The Other Side of C-45: Sentencing a Company for a Safety Violation that Constitutes Criminal Negligence

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For all of the attention it’s received, there’s an important aspect of Bill C-45 that has been almost completely overlooked. Sure, everybody knows about the part of the law that imposes potential criminal liability for failing to take “reasonable steps” to protect workers and others from bodily harm arising out of work—Section 217.1 of the Canadian Criminal Code. But there’s much more to C-45 than Section 217.1.

C-45 also makes important changes to the penalties that can be imposed on companies convicted of safety violations under criminal law. More precisely, C-45 spells out the specific factors a court must consider when sentencing a company for criminal negligence. Although, technically, these sentencing factors apply only to criminal prosecutions, as a practical matter, they may also influence sentencing in OHS prosecutions. So it’s crucial for safety coordinators to understand the C-45 sentencing factors so they can manage their company’s liability risks.

This article will explain what you need to know about sentencing under C-45. First, we’ll tell you about the factors courts have historically used to sentence companies for OHS violations. Then we’ll explain the C-45 factors and how they affect not only criminal sentencing but also the sentencing of companies that violate OHS laws, even if those companies aren’t charged with a crime.

Sentencing for OHS Violations
The OHS law is not a criminal law; it’s what lawyers refer to as a quasi-criminal, strict liability regulatory law. Prosecutions for regulatory offences are similar to, but not exactly the same as, criminal prosecutions. As in a criminal case, when a company is convicted of a regulatory offence, the judge must decide what sentence to impose. Although judges have a lot of discretion, they must follow certain guidelines. These guidelines might come from the law or regulation that the company violated, cases where other companies were sentenced for violating that law or regulation or a combination of both.

OHS laws and regulations rarely establish guidelines for sentencing. So judges in OHS prosecutions typically seek guidance from court cases. According to Toronto OHS lawyer, Norm Keith, “there are three primary principles that apply to sentencing for health and safety violations:” 

  • Retribution: As a moral principle, the sentence should force the company to pay for the harm it did; 
  • Deterrence: The sentence should be serious enough to discourage not only the company being sentenced but also other companies from violating the law in the future; and
  • Rehabilitation: The sentence shouldn’t run the company out of business but help the company restore its place as a citizen and a valued member of society.

The judge’s task is to apply these abstract principles to actual cases. To fulfill this task, courts have developed factors to consider when sentencing a company for an OHS violation. For example, the leading case for deciding the amount of a fine for an OHS violation is a 1982 decision called Cotton Felts. Although the case was decided in Ontario, the factors it sets out are referred to by courts in all parts of Canada when fining companies for OHS violations.

The Cotton Felts court stressed that the overriding factor in deciding the appropriate fine is the “need to enforce regulatory standards by deterrence.” But it cited four other factors that courts must also consider:

  1. The size of the company involved—the bigger the company, the greater the fine must be to have a meaningful impact on its conduct;
  2. The scope of the economic activity at issue;
  3. The extent of the actual and potential harm to the public—the greater the harm, the greater the fine; and
  4. The maximum penalty allowed by the law that the company violated.

Maximum penalties for OHS violations have increased in almost all jurisdictions since Cotton Feltswas decided, notes Keith. Now that companies, supervisors and workers convicted of OHS violations face higher fines and even jail time, courts in Ontario and other provinces have expanded the list of sentencing factors courts should consider to include: 

  • The victim’s special circumstances, such as whether he’ll be able to work again; 
  • The intent or degree of negligence involved; 
  • The extent of the company’s attempts to comply with the law; 
  • The element of risk involved in the activity in question; 
  • The remorse expressed by the company and whether it was sincere; 
  • The company’s overall health and safety record; and
  • The economic impact of the fine on the company’s business—it’s important not to run the company out of business.

Sentencing for Criminal Violations
Sentencing for criminal violations follows the same general principles as sentencing for OHS violations. But unlike OHS laws, criminal laws typically spell out factors for judges to consider when sentencing a defendant convicted of a crime. These factors are generally organized into two groups: 

  • “Mitigating” factors reflect well on the company and call for a lighter penalty. Example: the fact that the company took steps to prevent the incident from happening again; and 
  • “Aggravating” factors reflect poorly on the company and call for a stiffer penalty. Example: the fact that the company tried to conceal the incident and/or its role in what happened.

C-45, more precisely, Sec. 718.21 of the Canadian Criminal Code, sets out 10 factors—both mitigating and aggravating—that a court must consider when sentencing an “organization,” such as a company (see sidebar on p. 2 for a list of the 10 factors). To some extent, these factors overlap with the Cotton Felts factors and other factors considered by courts in sentencing companies in regulatory OHS prosecutions, says Keith. For example, the impact the sentence would have on the company’s economic viability is a factor under both C-45 and Cotton Felts.

Two of the C-45 factors are of particular importance because they’re factors over which companies have control:

Any penalty imposed by the company on a worker for his role in the incident (factor h). This factor can cut both ways. It may be mitigating for a company if it recognized a worker’s role in the incident that led to the prosecution and took steps to discipline the worker for his role, explains Keith. But it could also be an aggravating factor if the court believes the company unfairly disciplined or fired the worker or made him a scapegoat, he warns.

Any measures the company took to reduce the likelihood that a similar incident would happen again (factor j). Any steps a company took after a workplace incident won’t generally help it establish a due diligence defence. But they may help the company reduce its ultimate sentence if it’s convicted in a criminal prosecution based on that incident. The court will consider measures your company took to reduce the likelihood of a recurrence of the incident, such as developing an effective OHS management system, installing safeguards, training employees and setting safety rules and procedures. Genuine efforts to improve your company’s OHS compliance will likely be a significant mitigating factor, explains Keith.

Insider Says: The C-45 factors apply not only to companies convicted of criminal negligence in connection with a workplace incident but also to those convicted of any criminal offence.

The Influence of C-45 on Sentencing in Regulatory Prosecutions
What’s the point of worrying about how a company would be sentenced for a violation of C-45? After all, there have been only two prosecutions under C-45 since the law took effect on March 31, 2004.

Don’t be lulled into a false sense of security. True, the C-45 factors only apply to criminal prosecutions. But they may also affect how companies are sentenced in regulatory OHS prosecutions and indeed whether they’re prosecuted at all, notes Keith.

Explanation: Thanks to C-45 and increases in the maximum fine limits under many provinces’ OHS laws, the old Cotton Felts factors are in urgent need of reconsideration and revamping, says Keith. So courts may consult the new C-45 factors to decide on an appropriate sentence in a regulatory OHS prosecution, he explains. In addition, prosecutors and defence lawyers may start framing their sentencing arguments in regulatory prosecutions in terms of the C-45 factors. Consequently, the C-45 sentencing factors might serve as the unofficial standard for sentencing companies in regulatory OHS prosecutions, he suggests.

Impact on You
So what do the C-45 sentencing factors have to do with you? A lot.

A key function of a safety coordinator’s job is to manage the company’s liability risks. Understanding the factors that judges use to sentence a company for OHS violations in both criminal and regulatory prosecutions equips you to perform this function more effectively, particularly after a fatality or other serious incident in your workplace.

Explanation: Although it’s too late to prevent the incident, safety coordinators can limit the damage the company sustains after the incident occurs. Taking steps to minimize the potential penalty the company may face as a result of the incident is a key part of damage control. If you know what mitigating and aggravating factors courts consider when sentencing companies for OHS violations, you can frame your actions with those factors in mind and thus may reduce the fine or other penalties your company may face, says Keith.

Example: A worker is killed when a crane’s bucket falls on him. An investigation reveals that the supervisor knew there was a problem with the crane but figured it would be fine until the end of the shift, which was only an hour away. So he jury-rigged the crane temporarily and planned on properly repairing it after the shift ended. If the safety coordinator recognizes that imposing discipline for safety infractions is a mitigating factor, he can ensure that the company punishes the supervisor for allowing workers to use broken equipment in violation of company policy and OHS regulations. He can also see to it that the company sets new rules and procedures for dealing with machinery or equipment that are broken, and retrain workers and supervisors on the new rules and procedures. Those steps probably won’t help the company avoid prosecution, but they may help reduce the sentence imposed on it.

In addition, understanding the C-45 factors may help a company evaluate the extent of the penalty it faces in a regulatory prosecution, adds Keith. It can then decide how aggressively it wants to contest the OHS violation, he says.

Conclusion
What your company does after a workplace incident is important in terms of sentencing. So for practical reasons, your company needs to know about the C-45 factors and keep them in mind when there’s an incident in the workplace that could lead to a criminal prosecution. Awareness of those factors shouldn’t drive the steps your company takes after an incident. But the factors can provide guidance on steps you can take that may ultimately reduce any future penalties imposed on the company—in either a criminal or regulatory prosecution. 

INSIDER SOURCE
Norm Keith, B.A., LL.B., CRSP: Partner, Gowling Lafleur Henderson LLP, 1 First Canadian Pl., Ste. 600, 100 King St. W., Toronto, ON M5X 1G5.

SHOW YOUR LAWYER
R. v. Cotton Felts Ltd, [1982] 2.C.C.C. (3d) 287 (ON C.A.)