BILL ANALYSIS                                                                                                                                                                                                    






                 Senate Committee on Labor and Industrial Relations
                               Mark DeSaulnier, Chair

          Date of Hearing: June 23, 2010               2009-2010 Regular  
          Session                              
          Consultant: Alma Perez                       Fiscal:No
                                                       Urgency: No
          
                                  Bill No: AB 2774
                  Author: Assembly Labor and Employment Committee 
                          Version: As amended May 28, 2010
          

                                       SUBJECT
          
                           Occupational safety and health.


                                      KEY ISSUE

          Should the Legislature define what constitutes "serious physical  
          harm" in employment? 

          Should the Legislature establish a California definition for  
          "serious physical harm" that is at least as effective as that of  
          the Federal Occupational Safety and Health Administration  
          (Federal OSHA)? 
          

                                       PURPOSE
          
          To establish a definition for "serious physical harm" in the  
          State's statute governing occupational safety and health. 


                                      ANALYSIS
          
           With the passage of the Occupational Safety and Health Act of  
          1970  , Congress created the Federal Occupational Safety and  
          Health Administration (Federal OSHA) as part of the United  
          States Department of Labor to ensure safe and healthful working  
          conditions for working men and women by setting and enforcing  
          standards and by providing training, outreach, education and  
          assistance.  The OSH Act covers employers and their employees  
          either directly through federal OSHA or through an OSHA-approved  
          state program.  State programs must meet or exceed federal OSHA  









          standards for workplace safety and health.  

           Under existing law,  the California Occupational Safety and  
          Health Act of 1973 was enacted to ensure safe and healthful  
          working conditions for all California workers by, among other  
          things, authorizing the enforcement of effective standards as  
          well as assisting and encouraging employers to maintain safe and  
          healthful working conditions.  The Division of Occupational  
          Safety and Health (DOSH, also knows as Cal/OSHA), within the  
          state Department of Industrial Relations (DIR), is charged with  
          enforcing occupational health and safety laws, orders, and  
          standards, including the investigation of alleged violations of  
          those provisions.  

           Existing law  authorizes DOSH to issue a citation when an  
          employer causes an employee to suffer or potentially suffer,  
          among other things, "serious injury or illness" or "serious  
          physical harm."  Existing law defines:

                 A "Serious injury or illness," generally, as a workplace  
               injury or illness requiring inpatient hospitalization for a  
               more than 24 hours or resulting in the loss of a body  
               member or in permanent disfigurement.  

                 "Serious Exposure," as any exposure of an employee to a  
               hazardous substance when the exposure occurs as a result of  
               an incident, accident, emergency, or exposure over time and  
               is in a degree  or amount sufficient to create a  
               substantial probability that death or serious physical harm  
               in the future could result from the exposure. 
           

          This Bill  would codify a definition for "serious physical harm"  
          in the statute governing occupational safety and health.   
          Specifically, this bill: 

             1.   Defines "serious physical" harm as any injury or  
               illness, specific or cumulative, occurring in the place of  
               employment or in connection with any employment, which  
               results in any of the following:

                  a.        Inpatient hospitalization for a period in  
          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 2

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                    excess of 24 hours for other than medical observation.  

                  b.        The loss of any member of the body.
                  c.        Any serious degree of permanent disfigurement.  

                  d.        Impairment of the body in which part of the  
                    body is made functionally useless or is substantially  
                    reduced in efficiency on or off the job for more than  
                    72 hours.  
                  e.        A serious illness or impairment of the  
                    function of an organ, such as the heart, lungs, liver,  
                    skin, and nervous system that substantially reduces  
                    efficiency on or off the job.  An illness or  
                    impairment of this type would usually require  
                    treatment beyond first aid by a medical doctor or  
                    other licensed health care professional.   

             2.   Specifies that "serious physical harm" may be caused by  
               a single, repetitive practice, means, method, operation, or  
               process.  


                                      COMMENTS
          
          1.  Background on Types of Citations and Penalties under  
            California Law  
            
            In California, an employer may be issued a citation by DOSH  
            for an alleged violation of the law which affects the safety  
            or health of employees.  Citations may be issued for the  
            following reasons: 

                 A "regulatory violation" - cited when an employer fails  
               to comply with record keeping, posting or permit  
               requirements.

                 A "general violation" - cited when an accident or  
               occupational illness resulting from violation of a standard  
               would probably not cause death or serious physical harm,  
               but would have a direct or immediate relationship to the  
               safety or health of employees.

          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 3

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                 A "serious violation" - cited where there is substantial  
               probability that death or "serious physical harm" could  
               result from a condition which exists - or from practices,  
               operations or processes at the workplace.

                 A "willful violation" - where evidence shows that the  
               employer committed an intentional and knowing violation (as  
               distinguished from inadvertent or accidental or ordinarily   
                           negligent) and the employer is conscious of the  
               fact that what they are doing constitutes a violation, or  
               is aware that a hazardous condition exists and no  
               reasonable effort was made to eliminate the hazard.

                 A "repeat violation" - when a recurrence of the  
               previously cited standard, regulation, order or condition  
               is found within three years of the previous violation  
               becoming a final order. Repeat violations differ from  
               willful violations in that they may result from an           
                  inadvertent, accidental or ordinarily negligent act. If  
               a repeat violation is also willful, a citation for willful  
               violation is issued.

            Under existing law, civil penalties are issued to employers  
            for alleged violations and/or failure to abate a violation.   
            Criminal penalties may also be levied in certain cases.  The  
            law also contains misdemeanor provisions relating to matters  
            such as knowingly or negligently violating a workplace safety  
            and health regulation, repeatedly violating a regulation, or  
            refusing to comply with a regulation, and thereby creating an  
            employee hazard.  Criminal penalties are enforced by the local  
            district attorney.

            The Occupational Safety and Health Appeals Board (Appeals  
            Board), within DIR, is a three-member judicial body appointed  
            by the Governor and confirmed by the Senate, which handles  
            appeals from private and public-sector employers regarding  
            citations issued by DOSH for alleged violations of workplace  
            safety and health laws.  

          2.  Recent Federal OSHA Letters to California and Audit  :
            
            As a result of concerns raised by stakeholders regarding the  
          Hearing Date:  June 23, 2010                            AB 2774  
          Consultant: Alma Perez                                   Page 4

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            actions of the Occupational Safety and Health Appeals Board in  
            reducing the backlog of appeals cases that existed, this and  
            other Committees in the Legislature have conducted oversight  
            hearings and meetings on the Appeals Board since 2009.  

            In addition to oversight activities at the state level, in  
            recent months, federal OSHA has commenced an audit of DOSH  
            (including a "special study" of the Occupational Safety and  
            Health Appeals Board) looking at a number of issues.  However,  
            of particular concern to federal OSHA have been the issues  
            involving "serious violations" and the current Appeals Board's  
            interpretation of the term "serious physical harm."

            In a January 8, 2010 letter to the Chair of the OSH Appeals  
            Board, federal OSHA stated the following:
               
            "One area of concern that has been identified during our  
            initial review is regarding Appeals Board policy/approach for  
            reviewing the classification of serious violation.
                                                      ...??
            Unfortunately, it appears that in defining 'serious physical  
            harm,' the Board's current policy limits this phrase to the  
            Labor Code definition of 'serious injury,' at section 6302(h).  
             There are other issues of concern regarding the issuance of  
            serious violation, however even if this finding is correct, a  
            determination of the [D]OSH program not being at least as  
            effective as Federal OSHA is possible.  Any clarification or  
            action you can take regarding this issue is appreciated."  

            Federal OSHA is expected to complete and release the results  
            of the audit and special study before the end of the year. 

          3.  Need for this bill?

            In response to the concerns raised by federal OSHA, in January  
            the Chief of DOSH filed a rulemaking petition with the Appeals  
            Board suggesting that they address the issue of "serious  
            violation" and "serious physical harm" via regulation.  The  
            Appeals Board subsequently convened a series of advisory  
            committee meetings to consider these and other rulemaking  
            proposals.  The Appeals Board, however, has chosen not to  
            proceed with rulemaking on this specific issue arguing that  
          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 5

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            this change would be "substantive" in nature rather than  
            "procedural."   In response, the Chief of DOSH has announced  
            his intent to address this issue administratively via  
            "Director's Regulations" under the authority of DIR.  

            As discussed above, current California law provides  
            definitions for "serious injury or illness" and "serious  
            violation," however; the code does not contain a specific  
            definition of the term "serious physical harm." The author  
            argues that lacking an adequate definition of "serious  
            physical harm" affects the ability of "serious violations"  
            proposed by DOSH to be upheld throughout the appellate  
            process.  According to the U.S. Department of Labor, in fiscal  
            year 2009, in California only 19% of all violations cited by  
            DOSH were cited as serious, compared to 77% for Federal OSHA  
            (See chart below). This bill attempts to address the concern  
            raised by federal OSHA and others by establishing a definition  
            for "serious physical harm" in statute.

          4.  Proponent Arguments  :
            
            According to the author, current workplace health and safety  
            law does not contain an adequate definition for "serious  
            physical harm," which impacts the ability of citations against  
            employer for "serious" violations from being upheld during the  
            appeals process.  According to proponents, this bill is a  
            necessary first step to bring the California occupational  
            safety and health program into compliance with Federal OSHA  
            law.   In addition, they argue that this bill will help  
            strengthen the Cal/OSHA program, improve enforcement, and  
            result in better working conditions for all California  
            workers. 

            Proponents note that California's rate of serious citations is  
            currently the lowest in the country.  Moreover, they argue,  
            California is likely out of compliance with the Federal OSHA  
            program.  In addition, proponents contend that this bill is  
            needed because the OSH Appeals Board is applying the wrong  
            meaning to that phrase, won't issue a regulation, and won't  
            follow a regulation that Cal/OSHA might issue.  According to  
            proponents, with no statutory definition for "serious physical  
            harm," far too many citations issued after serious injuries or  
          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 6

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            fatalities are reclassified as general violations.  Therefore,  
            they contend that employers who should be cited and penalized  
            appropriately for serious violations are       instead given a  
            "slap on the wrist" and issued a general violation citation  
            instead.

            Finally, supporters conclude that California's occupational  
            safety and health program has been the best in the country in  
            many regards for years.  California cannot and should not risk  
                      jeopardizing the entire program because one aspect  
            is out of compliance, particularly when this aspect of the  
            problem may be promptly and effectively addressed through  
            legislation.  This bill is a crucial tool in the effort to  
            improve Cal/OSHA's ability to reach the worst offenders and to  
            level the playing field for legitimate law-abiding businesses.  
            Supporters state that this bill would benefit those employers  
            that play by the rules by enabling Cal/OSHA to more  
            effectively prosecute those employers that gain an economic  
            advantage from not protecting their employees' safety and  
            health.

          5.  Opponent Arguments  :

            A coalition of employer groups oppose this bill unless  
            amended, arguing that this overly expansive definition will  
            lead to an increase in citations classified as serious that  
            are now and should continue to be classified as general.   
            Opponents argue that a serious citation carries significant  
            financial implications and should only be issued where  
            warranted.  

            According to opponents, AB 1127 (Steinberg) of 1999  
            significantly increased penalties on employers who are cited  
            for serious citations.  They argue that prior to this measure  
            California's base penalty for a serious citation was the same  
            as Federal OSHA - $5,000.  AB 1127 increased that base penalty  
            more than three times to the highest in the country at $18,000  
            (California Code of Regulations, Title 8, 336 (c) (1)).   
            According to opponents, this enormous increase in liability to  
            employers significantly increased the number of citation  
            appeals, resulting in a backlog that has just been cleared  
            this year.  Because of the level of penalty that is assessed  
          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 7

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            against an employer for a serious violation, opponents argue  
            that we should be judicious in issuing serious citations.

            Opponents contend that this new definition will encourage  
            employer appeals because an employer's citation record is  
            considered in most competitive bidding situations.  They argue  
            that employers routinely appeal serious citations which they  
            believe are unwarranted.  Furthermore, opponents argue that a  
            significant increase in the number of serious citations issued  
            is likely to create a significant increase in appeals to those  
            citation and they argue that current Appeals Board resources  
            cannot timely adjudicate an increase in appeals.  However,  
            opponents do state that they appreciate the discussions that  
            they have had with author's staff and sponsors of the bill.  

          6.  California as compared to other states  :

                             FY 2009 Inspection Activity
                     Percent of All Violations Cited as Serious 

          
           --------------------- 
          |              |  FY  |
          |              |2009  |
          |--------------+------|
          |Alaska        | 26%  |
          |--------------+------|
          |Arizona       | 23%  |
          |--------------+------|
          |California    | 19%  |
          |--------------+------|
          |Connecticut   | 28%  |
          |***           |      |
          |--------------+------|
          |Hawaii        | 60%  |
          |--------------+------|
          |Indiana       | 57%  |
          |--------------+------|
          |Iowa          | 65%  |
          |--------------+------|
          |Kentucky      | 63%  |
          |--------------+------|
          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 8

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          |Maryland      | 45%  |
          |--------------+------|
          |Michigan      | 37%  |
          |--------------+------|
          |Minnesota     | 74%  |
          |--------------+------|
          |Nevada        | 28%  |
          |--------------+------|
          |New Jersey    | 82%  |
          |***           |      |
          |--------------+------|
          |New Mexico    | 67%  |
          |--------------+------|
          |New York ***  | 58%  |
          |--------------+------|
          |North         | 38%  |
          |Carolina      |      |
          |--------------+------|
          |Oregon        | 43%  |
          |--------------+------|
          |Puerto Rico   | 47%  |
          |--------------+------|
          |South         | 70%  |
          |Carolina      |      |
          |--------------+------|
          |Tennessee     | 55%  |
          |--------------+------|
          |Utah          | 71%  |
          |--------------+------|
          |Vermont       | 66%  |
          |--------------+------|
          |Virgin        | 53%  |
          |Islands ***   |      |
          |--------------+------|
          |Virginia      | 61%  |
          |--------------+------|
          |Washington    | 34%  |
          |--------------+------|
          |Wyoming       | 55%  |
          |--------------+------|
          |All State     | 43%  |
          |Plans         |      |
          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 9

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          |--------------+------|
          |Federal OSHA  |77%   |
           --------------------- 
                                                                           
                 Source: U.S. Department of Labor, OSHA, FY 2009.  
           State Plan ENFC Report, 11.19.2009, Public and Private Sectors  
                                      included.

                     *** State Plan covers public employees only
           

           



                                       SUPPORT
          
          American Federation of State, County and Municipal Employees
          Bricklayers and Allied Craftworkers Local 3 of Northern  
          California 
          California Applicants' Attorneys Association
          California Labor Federation
          California Nurses Association/National Nurses Organizing  
          Committee
          East Bay Repetitive Strain Injury Support Group
          International Brotherhood of Electrical Workers Local No. 595
          Kazan, McClain, Lyons, Greenwood & Harley
          National Lawyers Guild
          One individual ltr. [Barbara Materna, PhD.]
          Plumbers and Steamfitters Local 159
          State Building and Construction Trades Council of California,  
          AFL-CIO
          United Steelworkers Local 675
          UPTE-CWA Local 9119
          Voters Injured at Work
          Worksafe!

          
                                     OPPOSITION
          
          Alpha Fund [oppose unless amended]
          Associated General Contractors
          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 10

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          Associated Roofing Contractors of the Bay Area Counties, Inc.
          Association of California Water Agencies [oppose unless amended]
          California Association of Joint Powers Authorities
          California Association of Joint Powers Authorities [oppose  
          unless amended]
          California Association of Sheet Metal and Air conditioning  
          Contractors' National Association
          California Automotive Business Coalition
          California Chamber of Commerce
          California Chapter of the American Fence Association
          California Construction & Industrial Materials Association
          California Farm Bureau Federation
          California Fence Contractors Association
          California Framing Contractors Association
          California Grocers Association
          California Independent Grocers Association
          California Manufacturers and Technology Association
          California Professional Specialty Contractors Association
          California Restaurant Association
          California Special District Association [oppose unless amended]
          California State Association of Counties [oppose unless amended]
          Construction Employers' Association
          Engineering Contractors Association
          Flasher/Barricade Association
          Life Technologies Corporation
          Marin Builders Association
          Public Agency Safety Management Association - PASMA 
          Residential Contractors Association
          SafeCon
          Walter & Prince, LLP
          Western Electrical Contractors Association (WECA-IEC)
          Western Growers
           

                                         * * *






          Hearing Date:  June 23, 2010                             AB 2774  
          Consultant: Alma Perez                                   Page 11

          Senate Committee on Labor and Industrial Relations