In September 2015, Department of Justice Deputy Attorney General Sally Quillian Yates issued a memorandum instructing federal prosecutors to step-up individual prosecutions for corporate wrongdoing. The much-discussed “Yates Memorandum” was issued in response to criticism that federal prosecutors had been lax in prosecuting individual executives for crimes committed during the 2008 financial crisis and has garnered a lot of attention from practitioners and commentators. White-collar lawyers and their corporate clients also should be aware of the “other” Yates Memorandum quietly issued at the end of 2015, announcing that federal prosecutors will look for ways to charge a variety of felonies in routine worker safety cases to take advantage of the greater penalties available under environmental and other criminal laws.
The laws governing worker safety, such as the Occupational Safety and Health Act of 1970 (OSHA), generally carry relatively minor penalties. The government’s thesis is that employers “willing to cut corners on worker safety laws to maximize production and profit” are just as likely to “turn a blind eye” to other laws, especially environmental laws. Federal prosecutors are banking on this theory to be able to charge environmental and other felonies in worker safety cases. Assistant Secretary for Occupational Safety and Health Dr. David Michaels summarized the government’s position as follows: “[W]e know that strong sanctions are the best tool to ensure that low road employers comply with the law and protect workers lives. More frequent and effective prosecution of these crimes will send a strong message to those employers who fail to provide a safe workplace for their employees.”
A recent case may reveal why the government seeks the relatively stiffer penalties available under the environmental laws. Don Blakenship, the former chief executive officer of Massey Energy, was charged in connection with a deadly coal mine explosion in 2010 that killed 29 men. On December 3, 2015, a jury in the Southern District of West Virginia found Blakenship guilty only of misdemeanor conspiracy to willfully violate mine health and safety standards outlined in the Mine Safety and Health Act, but acquitted him of the more serious felony conspiracy, false statements and securities fraud charges. As a result, the CEO faces only up to one year in federal prison.
Two weeks after the Massey Energy verdict, on December 17, 2015, Yates announced the “Worker Endangerment Initiative,” a joint effort between the Justice Department and Department of Labor to utilize the enhanced penalties available under environmental and Title 18 felonies to prevent and deter crimes that put the lives and health of workers at risk. Yates said “Given the troubling statistics on workplace deaths and injuries, the Department of Justice is redoubling its efforts to hold accountable those who unlawfully jeopardize workers’ health and safety.” Government statistics reveal that in an average day in the United States approximately 13 workplace fatalities, almost 150 deaths from occupational diseases, and about 9,000 nonfatal injuries and illnesses occur. Worker safety statutes, such as OSHA, the Migrant and Seasonal Agricultural Workers Protection Act, and the Mine Safety and Health Act, historically enforced by the DOL, generally provide for only misdemeanor penalties absent evidence of a willful violation or falsification of required documents. As a result, according to Yates, few felony prosecutions are brought under these statutes.
In order to “make enforcement meaningful,” the new DOJ-DOL initiative suggests that when possible – when, for instance, workplace accidents are accompanied by some sort of noxious emission or toxic emission – prosecutors charge felonies, including environmental crimes as set forth in the Clean Air and Clean Water Acts and the Resource Conservation and Recovery Act, and Title 18 crimes such as false statements, obstruction of justice, witness tampering, and conspiracy, when violations of the worker safety statutes are uncovered. Pursuant to a Memorandum of Understandingexecuted by the Departments of Justice and Labor, the DOL will identify for prosecutors worker safety matters arising under OSHA and other worker safety statutes that are appropriate for enhanced investigation or criminal referral. The DOJ also looks to bolster its pursuit of civil cases that involve worker safety violations.
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The initiative allows the government to turn a workplace safety investigation into a much broader examination of a company’s environmental compliance. One recent example provides insight into the types of cases employers and their workers may anticipate going forward in cases where worker safety issues overlap with environmental law. In January 2015, former owners and managers of a metal-salvaging company pleaded guilty to one criminal felony count for conspiring to violate the Clean Air Act’s work practice standards by directing employees to remove and dispose of asbestos without the necessary protective equipment. One manager was sentenced to 5 years in prison. The government took the position that defendants not only failed to abide by the Clean Air Act’s “work practice standards” regarding the removal and disposal of asbestos, thereby risking their workers’ lives and safety, but also put the entire community at risk. One agent opined that the sentencing “demonstrates that EPA and its partner agencies will prosecute those who pollute the environment by breaking the law.”
The coupling of the Worker Endangerment Initiative with the more well-known September 2015 Yates memorandum focus on holding individual corporate wrongdoers accountable, means that corporate executives may find themselves criminally liable for workplace safety violations. In 2014, a roofing company paid $71,600 in penalties to OSHA after being cited for ten safety violations in connection with the death of an employee who fell 45 feet from a roof. A year later, the United States Attorney’s Office in the Eastern District of Pennsylvania charged the company’s owner with not only one count of willfully violating an OSHA regulation, but also crimes under Title 18, specifically four counts of making false statements and one count of obstruction of justice. The charges carry a maximum sentence of 25 years in prison and up to $1.5 million in fines.
These cases demonstrate how the initiative set forth in the “other” Yates memorandum may play out in the future.
From The Insider Blog: White Collar Defense & Securities Enforcement.