Where’s the Sarbanes-Oxley for workplace safety?

In 2002, after several corporate collapses, the United States government signed in the Sarbanes-Oxley Act which was intended to establish business practices on accounting and auditing among other aims.  The Western world watched the introduction of this legislation and echoed many of the requirements in their own legislation and corporate oversight agencies.

It is likely in the wake of the global financial crisis that the United States (and Europe to a lesser extent) is entering another wave of corporate regulation or interference, depending on one’s politics.

These laws introduced substantial change to the management of businesses, the disclosure of information and the role of corporate executives.  When will this type of change include occupational safety and health?

Firstly, the United States’ safety professionals and regulators need to accept that their system of OHS legislation and enforcement is not “world’s best practice”.  There are major deficiencies in high-risk organisations and a misunderstanding of safety obligations at the shopfloor level.  These problems exist partly because of the structure and population of the country itself and also because there is so much baggage in its legal system that new perspectives in law are difficult to imagine.

A significant change in OHS law outside the United States is the issue of personal accountability for safety-related decisions.  There are few who complain about the jailing of CEOs and executives for the loss of money (their own and that of others) but there is a real barrier to jailing those same people when their management decisions led to a loss of life.

England and Australia, amongst others, have laws relating specifically to industrial manslaughter.  These are the ultimate legal process for where a business decision has led to the death of a worker.  The application of these laws in practice are as variable as any other legal process but their simple existence is a constant reminder that jail is a penalty option for Courts in OHS prosecutions.

In 2000, the early days of the consideration of industrial manslaughter laws in Australia, Michael Tooma, then of Andersen Legal and now of Norton Rose, wrote the following in SafetyATWORK magazine:

“Faced with public outrage at the high level of industrial accidents, domestic and international governments have reached for the tried (although not necessarily proven) method of spiralling penalties to increase compliance.  Whether this latest round of legislation will prove successful remains to be seen, but I think it is unlikely.

The new offences are a Band-Aid solution aimed at the handful of high profile accidents which capture the media’s attention.  They do little to address the dozens of minor incidents and near misses that usually precede such accidents, let alone workplace risks more generally.  Accordingly, the corporate manslaughter provisions are more likely to be …. an interesting footnote to OHS regulation than the panacea they have been foreshadowed to be.”

In his 2008 book, Safety, Security, Health and Environment Law, Tooma took a more integrated approach to health and safety law, one of the few Australian lawyers to do so, and had refined his thoughts when writing about the personal liability for directors and senior managers.  Personal liability of executives has gained even more credibility in Australia with the introduction of the model Work Health & Safety Act

In the 2008 book, Tooma writes:

“It is often said that a corproation has no body to kick and no soul to damn.  It operates through its officers, employees and agents.  Senior management determines the direction which the corporation will take on issues.  In that regard, the ability to persuade corporations to comply with their legislative requirements depends heavily on the influence that can be exerted on these individuals who stand behind the corproation.” (p. 161-162)

Tooma says that financial penalties may be considered as a cost of production and therefore is ineffective.  (This is a comment that was often said in relation to the BP Texas City refinery explosion and may again in relation to the Transocean oil rig.)  He instead advocates applying personal liability as possibly a more effective deterrent to breaches of the Act or, at least, a motivator for pro-active involvement in OHS issues.

In 2010, the model Work Health & Safety Act provided even more credibility for Tooma’s argument through the inclusion of “due diligence” in the legislation.

In June 2010 Michael Tooma will be speaking at the Safety2010 conference hosted by the ASSE and it is hard to imagine that the personal liability of directors and the application of “due diligence” to safety management will not feature in his presentation, entitled “Lessons from Down-Under: Comparison of Australian and U.S. Laws”.  What the reception will be from the delegates may be more telling than what Tooma says in signposting the future of OHS laws in the United States.  Perhaps this conference may start a Sarbanes-Oxley on safety.

Kevin Jones