Looking for a way to get upper management to pay more attention to your safety program? Try this. The next time you brief your officers and managers, let them know that OSHA violations aren't just bad for the company's business; they can also land a corporation's leaders in jail. Once you drop the bombshell, you can proceed to defuse it. We'll explain. There's also a briefing in Tools that you can access if you're a SafetyXChange member.

Piercing The Corporate Veil

There are certain things you need to understand about corporations and the law before playing the liability card with your officers and directors. A corporation is an organization that's legally distinct from the officers, directors and shareholders who run it. Corporations make their own contracts and have to answer for their own debts. If the corporation breaks the law, it's the corporation that faces liability. What this means is that officers, directors and shareholders don't have to use their personal assets to pay the corporation's debts and liabilities.

This shield protecting the individual assets of officers, directors and shareholders is known as the "corporate veil." But the corporate veil isn't absolute. There are certain situations in which a court may hold corporate officers, directors and shareholders personally responsible for the corporation's liabilities. This is called "piercing the corporate veil."

OSHA Violations Can Lead to Veil Piercing

What does this have to do with health and safety? Answer: Violations of OSHA by a corporation can lead to corporate veil piercing. For example, OSHA cited two New Jersey corporations for willful violations. One citation carried a $96,300 fine; the other a $196,000 fine. OSHA asked the court to pierce the corporate veil and hold the father-and-son team that owned the corporation personally liable for the fines. The court in the $96,300 case agreed; but the court in the other case didn't [ Sec. of Labor v. Avcon, Inc .; Sec. of Labor v. Altor, Inc .].

The Avcon and Altor cases are more than an isolated fluke. On the contrary, they signal an aggressive new strategy on the part of OSHA to hold officers, directors and shareholders personally accountable for the safety violations their companies commit. The Secretary of Labor in these cases is advancing a theory that would make it much easier for OSHA and courts to pierce the corporate veil. If she succeeds, individual officers may find themselves writing checks for hefty fines, and maybe even spending time in prison.

Brief Your Officers

Bringing up the threat of veil piercing and personal liability for corporate OSHA violations can help you give upper management a needed jolt. But be careful. Playing on fears is risky business and you don't want to come off looking like some kind of Cassandra or Chicken Little trying to extort funds for your safety program. You need to not only identify risks but suggest solutions. A balanced approach can help build or maintain a reputation as an informed leader who looks after the backs of the company and its leaders. The Model Briefing in the Tools section can help you strike the right balance.

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