Volume 11, Issue 2, 2007
Alternatives to Prescriptive Regulation of Workplace Health and Safety
Professor Michael Baram
1. The Commitment to Occupational Safety and Health
Many promises to advance occupational safety and health have been made by developed nations. Expressed in the “hard law” of legislation are promises to regulate employers and workplaces, and to hold employers accountable when they do not comply. However, problems arise when regulators try to transform the promises into performance.
For example, in the U.S., the Occupational Safety and Health Act of 1970 states the national promise “to assure so far as possible…safe and healthful working conditions” for “every working man and woman”. It also requires that employers comply with regulations developed by the Occupational Safety and Health Administration (OSHA), and more broadly states the generic requirement that each employer must keep its workplace “free from recognized hazards…likely to cause death or serious physical harm to its employees.”i
Over the years, OSHA has followed a “command and control” approach to implement the law by developing many prescriptive standards and rules and taking many enforcement actions to punish employers who do not comply. Because this confrontational approach has proven problematic, OSHA has experimented with softer, less adversarial means to promoting workplace safety.ii
Other agencies also address workplace hazards in the U.S. the Chemical Safety and Hazard Investigation Board investigates major industrial accidents to determine root cause and contributing factors, as in the case of the explosion at a BP refinery in Texas City in 2005, which killed 15 workers and injured 170 others. The National Institute of Occupational Safety and Health conducts applied research on workplace hazards, ranging from ergonomic problems to health risks posed by nanotechnology. And several other agencies regulate special sectors such as mining, nuclear power, and biotechnology. Finally, each of the 50 states has regulatory programs for worker safety, and compensation programs for workers injured and disabled in the course of employment. Nevertheless, many industrial sectors and workplaces remain unreasonably hazardous in the U.S. and the toll of worker injuries, diseases and death is a persistent national problem.
In addition to national programs, international organizations strive to improve workplace safety, notably the International Labour Organization which makes recommendations for adoption by member countries. Other organizations (e.g. OECD) recommend improved risk management systems for corporate use. However, their efforts have been frustrated by the advent of global free trade, which enables the least regulated to have competitive advantage.iii
These commitments reflect consensus on two basic responsibilities. One is that nations and employers need to be linked in a joint effort to prevent workplace hazards. The other, often overlooked, is that employers have a moral or ethical responsibility to make their organizational decisions on the basis of internal principles which give appropriate value to preventing harm to workers and restrain employers from subordinating worker safeguards to production and profit.iv
In this talk, I will briefly discuss some of the challenges facing regulators and employers as they try to meet these responsibilities, the evolution of OSHA regulation as it struggles to respond to the challenges, and whether OSHA experimentation with certain alternatives to command and control regulation has produced a more effective approach to workplace safety.
2. The Challenge of Change
As regulators and employers work towards fulfilling their responsibilities to safeguard workers, they are challenged by many changes in the workplace, business, and society.
New technologies are rapidly being put to use without adequate knowledge of their intrinsic hazards, or sufficient means for protecting worker health and safety, as in the cases of nanotechnology and biotechnology where, for example, technically feasible means of ambient and biological monitoring to prevent or immediately detect harmful exposure are not available.
Demographic change in the workplace presents another challenge. For example, Hispanic workers in the U.S. take jobs in the most dangerous sectors (construction, agriculture, etc.) and incur injuries at disproportionate rates within those sectors despite receiving conventional training. OSHA is developing special initiatives to address cultural features of the Hispanic community which contribute to the injury rate.
Companies are restructuring to cut costs and become more competitive in the global free trade economy. They are downsizing, outsourcing to independent contractors, relying on consultants for the design and management of safety systems, and developing multi-organizational business enterprises on a global scale. Each of these changes has implications for the employer’s capability to manage workplace hazards and the regulator’s ability to effectively apply prescriptive standards. For example, numerous accidents have been occurring at facilities owned and operated by “toll contractors” while working under outsource arrangements for chemical manufacturers. Investigators frequently find that the toll contractor lacked expertise to do the outsourced work safely and that the manufacturer failed to provide the safety management information needed. v
Rising political and business pressures in developed nations to relax workplace and environmental regulations are being stimulated by the globalization of business and the elimination of trade barriers under the World Trade Organization regime. On the free trade playing field, firms in low wage countries with negligible regulatory burdens enjoy considerable comparative advantage over their competitors in developed, highly-regulated nations, a situation which is causing a “regulatory race to the bottom” among competing nations.vi
National membership in multinational organizations is creating greater complexity for regulators and companies. For example, procedures used by the European Community to regulate the workplace have become extremely convoluted and laborious as it tries to reconcile competing interests, e.g. “the need for coordination at the Community level and the essential flexibility needed to face country-specific issues at the national level”, and strives to set “de minimis rules for highly sensitive and country-specific issues” within a framework which promotes harmonization of law and rules.vii
New perceptions, opinions, concepts and facts regarding workplace safety are being rapidly introduced into public discourse by sources in diverse fields ranging from the behavioral sciences to genetics. This creates more complexity for regulators and companies who must verify such information, determine its relevance, and then decide whether or how to use it in conjunction with, or instead of, traditional engineering approaches to safety management. A looming challenge is posed by research which is beginning to explain how genetic factors shape each worker’s behavior and susceptibility to injury and illness in the workplace, a development which will undermine protective standards and training programs which at this time do not recognize such differential characteristics in the workforce.viii
Finally, new legal and policy developments demand constant attention and must be absorbed by regulators and companies on a “real time” basis. For example, court decisions protecting the privacy rights of workers can confound the most efficient workplace monitoring and surveillance systems and behavioral change programs. For another recent example, legal initiatives in the U.S., which are attempting to remedy enforcement inadequacies of the OSH Act by using highly punitive environmental laws to punish companies for endangering workers (e.g. exposure to hazardous waste spills) now command the attention of many regulators and companies.ix
To sum up, regulators and companies responsible for safeguarding workers must deal with rapidly occurring changes in the workplace, business, and the larger society in order to function at the “state of the art” level. Capturing and evaluating information on such changes, determining its regulatory implications, and making regulatory adjustments is a challenging, continuous, real time function. Thus, static approaches to worker protection, such as enactment of prescriptive standards and strict compliance, are insufficient. As a result, regulatory and self-regulatory programs have evolved in response to the workplace implications of change.
3. Evolution of OSHA Regulation
OSHA regulates a universe of employers with several million work sites and well over a hundred million employees, as well as numerous independent contractors. Since its birth in 1970, the agency has worked in an extremely hostile environment: persistent opposition from business interests and their political supporters, harsh criticism by free market economists and think tanks, and the anger of labor advocates whose demands are not met. Its trade union support has steadily declined as membership in labor organizations diminishes. To put it bluntly, OSHA has long been “understaffed, under-funded, under-appreciated, and overly-attacked.”x Despite these adversities, the agency strives to carry out its regulatory mandate to improve workplace safety, and to respond appropriately to changes.
In its early years, OSHA’s regulatory program took a command and control approach to workplace safety. It adopted technical standards that had been developed by private organizations, enacted emergency standards for workplaces which posed “grave danger” to employees, and developed new prescriptive and technically- detailed standards to reduce risks to worker safety and health. It also developed rules for employer record keeping and the reporting of certain adverse events. And it inspected workplaces, issued citations for violations, and imposed penalties as authorized by the OSH Act.
This approach proved to be problematic in many respects. It was seen as overly confrontational and intrusive by employers, many of whom were predisposed to oppose any regulation, and requiring compliance with uniform “one size fits all” standards by companies for workplaces with many differing features. Further, it was claimed that the OSHA approach suppressed company self-regulation and the flexibility needed to compete, and imposed excessive costs to achieve minor gains in safety. Employers challenged many of the standards, rules, inspections, citations, and penalties in the courts and were frequently successful in these judicial review proceedings.xi
As a result of this experience, and the onset of the Reagan administration’s campaign to deregulate the economy, OSHA became increasingly defensive, taking much longer to develop a new standard (eight years and more), halting further development of several new standards, and reducing the vigor of its enforcement program. Advocates of workplace safety attacked the agency for insufficient inspection and enforcement, and for allowing many non-compliant companies with poor safety records to continue “doing business as usual”. In fairness to OSHA, it needs to be said that inadequate financial and political support by Congress, intrinsic limitations in its OSH Act mandate, and court decisions protective of business interests were important factors contributing to its regulatory malaise.
These conditions still exist, but they stimulated OSHA to begin moving “out of the box” of command and control regulation and become more creative. One of its first innovations was to enable worker access to hazard information. Adopting the principle that workers have a need and a right to know the identities and hazards of the chemicals they work with, OSHA completed a 10 year process by enacting the Hazard Communication Standard (HCS) in 1983, a step that labor unions hailed as its most significant regulatory action. The HCS requires “upstream” manufacturers and importers of hazardous chemical products to furnish their “downstream” customer companies with labels and informative data sheets for each chemical sold. Downstream firms, as employers, are then required to provide this information, on request, to their employees, and to provide special training to enable them to avoid harmful exposure and use the chemicals safely. OSHA takes enforcement action against non-compliant employers, but is frustrated by workers who fail to take advantage of the information.xii
At the same time, OSHA took a further step away from the box of command and control by creating Voluntary Protection Programs (VPP), a program offering voluntary cooperative relationships between qualified employers and OSHA. VPP has grown slowly but steadily over the years and now encompasses over 1100 worksites, mainly sites with less than 200 employees in the chemical, electrical, lumber and paper manufacturing sectors.xiii
OSHA has subdivided VPP into several component programs, notably the “Star” program which it reserves for employers that have “the very best workplaces that are in compliance with OSHA regulations and that operate outstanding safety and health management systems for worker protection”. Eligibility is further limited to employer worksites which have “illness and injury” and “days away or restricted from work” rates over a three year period which are below the average rates for other worksites in the same industrial sector.
In addition, the employer’s management system must have several features, as described in OSHA’s VPP Manual.xiv For example, the features include:
These features of a safety management system are familiar, having been recommended by many organizations (e.g. ILO, OECD, ISO) as general principles for improving corporate risk management. xv OSHA has adopted and amplified them to serve as VPP principles for self-regulation of workplace safety (as it has also done for its Process Safety Management Standard for prevention of major industrial accidents).
Employers have several incentives to join VPP, despite the bureaucratic procedures involved. Among the incentives are some exemptions from OSHA inspection, the chance to impress consumers as being socially-responsible and to impress investors as being well-managed, the ability to gain technical assistance from OSHA, and the expectation that membership in VPP will help mitigate penalties if the employer inadvertently violates an OSHA regulation. VPP membership also facilitates employer qualification for acceptance into state VPP-type programs which provide additional benefits. However, VPP membership does not exempt an employer from compliance with OSHA standards and the “general duty” to eliminate “recognized hazards”.
OSHA has embellished VPP with a “Mentoring Program” in which VPP firms are solicited to voluntarily help other companies qualify for VPP membership. It has also added a “Special Government Employee Program” in which “qualified volunteers from VPP sites work alongside OSHA employees on VPP onsite evaluations…to help leverage OSHA’s limited resources.” Recent evaluation indicates that company willingness to participate starts well but diminishes over time.xvi
According to OSHA, VPP sites progressively improve workplace safety to levels far beyond the average for their industrial sectors, and as models of best practices, influence other firms and provide valuable input and assistance to the agency. As a result, OSHA has been encouraged to exploit the VPP model by offering a similar program for smaller firms in high hazard industries (SHARP), and a partnership program to help construction firms integrate safety information from multiple worksites (SPP). xvii It has also entered into an alliance with the chemical industry in which “joint gap analysis” tools are used to bring several hundred manufacturers and distributors of chemical products into compliance with VPP requisites and the industry’s own Codes of Management Practices. viii
States are now emulating OSHA, but some on a much faster track and broader scale, encompassing companies irrespective of their prior safety records. The state of Washington, for example, has created a VPP-type program and announced partnerships with 15,000 companies belonging to a national business association and with the 30,000 members of the Washington Farm Bureau. The participating companies must satisfy state program requirements for self-regulation and self-auditing similar to OSHA’s VPP, and secure technical assistance from a designated non-profit safety council. State officials promise exemptions from state inspections and penalty mitigation, but deny they are deregulating or abandoning enforcement. xix
Thus, the VPP model is gaining acceptance as an alternative to command and control regulation of workplace safety because it meets some of the needs of regulators, offers important benefits to employers, and does not offer a target for business interests and political deregulators. Its safety management principles are also familiar and acceptable to many companies because, as noted earlier, they are similar to the enlightened principles set forth by other organizations for improving corporate risk management, such as the following:
The VPP model also reflects important trends in public affairs. For example, since Enron and other corporate disasters, much pressure is being brought to bear on company officers and directors to improve self-regulation and governance. And E.U. and U.S. regulatory policies are shifting from command and control to “context-oriented governance emphasizing close cooperation of public and private actors…” xxiv Indeed, in the Netherlands, deregulation is a major political theme, and a variation of the VPP model is being used to supplant conventional workplace regulation. xxv
Finally, the VPP model is an intrinsically flexible regulatory approach which enables continuous improvement in safety management systems and adaptation to changes of the types previously noted, in contrast to the command and control approach. For example, it can readily absorb new management techniques, such as OSHA’s “eTool for Safety and Health Management Systems”, and OSHA’s gradual refining of what it means when it calls for companies to go beyond compliance and develop a safety culture which addresses organizational attitudes, behaviors, beliefs and values as well as practices.xxvi Thus, without the time-consuming and contentious process of developing and enforcing prescriptive standards for numerous business sectors, VPP can advance the state of the art of workplace safety management through cooperative means.
4. Keeping the Promise of Workplace Safety with an Alternative Regulatory Approach
A new regulatory approach on which lives and health depend needs to be carefully structured and managed to reach its goals. Despite its many attractive features, and endorsement of these features by many progressive organizations, the VPP model raises some obvious concerns: is it a retreat from regulatory commitments, an approach which merely creates the illusion of progress and comforts business interests?
So we must discuss what needs to be done to ensure that the model will be a credible and reliable means of advancing workplace safety beyond what can be achieved by command and control. On the basis of working experience with regulators and companies in the U.S. on safety management, and my precautionary personality, I suggest that the following issues need to be dealt with.
A. Legislative Action
Agency use of the VPP model should be mandated and structured by legislative action: i.e. by amending existing law on workplace safety. Thus far, the model has been opportunistically applied and expanded by regulators responding to political and business pressures without a clear national mandate. As a result, its legal status, goals, and implications for other established regulatory approaches (e.g. prescriptive standards, enforcement) are uncertain. Legislative action would involve the public in resolving these issues, provide direction for agency use of the VPP model, and reaffirm commitment to workplace safety. It would also clarify goals and thereby establish a basis for measuring progress and holding regulators and companies accountable.
B. Enforcement Features
It is common knowledge that economic considerations are the dominant influence on company management, and that this often confounds or obstructs the achievement of safety goals unless regulators have authority to enforce prescriptive and performance types of standards. The VPP model also needs to have enforcement features. Otherwise, implementation by a company will be of variable quality as its economic considerations change over time, and similarly-situated companies in the same industrial sector will implement qualitatively-different safety management systems. Such foreseeable outcomes would undermine public confidence and industry trust in the fairness and efficacy of the VPP-type program.
To avoid these problematic outcomes, the VPP-type program should have clearly-defined enforcement features: e.g. agency power to inspect worksites and documentation, require company self-audits and reports, apply objective measures of company performance, and impose sanctions upon finding inferior performance. Sanctions should range in severity according to performance deficiency and harmful outcomes, from monetary penalties to agency appointment of an independent monitor to oversee a company’s safety management system in worst cases (as is done in the U.S. for companies which have repeatedly and willfully violated certain environmental and corporate governance regulations.
An alternative approach, involving government covenants with companies, has been taken in the Netherlands. This method for holding companies accountable for workplace safety has yet to be fully tested in a situation involving a company’s breach of its covenant. xxvii
C. Hazard Mitigation
The analytic feature of the VPP-type program is usually stated as doing risk analysis for the purpose of enabling management to keep workplace risks at an “acceptable level”. This ignores or distracts from a more fundamental responsibility---the need to eliminate or minimize the baseline hazards which are intrinsic to the worksite. Emphasis on risk and disregard for hazard enables companies to continue to use outmoded, unsafe facilities (“cash cows”), poorly designed equipment and working arrangements, for example, and to shift the burden of preventing harm further onto workers through behavioral change programs, surveillance, and protective clothing. Thus, a VPP-type program should stress the need to identify and minimize hazards intrinsic to the physical worksite and human activities therein, on a continuing basis, and assure that “acceptable risk” is determined after hazards are eliminated to the extent feasible.
D. Anti-Degradation and Safety Culture
The main feature of the employer’s self-regulatory program is its safety management system. Experience indicates that self-regulation degrades over time into routine compliance checklist practices, tolerance of short cuts and other deviations, and loses effectiveness---until a serious accident occurs. Then it is revived, only to slowly degrade again until the next serious accident, a cyclical process. To prevent this and keep the safety management system vital and integral to all employer activities, it must be rooted in an organizational safety culture rather than a compliance culture. Thus, there is a need for regulators to develop a fuller understanding of safety culture and its behavioral and other attributes, to learn how it can be monitored and sustained, and to put this knowledge to use in partnering with companies.
E. Internal Principles
Finally, regulators and companies need to be kept alert to a problem created by compliance with prescriptive and performance-based modes of regulation, whether externally-imposed by regulators, or internally-developed by companies as in the VPP model. Compliance has the inevitable tendency to distract organizations and individuals from developing their own internal principles of what is fair and responsible when dealing with ethical or moral dilemmas of worker and environmental protection, such as the ever-present issue of “how safe is safe enough”, an issue which is never conclusively solved by a rule.
A recent survey of business managers, consultants, and academics regarding the ethics of corporate governance drew many responses illuminating this problem: e.g. that “ethics and compliance are indeed different”, that “compliance killed ethics” in regulated companies, “ that “the conventional level of cognitive moral development” causes most people to look for external guidance and what others are doing, rather than look internally “for principles of what’s fair and right”. xxviii Because rules do not fully resolve safety issues, the development and use of internal ethical principles which give full value to worker and public safety remains the fundamental responsibility for individuals and their organizations. xxix