On November 28, 2016, a federal district judge rejected several industry groups’ attempt to halt certain aspects of the Occupational Safety and Health Administration’s (OSHA) Improve Tracking of Workplace Injuries and Illnesses final rule. In particular, the groups were targeting the new “anti-retaliation” provisions under 29 C.F.R. Sections 1904.35 and 1904.36, which would effectively prohibit employers from utilizing certain safety incentive programs and mandatory post-accident drug testing policies.

The lawsuit filed by industry groups in July of 2016 challenged these regulations and requested a motion for a preliminary injunction to stay enforcement of the rule’s anti-retaliation provisions pending a ruling on the merits of the case. In opposition, OSHA questioned the groups’ ability to challenge the regulations, arguing that the plaintiffs “offered no credible evidence to suggest that they face any immediate threat of increased workplace injuries.” OSHA also asserted that a nationwide injunction applicable to the plaintiffs as well as nonparties was inappropriate. On October 14, 2016, the district judge issued an order asking OSHA to stay enforcement until December 1, 2016 to allow for sufficient time for additional briefing on the scope of the preliminary injunction.

On the Monday after Thanksgiving, District Judge Sam Lindsay of the United States District Court for the Northern District of Texas, Dallas Division, denied the plaintiffs’ request for a preliminary injunction. The court noted that the industry groups must establish four elements to be entitled to an injunction:

  1. There is a substantial likelihood that the plaintiffs will prevail on the merits.
  2. There is a substantial threat that irreparable harm will result if the injunction is not granted.
  3. The threatened injury to the plaintiffs outweighs the threatened harm to the defendant.
  4. The granting of the preliminary injunction would not disserve the public interest.

Most preliminary injunction litigation centers on the first element—whether the plaintiffs can establish “a substantial likelihood” they will “prevail on the merits,” or in English, whether they can establish that they will likely win the case. Indeed, the parties here devoted most of their arguments to the first element. The industry groups spent 30 pages of their 34-page brief asserting they were likely to prevail; OSHA spent 34 out of 37 pages in its brief arguing the opposite. In an unorthodox move, however, Judge Lindsay completely skipped the first element, over which the parties spent nearly all of their energy fighting, and instead ruled that the plaintiffs failed to meet their burden on the second and fourth elements.

Hearings are typically held in cases challenging the legality of federal regulations, such as the recently successful challenges to the U.S. Department of Labor’s “persuader” regulations or its new overtime regulations. Here, however, the district judge did not hold a hearing. 

Judge Lindsay agreed with OSHA that the evidence submitted by the plaintiffs—six declarations of witnesses on behalf of the industry groups—lacked evidence sufficient to show a substantial threat of increased injury if the injunction were denied. He took issue with the fact that the declarants stated they “believe[d]” that safety incentive programs reduce injuries. Citing a belief and not specific data on the effect that incentive programs had on workplace safety did not show irreparable harm. Judge Lindsay relied upon a statement in OSHA’s brief that the final rule “leaves plenty of room” for employees to modify their programs to comply with the existing rule and noted that none of plaintiffs’ declarations explained why safety incentive programs “cannot be modified to comply with the Rule without losing their effectiveness.”

The district judge also noted that the declarations “are similarly devoid of facts to support the belief that mandatory post-accident drug testing is more effective than other forms of drug testing or why the elimination or modification of post-accident drug testing would necessarily result in increased injuries if other drug testing remained in place.” He noted that the final rule “does not include a per se ban on post-accident drug testing or incident-based safety incentive programs, and it is not entirely clear whether any of the programs currently implemented by Plaintiffs would violate the Rule.”

Judge Lindsay also rejected the plaintiffs’ argument that increased likelihood of inspections and citations constituted irreparable harm and made short shrift of the plaintiffs’ public interest argument (the fourth element), concluding it “is essentially the same as its irreparable harm argument.”

The Court’s Analysis

Interestingly, Judge Lindsay did not address the merits of the case, and stated: “That the court has denied injunctive relief requested by Plaintiffs is not a comment or indication as to whether Defendants will ultimately prevail on the merits. This determination is left for another day.” In other words, the trade associations and employers may ultimately succeed in convincing the judge that OSHA does not have the authority to create a new remedy for employees who believe they have been retaliated against for reporting a work-related injury. Employees have been limited to filing Section 11(c) whistleblower claims in retaliation cases, and OSHA is trying to create a new remedy—such as OSHA citations that require abatement measures like reinstatement and back pay—to address those situations. Judge Lindsay may ultimately rule that only Congress, not OSHA, has the authority to create remedies for employees.

By skipping the first element, however, the district court’s analysis presumes that OSHA’s action in issuing the final rule was lawful and in accordance with the Administrative Procedure Act.  Affected groups may complain that the district judge effectively decided the first element in OSHA’s favor without analysis or explanation, which may give rise to an abuse-of-discretion challenge on review.

What Next for Employers?

The plaintiffs may immediately appeal the decision to the United States Court of Appeals for the Fifth Circuit, but unless they successfully persuade the Fifth Circuit to enjoin enforcement of the final rule pending the outcome of the appeal, the final rule will go into effect. The plaintiffs may also request to set the case for trial and then attempt to challenge the rule with additional evidence. In that case, a trial would not take place until 2017 at the earliest and would not prevent OSHA from enforcing the final rule.

The ruling creates tremendous uncertainty for employers. Judge Lindsay admitted that “it is not entirely clear whether any of the programs currently implemented by Plaintiffs would violate the Rule.” Employers are also unclear over what, exactly, violates OSHA’s vague “anti-retaliation” prohibitions. Employers want clarity in regulations so they know what they can and cannot do before the rule goes into effect—not afterward when the guessing game can cost employers over five figures in citation penalties.

Beginning December 1, 2016, OSHA will begin enforcing these new provisions—but it is far from certain exactly how and to what lengths the agency will, over the next few months, attempt to limit or prohibit the use of mandatory post-accident drug testing policies or safety incentive programs. While OSHA claims that its intent is to not outlaw these programs, the reality is that inspectors will likely issue citations on an ad hoc, “I know it when I see it” basis. What one inspector in Texas may see as an acceptable program may be perceived as a blatant violation by another inspector in Pennsylvania.

Challenges to the final rule are far from over. In addition to the industry group lawsuit, employers can expect several employers receiving citations under the final rule to challenge the legality of the rule and OSHA’s authority to implement it. OSHA proposes a unique set of elements to prove a violation of these “anti-retaliation” regulations and a unique set of remedies, such as back pay and reinstatement. This upsets decades of federal precedent developed by the courts, which have crafted the elements of proof of a violation of the Occupational Safety and Health Act over several decades. The Occupational Safety and Health Review Commission and one or more of the federal circuit courts of appeals may ultimately resolve these issues, but going through the courts will take years.

One final consideration is that the Obama administration only has about 50 more days in office. Since the language in the anti-retaliation provisions does not explicitly reference post-accident drug testing or safety incentive programs, the Trump administration could presumably decline to enforce the provisions in the same manner the Obama administration said that it would. The Trump administration could also decide not to defend the lawsuit brought by the plaintiffs.


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