A human resources occupational safety expert recently concluded that a new trend exists in the business world that deems successor companies liable for past violations of their acquired company.

When it comes to mergers and acquisitions, it is extremely important for companies to perform safety and health due diligences, because once the paperwork is signed the Occupational Safety and Health Administration will not show leniency to the new company owner. A full safety and health review should therefore be completed so that the buying company understands what obligations they are buying into and what safety record it is adopting.

Certain repeat offenses can cost an employer upwards of $70,000. Violations attached to repeat penalties are often characterized in one of three ways: Having been committed by the same employer, the same employer received a prior citation for the same or a very similar condition/hazard, or the prior citation became a final order of OSHRC.

The line becomes blurred when the idea of what constitutes the “same employer” is questioned. HR experts typically identify the same employer as the same corporate entity. In some cases, multiple corporate entities within a corporate structure could be protected from repeat liability.

OSHRC uses two different tests to determine successor ship for repeat liability. The first test is known as the “alter ego” analysis. This applies to any employer that commits violations confirmed through an OSHA settlement or an OSHRC decision goes out of business and later resurfaces under a new or different name. OSHRC asks multiple questions in their analysis including, is the same work being performed in the same manner?

The second test is called “substantial continuity” which says that an employer can be cited for violations of a prior employer if the two companies operate with substantial continuity.

At the end of the day, human resource professionals urge companies to avoid getting hit with repeat violations by keeping the lines of communication open throughout the entire corporate structure.