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Hunter is right on with this
The load back rest is a load bearing component and the equipment manufacturer should have been contacted and presented with this alteration and have it approved first of all. Secondly the alteration would have to be certified as hunter said.
If it by chance was sent in to the dealership and they did the modification then they should have done the approval and certification process and the burden of liability would be on them.

If your maintenance or management team took it upon themselves to do this and contracted out some joe schmoe welder to do it and didn't have it mfg approved and certified by the welder then that just wasn't too smart and the burden of liability falls on them and the welding contractor.

Now from my own experience most LBR's are only as wide as the carriage they are mounted on and generally are as wide as the standard pallet and as tall as whatever load your handling, but by design a LBR isn't designed to fit the pallet size per say, its designed to conform to the truck its mounted on to provide the most protection to the operator from a load shift that would create a scenario causing falling objects. (ie: designed to be strong enough to help prevent the load from falling back onto the operator).

As long as it conforms to ANSI and OSHA's regulations and meets the mfg's specifications standard or modified specs and the welding is certified then there shouldn't be any problem.

All of my statements here are based on my knowledge of safety concerning material handling equipment (lift trucks in this case), and their components and how manufacturers dictate to dealers and consumers on how to deal with alterations
/modifications on the machines they manufacture.

Also without being able to see the racking , work area and the forklift and knowing the operational specs of your company's warehouse operations i am only giving my educated guess based on standard applications and knowledge of general safety environments and dealing with customers requests for modifying their equipment in non standard ways.

Hey
Safety is most important never compromise with your safety.If you love your life next time make sure about your safety.

I understand how important safety is but that just seems flat out annoying. I would complain to the HR team about that myself.

Well, safety is something you can never compromise with. The preventive measure should be always taken.

I have never understood why drive in racks that intrude into the operators area are permissible. Operators have little space to operate as defined by the rear posts or raised backrest and allowing racks to intrude into that space makes no sense with respect to safety of the operator.
Clark ESM forklifts had reversible rear posts to allow for drive in racks but the operator has to lean away from the side of the machine to get into the racks.

If the machine has been altered from original in anyway you need the manufacturer's approval or the change has to be certified by an engineer. In short, your company's changes could cost a life or big dollars.

If the machine has been altered from standard in anyway you need manufacturer approval. All MHE equipment sold in the EU has passed type approval before it is passed safe to supply to end users. Any change to the truck specification cannot be carried out without prior approval of the manufacturer

If you are meaning the driver gets off the forklift while in racking and raises or lowers the hydraulics while not on the seat, how about a seat switch and solenoids on the hydraulics? If the driver gets off the seat, the hydraulics wouldn't function. Then you could use the original sized load backrest.