Ties that Bind
By Glenn Pringle
Your workplace has a health and safety program in place; the employees are well trained and aware of the hazards in the workplace. With an impressive safety record, employees can be proud of your commitment to safety. But what about the contractors that a company engages?
Contractors are an important part of a business. They maintain electrical, plumbing and HVAC systems, complete renovations, remove hazardous waste and snow, and the list goes on. Choosing and working with a contractor can be a great experience — if all goes well. Companies want to be sure that they have engaged the right contractor for the work, since almost anyone can call himself or herself a “contractor” except for certain trades, such as being a plumber, an electrician or an engineer, who need to be licenced.
Employers must keep up to speed with changes in health and safety regulations and laws, corporate governance and transparency, including risk-management and insurance requirements, changing workers’ compensation board (WCB) requirements, contracts, rate schedules, policies, procedures and documentation. Various elements of the contractor’s ability to do the job, such as price, availability, experience, quality of work and the ability to meet schedules, also need to be assessed.
But do they meet minimum health and safety qualifications, or does anyone even check?
There may be an existing practice of collecting the contractor’s certificate of insurance, workers’ compensation clearance certificate and accident history, but is this enough? And is this done before the documents expire? While these documents do not provide a complete health and safety prequalification picture, they are nevertheless important in protecting the hiring party and demonstrating that the contractor has protection in place to cover any damage or injury costs that may arise and maintains a clean safety record.
There are various types of insurance that a contractor should provide, with the two most common being workers’ compensation clearance and commercial general-liability insurance, with the principal named on both certificates. A clearance letter from a WCB confirms that a company is in good standing. This means that the company has workers’ compensation coverage, has met all payroll reporting requirements, has paid all premiums to date and has no outstanding balance on account. On the other hand, commercial general-liability insurance protects a business from financial loss should it be sued because of property damage, injuries or fatalities caused by the company’s services, business operations or employees.
|Hard Lessons Learned|
Since Bill C-45 became law in 2004, there have been eight cases — some of which involved contracting work arrangements — in which charges under the law have been laid. Most of these cases did see other charges and fines being issued under the oh&s legislation of the jurisdiction in which the incident took place.
Potash Corporation of Saskatchewan received a penalty of $300,000 in August 1998, in connection with an incident involving contracted workers who were repairing a cover on a vat containing potash/water mixture heated to approximately 90° Celsius. Three contract employees fell through a section of the cover, leaving two dead and one severely burned. The corporation had warned its workers about the potential danger, but had apparently failed to inform the contractor, Bedry & Sons, which employed the workers. The contractor was convicted and fined $10,000.
Georgia Pacific Canada Inc. received a fine of $100,000 in November 1998 for a lockout contravention at its Ontario facility. A worker for Ancaster Tool Company, under contract to Georgia Pacific, was performing routine maintenance on a screw auger. The worker locked out only his end of the equipment. An operator for Georgia Pacific, not having been informed that work was underway, turned on the equipment, causing fatal injuries to the operator. The direct employer of the worker, Ancaster Tool Company Inc., was fined $65,000.
Dofasco Inc. received a total fine of $675,000 in February 1999 for three separate workplace accidents at its facility in Ontario. Of this amount, $400,000 stemmed from an incident in which two workers of a contractor retained by Dofasco were fatally injured during a confined-space entry. A gas check had failed to detect the presence of argon gas, which displaced the oxygen in the tank. The direct employer of the two workers, Steelcat Task Force Inc., received a fine of $100,000 for failing to inform the workers of confined-space entry hazards.
In March 2008, a Quebec Court imposed a fine of $110,000 on Transpavé Paving Stone Inc. — the first company in Canada to be convicted of criminal negligence in a workplace death under Bill C-45 amendments to the Criminal Code. A Transpavé employee was fatally crushed on October 11, 2005, when he attempted to clear a jam in one of the company’s machines. An investigation led by Quebec’s Health and Safety Commission and the provincial police found that the company had allowed the employee to operate the machine with its motion-detector safety mechanism deactivated. Transpavé pleaded guilty to the charge on December 7, 2007.
On June 12, 2006, a landscape contractor was crushed to death when the backhoe driven by his employer failed to stop, pinning the employee to a wall. The investigation of the incident found that the 30-year-old backhoe had not received any regular maintenance since the vehicle’s purchase and that no formal inspection had been done in the previous five years. Upon further investigation, it was discovered that the vehicle had no braking capacity. In September 2010, the employer was convicted of criminal negligence causing death and given a two-year conditional sentence to be served in the community.
On December 24, 2009, four workers were killed and one was seriously injured at a Toronto construction site, when the swing-stage scaffolding on which they were working collapsed. The Ministry of Labour laid a total of 61 charges. This was the first time in Ontario that the Criminal Code had been used to hold a company responsible for a worker’s death. Metron Construction and three corporate officers were charged with criminal negligence and fined $200,000, plus a victim surcharge of $30,000. Metron’s owner was personally fined $90,000, plus a victim surcharge of $22,500 under the Occupational Health and Safety Act. The fine against the company was appealed, and in September 2013, the appeals court judge found that the original fine of $200,000 was “manifestly unfit” and raised the fine to $750,000 for criminal negligence. An additional victim surcharge of $112,500 was levied against the company. The project manager who oversaw the crew was found guilty of five criminal charges in June 2015 and will be sentenced in October. The company that supplied the swing stage, Ottawa-based Swing N Scaff Inc., was fined $350,000 for failing to ensure that the platform was in good condition.
It is important to name the principal in a WCB clearance certificate, considering that only half the provinces in Canada require this to be done. Regarding the certificate of commercial general-liability insurance, it is recommended that a principal be named as an additional insured. Otherwise, the principal may not get any benefit from the contractor’s policy in the event of an incident. It should also be noted that a certificate of insurance confers no rights to the certificate holder.
Both types of insurance are required to provide protection to the principal or an employer when engaging a contractor. In most provinces, proof of workers’ compensation clearance is mandatory before a principal permits a contractor to perform work on the property.
According to the WCB of Nova Scotia, people who hire contractors or sub-contractors should always obtain clearance letters from them as proof of WCB coverage. If a contractor does not have WCB coverage, the hiring party is responsible for any injuries sustained by these uncovered contractors or subcontractors on the job site, and those incidents will become part of the hiring party’s injury history with the local WCB.
In Ontario, contractors who are not registered with the Workplace Safety and Insurance Board and do construction work without a valid clearance number could be fined up to $100,000 upon conviction. Those who hire contractors without confirming that they have valid clearance numbers also face serious fines and penalties.
A consideration that is often overlooked when engaging contractors is pre-qualifying their health and safety programs, and the failure to do so can lead to significant issues. Contractors must be able to demonstrate to their principals or whoever has contracted them that they have health and safety programs in place and are aware of the basic health and safety responsibilities, issues and hazards relating to the work they perform. Where there are potential hazards, they have to demonstrate that not only are they aware of the dangers, but that they can take the necessary steps to mitigate or eliminate them.
Some of the problems that companies face include contractors who lack appropriate insurance coverage, do not have appropriately licenced tradespersons and do not have documented policies and procedures. In fact, many companies have been told that pre-qualification is not necessary, either by contractors who feel that they do not need to go through pre-qualification, since they have never had an accident before, or by principals who do not think that they need to put their contractors through pre-qualification, as they have known them for years without incident.
Collecting these and related documents is essential in proving a company’s due diligence in the event of an incident, investigation or inspection, considering that health and safety legislation across Canada holds employers and work-site owners responsible for the safety of not just their own workers, but those hired by contractors as well.
Pre-qualification as Due Diligence
While one is presumed innocent until proven guilty in criminal law, in occupational health and safety, a party is more likely to be deemed guilty until proven innocent, and due diligence is often the best defence. Generally, to establish criminal negligence, the accused must be under a legal duty or obligation to act in a particular way, but failed to do so. This failure or omission must demonstrate a “wanton or reckless disregard” for the lives or the safety of others, according to Section 219 (1) of the Criminal Code of Canada.
Prior to 2004, employers or contractors who were involved in a breach of oh&s legislation could be charged only under provincial regulatory law. Offences under this legislation were considered to be strict liability offences — that is, there was no need to prove mens rea or criminal intent.
Since Bill C-45 took effect in March 2004, it imposed a duty on organizations and their representatives to protect their workers and the public by creating a Criminal Code of Canada duty similar to the one already found in Ontario’s Occupational Health and Safety Act (OHSA), which requires that employers take every reasonable precaution to protect their employees.
Under Bill C-45, a workplace injury or fatality may result in a corporation being convicted of criminal negligence causing bodily harm or death, if there is proof that a representative of the corporation behaved in a criminally negligent manner and that the senior officers or management of the corporation failed to correct the resulting situation. More specifically, it added Section 217.1 to the Criminal Code:
217.1 “Everyone who undertakes, or has the authority, to direct how another person does work or performs a task is under a legal duty to take reasonable steps to prevent bodily harm to that person, or any other person, arising from that work or task.”
Demonstrating due diligence means that employers shall take all reasonable precautions under the particular circumstances to prevent injuries or accidents in their workplaces. In the case of contracting out work, there must be a meaningful assessment of the contractor’s health and safety program.
A practice known as pre-qualification is increasingly recognized as an acceptable and appropriate assessment of contractors to ensure that they have practices in place to comply with the legislation and best practices. The main health and safety program elements that should be included in written polices, practices and procedures include the following:
— The contractor’s health and safety program and practices reflect knowledge of the legal requirements: The contractor to whom the work is contracted has clearly defined health and safety duties of various parties, including workers, supervisors, manager and owners.
— The contractor must be knowledgeable of the workplace and its potential and actual hazards: The contractor conducts workplace-hazard assessments, develops specific safe-work procedures and policies (if necessary) and instructs and trains employees before commencing work. This includes coordination of work with other contractors.
— The contractor’s health and safety program is actually implemented: The contractor should be able to provide documents, such as training records, inspection records, hazard-analysis forms, completed risk and hazard analyses, joint health and safety committee agendas and minutes and a signed and dated health and safety policy.
— The contractor’s employees have received all necessary safety training applicable to the nature of their work: This may include training in health and safety awareness, the Workplace Hazardous Material Information System, first aid, fall protection, lockout, confined-space entry, forklift or crane operation and ergonomics.
— The contractor’s employees (for example, electricians, plumbers, HVAC mechanics, gas fitters, crane operators and steamfitters) hold all necessary trade certificates as required by law or are holders of voluntary certifications, such as those for sprinkler and fire-protection installers, painters, millwrights and masons.
— The contractor has incident-reporting and investigation procedures in place: All incidents are reported and investigated promptly, and corrective action is assigned and followed through to completion.
— Due supervision: The contractor has appropriate supervision in place for the number of workers and the type of work being performed.
— There is a plan in place for initial and ongoing communication and coordination of work between the principal and the contractor: This includes participating in regular meetings with the contractor to provide feedback, discuss areas of concern and share information.
— The contractor has established equipment-maintenance policies and procedures: All equipment used is maintained according to manufacturer’s recommendations and applicable technical standards.
— Contractor monitoring: This includes monitoring the contractor to ensure that the contracted work proceeds safely and according to agreed requirements and that corrective action and enforcement are undertaken where warranted.
If a gap has been identified — something significant that is required by legislation and is not being done by the contractor — during a review of the contractor, the principal could be held responsible, regardless of whether or not he or she was personally aware of the gap.
Assessing the due diligence of a contractor’s health and safety program provides an indication of how much they care about safety. It also gives companies a measure of confidence that the contractor has demonstrated that an oh&s program is in place to satisfy federal and provincial legislation and the contracting company’s specific requirements.
Some organizations have developed programs internally to manage the health and safety pre-qualification process. This can be one of the most tedious and cumbersome parts of a contractor-management system, yet it is also the most important. In order to reduce internal inefficiencies and address a lack of health and safety qualifications, there is a growing trend to turn to an external third party with expertise in health and safety pre-qualification.
However, there will always be contractors who choose not to participate in the pre-qualification process. Not being duly diligent can be costly for both the contracting and the contracted parties — think fines, criminal prosecution and possibly imprisonment, damage to reputation and brand and, tragically, worker injury or deaths.
And should one ever find oneself faced with contractors who do not want to meet minimum requirements for the health and safety of themselves and others, perhaps the ultimate question that should be asked is, do you want them working for you?
Glenn Pringle is a Canadian Registered Safety Professional, a World Safety Organization Certified Safety and Security Director and the manager of Accreditation Services at ContractorCheck, which provides pre-qualification health and safety assessments of contractors from large construction projects to individual service providers across Canada.