Workplace safety improvements via deferred prosecution agreements (DPAs)

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Canadian occupational health and safety regulators have legal authority and moral responsibility to set, communicate, and enforce workplace safety standards across Canada.

The important question is what’s the best regulatory model to protect workers on the job and ensure the highest standards of workplace safety. Many Canadian regulators enforce OHS laws by prosecuting employers, and other workplace stakeholders, when there are incidents, injuries, and fatalities in the workplace.

OHS penal prosecutions may take the form of either quasi-criminal charges under health and safety laws or criminal charges under the Westray Bill. In either case, a conviction may result in high fines, jail terms, and debarment from future public and private business opportunities, which adds to the punishment and costs of the corporate employer.

The recent decision of the Supreme Court in City of Greater Sudbury has increased the use of pre-qualification and debarment of convicted employers by governments at all levels.

Also, private sector owners and developers of construction projects are excluding contractors with prior OHS records of conviction. The theory behind this risk management strategy is that an employer with a record of conviction of an OHS offence has a suboptimal commitment and execution of their OHS program and an increased risk of a complaint, incident or injuries to workers that will result in OHS regulatory enforcement.  

One of many means

The use of penal prosecutions by governments to enforce OHS standards under the criminal sanctions model is only one of many means available for OHS accountability and enforcement. Many other models of regulatory compliance exist and are worthy of consideration to improve workplace safety.

For example, in the United States, citations with Administrative Monetary Penalties (AMPs) are frequently used as a model of OHS enforcement. British Columbia is the only Canadian jurisdiction that most frequently uses AMPs and much more than penal prosecutions to enforce OHS laws.

Other countries, such as the United Kingdom, use proactive inspections, constructive collaboration, and mandatory compliance orders more often than prosecutions to achieve OHS law compliance. In fact, the United Kingdom, with a considerably larger population, has far fewer OHS prosecutions annually than Canada. 

DPAs: Another tool in the toolbox

Another enforcement tool in the OHS regulator’s tool box is the Deferred Prosecution Agreement (DPA). The regulatory mechanism of DPAs gives the option of resolving OHS non-compliance allegations constructively rather than by means of the criminal sanctions model.

A trial with OHS charges results in defendants spending a lot of time distracted with legal proceedings, asserting all available rights under the Charter of Rights and Freedoms, raising every possible legal defence available, and spending a great deal of money in non-recoverable legal fees.

DPAs avoid the very expensive and uncertain outcome of penal prosecution process for all parties, including the taxpayer-funded judicial system. DPAs are now the preferred resolution mechanism in the United States, the United Kingdom, and France. In fact many jurisdictions around the world have considered the benefits of using DPAs as a better way to encourage compliance and ensure enforcement by organizations rather than the blunt and expensive criminal sanctions model. 

A DPA is essentially a diversion program for corporate accused in a regulatory or criminal law enforcement context.

Canadian criminal law has used diversion programs for young offenders, Indigenous offenders, and special need offenders for decades. A diversion program deals with the individual accused who has been either arrested or charged with a criminal offence.

A diversion program requires the accused to acknowledge their legal contravention and non-compliance, accept responsibility of the consequences of their actions, commit to address the non-compliant conduct, and then commit to a corrective rehabilitative program. The person who has been accused of violating the legal standards agrees to all of this in open court and is subject to judicial supervision.

For example, long before the legalization of cannabis by the federal government in 2018, young offenders arrested for the possession or consumption of cannabis were usually offered the option of entering into a diversion program rather than facing a criminal trial, a conviction, a criminal penalty of a fine or jail, and a criminal record. These youth diversion programs usually required the young offender to publicly acknowledge they had broken the law, attend a drug education program to learn the adverse effects of cannabis use, and publicly commit to stop the criminal behaviour.

Corporate diversion programs

Corporate diversion programs also exist in Canada. The Competition Bureau uses the co-called ‘Immunity Program’ with good effect in resolving price fixing and other offences under the Competition Act. The federal government has also used Environmental Protection Alternative Measures (EPMA) agreements pursuant to the Canadian Environmental Protection Act, to effect resolution of environmental offences that result in environmental radiation but do not result in corporate convictions.

Finally, the penultimate DPA in Canada is under the Criminal Code, permitting corporate criminal offenders to admit to fraud, corruption, or other white collar crimes in a manner that results in rehabilitation of the offender without getting a criminal record, and therefore automatic debarment from government and many other business opportunities.

A ‘win-win’

Corporate DPAs provide a potential ‘win-win’ result for both the regulator (and the societal interest they represent) and the legitimate business interests of the corporate offender, without harming their investors, their employees, and other corporate stakeholders. Therefore, DPAs may be an effective option in striking that balance in OHS legal compliance without the expense of a trial, the damage to innocent stakeholders, and the risk to the state that the charges will be dismissed.

A comprehensive review of the advantages and disadvantages of DPAs for corporate offenders has been addressed by the author elsewhere. A brief summary of the benefits of DPAs for OHS legal enforcement may include the following:

1. The lengthy, costly, and uncertain outcomes of an enforcement by OHS charges that result in a quasi-criminal or criminal trial;
2. The consequences a public trial and conviction have on the employer’s business reputation and debarment from future business opportunities;
3. The adverse effects on innocent stakeholders, including investors, employees, customers, and suppliers who did not cause the incident.

Although the goal of OHS laws and their enforcement is the improvement of workplace safety, the use of penal prosecutions had become so prevalent in Canada there has been little reflection of the efficacy of the criminal sanctions enforcement model.

No meaningful empirical study in Canada reliably confirms a positive correlation between increased OHS prosecutions and increased penalties and a reduction in workplace incidents, injuries, and fatalities. The absence of such evidence is shocking given the continuing trend of Canadian OHS regulators to increase both the penalties and frequency of OHS prosecutions.

Rather than double down on a failed policy model, there must be a better way to improve workplace safety.   

The process of how a DPA could work to achieve OHS enforcement without the lengthy, costly and adversarial process of a penal prosecution may look like this:   

1. There is a workplace incident, injury, or fatality; the OHS regulator investigates and determines there have been OHS legal contraventions;
2. The terms and conditions of the DPA are voluntarily negotiated between the OHS regulator and the corporate employer and their respective legal counsel;
3. The DPA will include requirements for acknowledgment of a legal contravention of a legal OHS violation by the corporate employer;
4. The DPA will require the payment of a significant monetary penalty for not complying with the OHS legal standard in question;
5. The DPA will include requirements to add or improve current OHS policies, procedures, training, accountability, and other workplace safety measures.
6. The DPA will be reviewed in a public judicial proceeding by a justice who records the full details of the commitment to the improved OHS compliance program;
7. When the above criteria are completed, the pending or actual OHS penal charges will be stayed by a judge at the request of the prosecutor.

DPAs will not be always used by OHS regulators, especially in cases involving fatalities and repeat offenders. The role of quasi-criminal and criminal OHS prosecutions will be preserved. However, the tremendous time, costs, and talent tied up in penal prosecutions can be better put into constructive resolution discussions to improve workplace safety.

If governments and OHS regulators are truly committed to reducing workplace incidents, injuries, and fatalities, and improving workplace safety, there is no reason not to make OHS DPAs available in every jurisdiction in Canada.  

This brief review of the concept of DPAs demonstrates they can be an effective and efficient means of holding corporate employers accountable for OHS legal contraventions. DPAs may not necessarily reduce the monetary penalties the employers face, but nor will they cripple them from future business activity that inadvertently punishes employers, investors, suppliers, customers, and other workplace stakeholders.

DPAs also prevent a record of conviction from debarring an otherwise capable and competitive business from offering its goods and services to both the public and private sector. DPAs have been widely used in many other free and democratic countries with resounding success.

While DPAs are not a panacea to improving workplace safety in Canada, they may go a long way to supporting legal enforcement against offenders and preventing hardship to non-offenders, while avoiding the existential threat of corporate capital punishment by OHS prosecutions, convictions, and debarment.

Norm Keith is a partner, employment and labour law, at KPMG Law LLP in Toronto. The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG LLP.