The hidden consequences of safety failures

Negative publicity may result in significant business losses

The hidden consequences of safety failures
Cheryl A. Edwards

There are many unintended, unexpected and largely hidden costs and consequences of workplace incidents and occupational health and safety violations. Aside from fines and penalties, companies may experience significant business losses, no longer be permitted to bid on large projects, have their safety certification revoked or suffer reputation damage and face the resulting stock or share value implications.

Imagine that after dealing with the emotional aftermath of a serious incident involving a valued worker and making changes to workplace equipment, procedures and training, the business is prosecuted under OHS laws. Further, imagine that the business receives a significant penalty, years after the incident, and that penalty is publicized by the regulator. All details of the incident and injuries, the violations committed by the company and management, as well as identities, are published in a news release. The release is picked up by local media, national newspapers, health and safety trade publications and various newsletters.

Then, a customer (or potential customer) enters the company’s name into a search engine. Multiple results return details of the incident. It is then discovered that the news release will remain on the regulator’s website — and searchable — for several years into the future.

While such negative publicity is not the predominant reason to ensure a safe workplace and compliance with legislation, the consequence of significant, ongoing negative publicity after a penalty has become more frequent. Government news releases detailing serious violations have become commonplace. Publicity is a deliberate strategy of regulators. Depending on reactions, this consequence can result in an even harder hit to the corporate pocketbook than the OHS penalty.

The naming and shaming of managers, supervisors or directors in a news release can have wide-ranging and long-lasting impacts amongst the community, friends and family and may be personally devastating.

Professionals, such as architects and engineers, have specific legal obligations under some occupational health and safety statutes. As such, professionals may face charges under OHS legislation or even the Criminal Code. Where any professional is charged or faces a penalty, they may be subject to disciplinary proceedings, for professional misconduct by the profession’s regulator.

Failing to meet professional obligations and facing professional disciplinary proceedings could result in career-ending consequences. Disciplinary bodies have the authority to impose such consequences as the suspension of the ability to practise a profession or the loss of professional status. Such potential consequences should be carefully considered by any professional engaged in a front-line supervisory or managerial role or professionals who may be directly involved in reviewing safety-related aspects of equipment or structures.

A recent example of criminal and OHS charges against a professional engineer arose from the collapse of the Algo Centre Mall in Elliot Lake, Ont. The engineer had been involved in the inspection of the mall prior to its collapse. Allegations against the engineer related to the deterioration of the mall’s roof structure due to extensive water infiltration resulting in the death of two members of the community. Although the engineer was ultimately found not guilty of criminal negligence, the matter was career-ending.

The Certificate of Recognition (COR) program, initiated in Alberta more than 20 years ago, has become a nationally recognized and increasingly expected independent safety accreditation required for successfully bidding on construction projects. Municipalities, provincial infrastructure bodies and governments, transit authorities, airports and other owners of construction projects routinely require this certification at the stage of pre-qualification or bidding on high-value contracts across Canada. While COR certification is discretionary, it has become recognized as an audited program that provides greater assurance of the health and safety management systems of a certified business.

In at least one Canadian jurisdiction, it appears that OHS violations have the potential to result in the loss of COR status. Following any serious safety incident, Alberta Occupational Health and Safety will now assess whether to permit an organization to retain its COR. If a notice of review is received, the company must respond to the government with an explanation of how it is meeting COR elements and implementing corrective actions. A failure to do so could result in the loss of COR.

Even in the absence of a COR requirement, organizations seeking completion of a pre-qualification questionnaire ask for details of relevant health and safety programs, supervisor competency, worker training and health and safety rules. Pre-qualification also frequently asks about safety records. Disclosure of past incidents involving a serious or fatal injury or prior charges or convictions under OHS laws will likely be required to bid. Penalties, charges and convictions could result in an unsuccessful bid or the loss of the opportunity to bid.

A recent Ontario case presents a stark example of the potential consequences. In Interpaving Limited v. The City of Greater Sudbury, the municipality barred a paving business from bidding on municipal contracts for a period of four years. Amongst the reasons for the debarment was the business’ health and safety record. This was, mainly, based on an incident in which a pedestrian was killed after being struck by a reversing road grader at a construction project. Charges were laid against the city and business. The business was convicted of a safety violation, although this was about two years after the debarment. In addition to this incident, there were other concerns alleged about the business’ compliance with health and safety requirements.

According to the court decision, the value of municipal contracts potentially lost by the business was up to $19 million annually.

What can be done?

The most direct means of minimizing these risks is through the implementation of a sound and vigorous safety management program. However, businesses may need to consider and adopt a more strategic and proactive approach to addressing orders, charges and penalties. Where they are issued, businesses may need to consider creative approaches or, where necessary, resort to litigation. Ultimately, businesses will need to consider these potential consequences as part of the overall approach to occupational health and safety compliance. 

This article originally appeared in the February/March 2019 issue of COS.