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

reservoir, victoria, australia

6 thoughts on “Where’s the Sarbanes-Oxley for workplace safety?”

  1. Interesting I just recieved this on an email (sorry I don\’t have the link to where it originally came from). Seems like they are proposing a SOX-style reporting requirement for Safety Reporting:

    Wall Street reform amendment would mandate SEC mine safety reporting
    West Virginia Senator Jay Rockefeller wants publicly-traded mining companies to disclose their safety records to their shareholders and the SEC.
    Author: Dorothy Kosich
    Posted: Monday , 10 May 2010
    RENO, NV –
    U.S. Sen. Jay Rockefeller has introduced an amendment to the Wall Street reform legislation that would require any publicly-traded mining company to include serious mine safety violations in its annual and quarterly SEC filings.
    Mining companies that fail to file proper safety disclosures would face monetary penalties. The amendment would apply to coal and other mines.
    \”This amendment is common-sense: what is good for safety is good for business,\” Rockefeller, D-West Virginia, said in a news release. \”By disclosing important mine safety information to shareholders, it\’s a win for companies doing a good job, and a much-needed alert for companies who are not.\”
    \”Currently, there is no requirement to publicly disclose safety records, which has allowed companies to operate without critical checks and balances,\” he noted.
    This amendment would require any publicly-traded mine company to report the following information in their annual and quarterly filings with the SEC:
    1. The total number of significant and substantial violations of mandatory health or safety standards;
    2. The total number of failures to abate orders issued under section 104(b) of the Mine Act;
    3. The total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under the Mine Act;
    4. The total number of flagrant violations under the Mine Act;
    5. The total number of imminent danger orders issued under the Mine Act;
    6. The total dollar value of MSHA proposed penalties and fines;
    7. A list of the regulated worksites that have been notified by MSHA of a Pattern of Violation or a Potential to have a Pattern of Violations under the Mine Act; and
    8. Pending legal action before the Federal Mine Safety and Health Review Commission.

    In addition, any publicly-traded mining company must issue an immediate \”8-K\” disclosure report to the SEC if it:
    1. Receives a shutdown order under section 107(a) of the Mine Act (imminent danger), or
    2. Receives notice that a mine site has a potential or actual pattern of violations.

  2. I think it all gets back to application and Tooma is on the right track with prescriptive measures holding those to account who need to be held to account for non compliance. The only issue is in the application of penalties by the authorities .

    I keep seeing the word \”Accident\” teamed with work place injuries which tends to soften the impact of the \”workplace injury\”. In the main they are preventable injuries caused by lack of due diligence by management and in some cases, stupidity by workers.

    When I start to see court lists of major size and consequence on a daily basis, hauling transgressors of OHSW law before the judiciary and significant penalties being handed down, then and only then, will I believe we are on the road to having a major impact on improvement in workplace safety.

    1. In most SafetyAtWorkBlog posts, \”accident\” is replaced with \”incident\” but even that is soft although I don\’t think it is as dismissive. Some reports of crashes in the transport sector have moved away from \”accident\” and I think gradually \”accident\” will have a more specific application.

  3. \”…the United States’ safety professionals and regulators need to accept that their system of OHS legislation and enforcement is not “world’s best practice”.\”

    My recent forays into US workplace safety issues has me very puzzled – just what is the basis of OSHA and MSHA legislation? Maybe Michael Tooma could \’please explain\’ – I\’m overly familiar with the UK and Australian legislative models. The Canadian is largely comprehensible. The USA – I just don\’t get it, seems very antiquated – is this like the old style prescriptive legislation that I\’m far to young to remember in Aus? And this \”rule making\” they bang on about – how does that work?


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