may apply through adoption by reference into the Wisconsin Administrative Code. In the absence of such a specific program, however, the default standard is the general duty set forth in the Safe Place Statute.

In effect, the employee has potentially “two kicks at the cat.” An analogous situation is the prosecution for driving under the influence where the prosecutor obtains a conviction where it is shown that the driver had a blood alcohol concentration above the legal limit. But even where the blood alcohol concentration test evidence fails for one reason or another, the prosecutor may still achieve a conviction upon demonstrating that the driver was “under the influence” based upon his or her conduct and behavior.

Under the Safety Violation Penalty, a rebuttable presumption of causation arises where a worker safety regulation is intended to prevent the type of injury that happened. For example, where an employer removes a machine guard (or is aware, or ought to have been aware, that a machine guard has been removed), and the employee is injured by the action of the machine, the law presumes that the injury was caused by the absence of the guard. In that circumstance, the employer is faced with the challenge of rebutting the evidentiary presumption that the absence of the guard caused the injury.

Employers face additional challenges in defending against Safety Violation Penalties. While evidence of implementation of “subsequent remedial measures” is, as a general matter, not admissible into evidence in civil lawsuits founded on negligence and strict product liability (subject to numerous exceptions), these measures are admissible into evidence in actions premised upon violation of the Safe Place Statute, which include Safety Violation Penalty claims in worker’s compensation. Again, an example illustrates this point. In the hypothetical case of the absence of the machine guard, suppose that shortly after the injury the employer reinstalled the guard or replaced the machine with a state-of-the-art model. Under that circumstance, the employee’s evidence that the employer had done so would be admissible into evidence in order to prove that the employer was in violation of the Safe Place Statute at the time of injury, thus making the employer liable for increased compensation under the Safety Violation Penalty.

Employers often respond by stating that such an extreme evidentiary rule runs counter to products liability and reflects bad policy. The law of evidence ought not serve as a disincentive to employers to continually improve safety. These concerns are well founded.

Another concern is constructive notice. Suppose that the injured worker’s supervisor had been aware that the guard in our hypothetical case had been absent and the supervisor had taken no step to make the machine safer. In that instance, the knowledge of the missing guard would likely be imputed as a matter of law to the employer, thus placing the employer in violation of the Safe Place Statute.

Worker’s compensation is a “no fault” program. Violation of the Safe Place Statute and liability for Safety Violation Penalties do not apply in every instance. Some factual circumstances fall under the “act of operations” line of Safe Place Statute cases that can exonerate the employer from the acts of co-employees. Accurately distinguishing between acts of operations, on the one hand, from unsafe employment or an unsafe place of employment, however, can be an exercise in uncertainty.

The employer has the obligation to enforce lawful safety rules. Suppose the employer in our hypothetical case maintained the guards in place and consistently applied progressive discipline to its employees who removed the guard. Under that circumstance the insurance carrier (or the self-insured employer) could seek a 15% reduction of compensation (also subject to a $15,000 cap) under section 102.58. The deduction cannot be taken prior to hearing; it can be taken only after a final determination.

Counter-intuitive though it may seem, increased compensation under section 102.57 and decreased compensation under section 102.58 are not mutually exclusive. In Milwaukee Forge v. Dept. of Industry, Labor and Human Relations, 66 Wis.2d 428, 225 N.W.2d 476 (1975) an employee suffered a hand amputation where his employer had provided tongs that were too short to allow him to push forgings completely through a drop forge. For that reason, the increased compensation penalty under section 102.57 was upheld. The employee had been consistently warned, however, to push as far as the tongs would safely allow and then walk to the other side so as to safely pull with the tongs. Instead of taking the time to walk around the machine, the employee reached with the tongs while pushing so that his hand entered the drop forge; the forge dropped just at that moment. Thus a decrease in compensation under section 102.58 was also upheld.

It is up to the employer to defend and pay Safety Violations Penalties. Worker’s compensation insurance carriers have liability under section 102.57 only secondarily where the employer is unable to satisfy its obligation to pay the increased penalty. If you have questions on this topic, please contact Russ Wilson.

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