As a safety coordinator, you work hard to ensure that your company and its workers and supervisors comply with OHS laws. But if your company uses outside contractors at its facility, your compliance efforts won’t be enough to protect your company from liability. The contractor’s workers or supervisors might violate a safety law by, say, failing to lock out machinery. At least you can take comfort in the knowledge that if such a violation were ever to happen, the contractor would be 100% liable for the offence. But guess what? That silver lining is an illusion. Your company could also be liable for the contractor’s safety violation. With the help of Alberta OHS lawyer and former Crown prosecutor David Myrol, we’ll explain the risk of liability for contractor safety offences. And we’ll give you 12 dos and don’ts for dealing with contractors to help you manage that risk. ONLINE RESOURCE: Click here to download a Model Clause that you can give to your company’s lawyer to adapt and add to any agreements with contractors to protect your company.
THE LIABILITY RISK
Liability for safety violations committed by a company’s contractors is a complex issue. The OHS laws create a “complicated web of accountability” for employers, owners, contractors and so on, explains Myrol. And the jurisdictions have taken various approaches to spinning this web. For example, some jurisdictions have a broad definition of “employer.” Consequently, in these jurisdictions, an “employer’s” duty to ensure health and safety in the workplace includes not only workers on the company’s payroll but may also include any worker in the workplace, including the employees of contractors the company hires, he says. OHS duties generally can’t be delegated. As Myrol says, “Most OHS duties are like Velcro—they stick to you no matter what you say in the contract.” For example, you can agree that a contractor is completely responsible for the safety of its workers at a worksite, but the courts don’t care much about the contract. They’re more interested in what the OHS laws say, he explains. In addition, employers can’t use a contract to escape their potential liability under C-45. Bottom line: Every employer in Canada that uses contractors is exposed to at least some degree of liability for safety offences committed by them. (Click here for a more in-depth discussion of how an employer can be held liable for a contractor’s safety violations.)
12 CONTRACTOR DOS & DON’TS
Companies should have a plan for managing the liability risks they take on when working with contractors. There are generally four key components to this plan. Let’s look at each component and its dos and don’ts individually. 1. PRE-QUALIFICATION AUDITS When hiring a contractor, don’t just pick the one that submits the lowest bid. Make the contractor’s ability to work safely and in accordance with OHS laws one of your hiring criteria. And use pre-qualification audits to carefully screen all contractors. Here are four dos and don’ts to help you. Conduct Internal Audits of Contractors One way to screen contractors is by hiring only contractors that have a valid “Certificate of Recognition,” a credential issued by the workers’ compensation boards of many provinces, such as AB, BC, ON and SK, that indicate that the company has met stringent health and safety requirements. You can also rely on outside agencies or registries to audit a contractor’s OHS program. These organizations provide a valuable service but be aware of their limitations, says Myrol. For example, outside auditors may refuse to qualify a contractor because, say, it doesn’t train its workers on asbestos. But if the contractor’s work never exposes its workers to asbestos and asbestos exposure isn’t a hazard in your work, that contractor may still be qualified for the job, explains Myrol. Thus, relying only on an outside audit might limit the field of competent contractors. Conversely, outside auditors may not screen contractors on your specific areas of focus, says Myrol. And for an effective audit, you need to screen contractors with an eye on the hazards involved in your particular job, he advises. For example, if the contractor would be doing trenching work on your job, then you need to be sure that the contractor has more than a written procedure for trenching. Don’t Use Generic Criteria Myrol cautions against using generic screening criteria for all contractors. You need to establish criteria for contractors based on each particular project and its hazards and screen contractors accordingly, he explains. However, there are certain criteria you should always evaluate:
Screen from Bottom Up as Well as Top Down Most companies screen contractors from the top down, says Myrol. That is, they look at the contractor’s OHS program and safety practices on a corporate level, which is important. But if possible, you also want to screen the people who will actually be doing the work you hire the contractor to do—the workers and supervisors, he says. A company may have a great overall OHS program and safety record but those qualifications won’t do you any good if the particular crew it sends to your workplace is inexperienced or led by a careless supervisor. So Myrol suggests that you also try to get information on the crew and supervisors who’ll be assigned to your job, including their experience, training and safety records. Don’t Automatically Reject Contractor Because of One Deficiency During the screening process, you may come upon a contractor that’s perfect for your job except for one small thing, such as insufficient worker training in one discrete area. Don’t necessarily reject the contractor for that shortcoming, says Myrol. Instead, consider requiring additional measures to remedy that deficiency, such as requiring additional training or more direct supervision, he suggests. Insider Says: For more information on screening contractors, Click here. 2. COMMUNICATION OF SAFETY EXPECTATIONS You need to effectively communicate your company’s safety expectations to the contractor and its workers. You actually start that process while screening contractors. But communicating safety expectations is even more important once you’ve selected a contractor for the job. Here are three dos and don’ts to help you do it effectively. Spell out Expectations in Written Agreement If a contractor passes your screening process, you should sign a written agreement with it, says Myrol. In addition to standard clauses on insurance, workers’ compensation and termination, Myrol recommends that your agreement require the contractor to: Comply with your company’s OHS program. Standard contracts require the contractor to comply with the OHS laws and industry standards, says Myrol. But this requirement is becoming much more detailed and specific in agreements he’s seen. For example, it’s common now for the contract to spell out whose safety procedures will be followed for the work being done—your company’s or the contractor’s. Get your consent before hiring subcontractors. If you’re going to give the contractor the power to hire subcontractors, make sure that you require it to get the company’s consent first, suggests Myrol. The last thing you want is for the contractor to hire an unqualified or unsafe subcontractor. You should also retain the right of refusal, he adds. That is, if you’re not satisfied with the subcontractor, you can refuse to allow the contractor to hire it. The two requirements above will help prevent safety violations. But there’s no guarantee that the contractor won’t commit a safety violation anyway. So to ensure that your company won’t suffer financially if it’s held liable for that violation, the agreement should also require the contractor to: Indemnify your company. The contractor should “indemnify” your company—that is, it should agree to pay or reimburse the company for any and all costs related to the safety violation it caused, including fines, lawyers’ fees, experts’ fees, investigatory costs and any other related expenses. Myrol notes that indemnification clauses can be complicated and the source of heavy negotiation, especially on large projects. For instance, the contractor may try to cap its financial risk under the indemnity to a specific amount of money, such as the legislated maximum fine. But be aware of the hidden costs of responding to a safety violation. Myrol notes that these hidden costs, including investigating the incident, hiring experts, responding to the government’s concerns and paying legal fees, can easily double, triple or even quadruple the amount of any fine ultimately imposed. Cooperate in the event of an incident. If a safety incident occurs that involves the contractor and its workers, you’ll need their cooperation in the investigation of that incident. For example, you may need training records for the workers involved or access to workers who witnessed the incident. But if you don’t require the contractor in the agreement to cooperate with your investigation, you won’t be able to compel the contractor to do so after the fact, warns Myrol. After all, you don’t have subpoena power like the government. ONLINE RESOURCE: Click here to download a Model Clause that contains the above protections and give it to the company’s lawyer. Don’t Forget to Communicate Expectations to Workers Communicating your company’s safety expectations to the contractor’s corporate executives during the bidding and contracting process isn’t enough. It’s the contractor’s workers who will be doing the actual work at your site. So make sure to communicate all safety expectations to those workers through meetings and training sessions, which the workers should be required to attend, says Myrol. Be Consistent in Your Safety Communications Be consistent, advises Myrol. That is, make sure when communicating your company’s safety expectations that you send the same message to both the contractor and its workers. For example, saying in the agreement with the contractor that the workers must comply with the contractor’s safe work procedures for confined spaces but then training those workers on your company’s confined space procedures is not only confusing but also dangerous. And such inconsistency will certainly undermine any due diligence defence your company later tries to make. 3. MONITORING OF COMPLIANCE Don’t assume that a contractor will comply with its safety obligations just because they’re spelled out in the agreement. You must adequately supervise the contractor while it’s working for your company to ensure that it does what it promised to do, says Myrol. If you don’t and the contractor violates an OHS law, your company could be held responsible for that violation. Here are two dos regarding monitoring. Tailor the Level of Supervision to the Level of Hazard All work doesn’t require the same level of supervision. “The greater the hazard, the greater the need for supervision,” explains Myrol. For example, particularly hazardous work, such as jobs involving hazardous substances or on electrical equipment, requires more direct supervision, such as having someone from your company physically monitor the contractor out in the field. But for less hazardous work, you can rely on indirect supervision, such as requiring daily copies of all risk assessments conducted by the contractor, says Myrol. Look for Safety Violations & Infractions When supervising a contractor’s work, you shouldn’t merely ensure that the workers are doing the job they were hired to do. It’s crucial that your supervisors also identify any violations of the OHS laws and of your company’s or the contractor’s safety rules and procedures. 4. INTERVENTION & ENFORCEMENT During the course of monitoring the contractor’s compliance with your safety expectations, you may uncover safety violations, such as workers not following safe work procedures. So what do you do now? Here are three dos to answer that question. Take Action to Enforce Safety Expectations If you’ve identified any violations of the OHS laws or of your company’s safety expectations, you must take action to enforce those laws or expectations, says Myrol. The appropriate action will vary depending on the nature of the violation, ranging from a verbal warning to termination of the agreement. For example, if the violation is serious and involves a single worker, you could ask the contractor to remove that worker from the job. If the problems are more pervasive, you may want the entire crew removed. (Note: If a union is involved, you may need to follow the collective bargaining agreement’s protocols when removing a worker or crew.) Think Twice Before Directly Confronting a Contractor’s Worker Say you see a contractor’s worker without a hard hat in an area that requires the use of hard hats. Do you tell the worker to put his hard hat on? Or do you go to the contractor and ask him to get the worker to comply with the PPE rules? Directly confronting a contractor’s worker can have unexpected consequences, says Myrol. For example, in asserting your authority or control over the worker and the work, you may inadvertently undercut the limited protection the company gets from the designation of the contractor as prime contractor, he explains. Instead, you may want to stop the work and have the contractor deal with the worker. From a practical perspective, however, telling the worker to put his hard hat on makes sense. By doing so, you’re protecting the worker, possibly preventing an injury and almost certainly heading off a safety violation. Document All Interventions and Enforcement Actions Make sure you document every time you intervene or take any enforcement action, advises Myrol. If the company is later charged with a safety violation based on conduct by the contractor’s workers that you tried to address, you want to be able to show what exactly you did to ensure that the contractor complied with the applicable OHS laws. Conclusion Hiring contractors to perform certain work may be efficient for your company’s business. But it also may complicate your job as safety coordinator. You must ensure that anyone doing work in your company’s workplace or on your company’s behalf complies with the law. So you should be involved in the process of hiring contractors to ensure that the company hires contractors that are qualified to perform the work and have good safety compliance track records. And you should make sure the contractors that are hired understand their safety compliance obligations while working for your company. INSIDER SOURCE David Myrol: McLennan Ross LLP, 600 W. Chambers, 12220 Stony Plain Rd., Edmonton, AB T5N 3Y4; (780) 482-9290; dmyrol@mross.com. limited
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