California Unfair Competition Law Cannot Create Additional Liability For Workplace Safety Issues

Following a catastrophic workplace incident at a plastics manufacturing plant that resulted in the death of two workers, the California Division of Occupational Safety and Health issued a number of citations to the plant owner for alleged safety violations.  The local district attorney, however, in addition to filing criminal charges against the plant’s manager and maintenance supervisor, also charged the plant with per day civil penalties under the California Unfair Competition Law (“UCL”) that would amount to approximately $2 million.

Earlier this year, a California appellate court ruled that the district attorney lacked the ability to bring the charges under the UCL as an additional means of penalizing an employer for violations of workplace safety standards because of federal OSHA preemption.  Even though California’s OSHA plan was approved by the U.S. Secretary of Labor when created, the plan lacks any reference to the UCL.  Moreover, the Secretary of Labor had never approved any subsequent iteration of California’s OSHA plan that included reference to additional penalties under the UCL.  As a result, because a state’s regulatory power over workplace safety may be exercised only in accordance with the specific terms of its federally approved workplace safety plan, the district attorney could not bring the additional charges under the UCL.

Following that decision, the California Supreme Court transferred the matter back to the intermediate appellate court to reconsider the matter given a California statute that was in effect when California’s OSHA plan was approved, which provided for the imposition of similar penalties based on acts of unfair competition.  Earlier this week, the intermediate appellate court again concluded that the district attorney’s reliance on the UCL to address workplace safety violations is preempted by OSHA.  The court described a state’s ability to regulate workplace safety as being limited to the plan specifically approved by the federal Department of Labor, and that the state plan operates as a “safe harbor” within which it may exercise jurisdiction.  “It is only when the state stays within the terms of its approved plan, that its actions will not be preempted by federal law.”  The court rejected the district attorney’s attempt to utilize the UCL as a means of imposing truly massive penalties based specifically on workplace safety violations.