Texas Hazardous Employer Program preempted by OSHA?

A recent decision from the Austin Court of Appeals holds that the Texas Hazzardous Employer program is preempted by the Occupational Safety & Health Act. Skilled Craftsmen of Texas, Inc. v. Texas Workers' Compensation Commission ( Austin Court of Appeals 2/3/2005).

Under the Hazardous Employer program, empoyers with injury rates above the average for their industry are subject to being designated as "hazardous employers" by the state. This desigation is reported to the employer's workers' compensation carrier, and continues in effect until the employer improves its injury rates enough to be classified as "hazardous" under the formula.

This case was brought after a temporary staffing firm was designated as "hazardous." The Austin Court of Appeals agreed that the effect of the program was to punish employers that fail to provide a safe workplace and fail to improve safety. The Court of Appeals found that the federal Occupational Safety & Health Act comprehensively regulates this issue, and thus the Texas program is not enforceable.

The Hazardous Employer program has proven to be a regular problem for PEOs. The Commission has applied the hazardous employer formula to PEOs by analyzing injury rates at each client location, a PEO with a stellar safety record overall, can be targeted by the state on the basis of a single client location with a poor safety record.