Piercing the Corporate Veil

No, this is not a story about Taliban attacks on business women. This is a story about OSHA possibly going after companies -- especially small construction companies -- who hide behind complex corporate structures to avoid repeat violations from OSHA.

The Washington Post's Cindy Skrzycki writes that the Occupational Safety Review Commission is considering two cases of business owners who have owned a series of companies that have killed workers, but are fighting repeat OSHA violations because their original companies have gone out of business.

The cases in question stem from OSHA inspections that alleged the companies were violating rules that protect workers from falls and other hazards.

The safety agency cited Sharon and Walter Construction Corp., a general contracting company in New Hampshire, for repeat violations since the owner ran an earlier company that had the same employees and work, and had been cited in 1995. The company owes $10,750 in penalties.

Charles A. Russell, an attorney for Sharon and Walter, said his client should not be considered a repeat violator since the first venture, a sole proprietorship, went bankrupt. He also said the company should not be held liable for an employee who fell off a roof because he was an independent contractor.

The other case involves two New Jersey companies that are involved in pouring concrete for major commercial projects. OSHA alleged that through complicated family ownership provisions, Altor Inc. and Avcon Inc. were in effect owned by father and son, Vasilios and Nicholas Saites, and they should be personally liable for $292,300 in penalties for various safety violations.

Paul A. Sanders, a New Jersey attorney representing Altor and Avcon, said: "The individuals don't intend to pay the fees. They don't think they are responsible."

The AFL-CIO doesn't agree.

"It's about naming and holding the responsible parties responsible," said Lynn Rhinehart, associate counsel for the AFL-CIO. "These are a series [of cases involving] construction companies and they have been repeatedly cited for OSHA violations. There is evidence they manipulated the corporate form to evade OSHA penalties."

Interesting cases, but I'm not optimistic. The Post notes that these cases were selected a for review a while back by Democrat Thomasina V. Rogers. Currently the Board has two Republican members, in addition to Rogers.