One of California’s many unique environmental, health and safety (EH&S) laws is its “Corporate Criminal Liability Act (CCLA).” CCLA provides greatly expanded potential personal criminal liabilities for violations by managers, so is often referred to as the “Be a Manager, Go to Jail” law. Enacted in 1990, CCLA draws both from occupational safety and product liability laws, to provide sweeping requirements for corporations and managers to abate or warn exposed individuals (including employees) about a broad variety of serious concealed dangers occurring in a broad variety of circumstances, including both workplaces and products. Although this law has been used by prosecutors and advocates to strike fear into the hearts of corporate managers, there have been few reported cases in its nearly three decades on the books.
CCLA applies to a “manager with actual knowledge of a serious concealed danger.” (California Penal Code section 387). It provides (broad) definitions for each of these critical terms. First, the act applies to managers, who are defined as follows:
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Manager means a person having both:
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Management authority in or as a business entity [defined to include corporations and limited liability entities].
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Significant responsibility for any aspect of a business which includes actual authority for the safety of a product or business practice, or for the conduct of research or testing in connection with a product or business practice.
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Product is defined broadly as “an article of trade or commerce or other item of merchandise which is a tangible or an intangible good, and includes services.”
Compliance requirements and potential liability are triggered by “actual knowledge of a serious concealed danger,” which are defined as follows:
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Serious concealed danger, used with respect to a product or business practice, means that the normal or foreseeable use of, or the exposure of an individual to, the product or business practice creates a substantial probability of death, great bodily harm, or serious exposure to an individual, and the danger is not readily apparent to an individual who is likely to be exposed.
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Actual knowledge, used with respect to a serious concealed danger, means information about the manager and circumstances that would convince a reasonable person that the serious concealed danger exists.
Disclosures and/or Abatement
Actual knowledge of a serious concealed danger triggers a responsibility either to abate the hazard, or to warn affected people (e.g., employees or customers) and notify California’s Division of Occupational Safety and Health (Cal/OSHA). The abatement or disclosures must be accomplished within 15 days after the actual knowledge is acquired, except that they must be accomplished immediately if there is “imminent risk of great bodily harm or death.”
Abatement can be accomplished by removing any one of the three elements of a “serious concealed danger” need not be difficult. If the danger is revealed to exposed individuals – by posting notice of a suffocation or electrocution hazard, for example – it’s no longer “concealed” even if it’s still serious. If the actual danger is abated – by providing ventilation for an atmospheric hazard, or insulation or a lockout/blockout system for electrocution hazards, for example – it may no longer be serious. If the danger is removed – by reformulating or redesigning a product – it may no longer be a danger at all.
On the other hand, readers must keep in mind the definition of “actual knowledge” – a manager does not have to know there’s a danger, just know enough about the situation that a reasonable person would figure it out. As with all “reasonable person” standards in civil and criminal laws, this is decided on a case-by-case basis by each jury. This uncertainty – presented with facts, which may be shocking, will a jury decide the defendant is guilty? – leads to significant pressure on prosecutors’ targets to settle or plea bargain.
Agency Notification
If a manager decides to notify rather than abate, Cal/OSHA has responsibilities after receiving a notification. Cal/OSHA is to notify any agency on a list of “appropriate government agencies” specified by the act within 24 hours. The list of appropriate agencies is as follows:
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Cal/OSHA
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State Department of Health Services (replaced by Department of Public Health effective July 1, 2007, but CCLA has not been amended to reflect the change)
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United States Department of Agriculture
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County department of health
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United States Food and Drug Administration
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Environmental Protection Agency (EPA)
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National Highway Traffic Safety Administration
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Occupational Safety and Health Administration (OSHA)
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United States Nuclear Regulatory Commission
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Consumer Product Safety Commission
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Federal Aviation Administration
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Federal Mine Safety and Health Review Commission.
Punishments For Violations
CCLA provides the following punishment for failure to abate or disclose within the prescribed deadlines, after acquiring actual knowledge of a serious concealed danger:
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Imprisonment in county jail for up to 1 year and/or a fine not exceeding $10,000
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Imprisonment in state prison for 16 months, 2 years, or three years and/or a fine not exceeding $25,000
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A fine not to exceed $1 million where the defendant is a corporation or a limited liability company.
Critically, CCLA does not limit the number of culpable managers who can be charged for failure to notify the appropriate agencies of a single danger. This means that every “manager” in an organization may be subject to criminal investigation and potential prosecution, based on how information is communicated within the organization. What if a facility’s EH&S manager has emailed a memo to other managers within the organization expressing concern about a hazard? He or she may just have given everyone on the distribution list “actual knowledge” of the hazard, if a jury might decide that reasonable managers have reason to believe warnings from in-house EH&S experts.
How Has CCLA Been Used?
There have been only a handful of reported CCLA convictions in nearly three decades. One involved a site where electrified equipment self-actuated when bumped by a night janitor, who was pulled in and killed. Another involved producers of a “traditional herbal remedy” that contained dangerous levels of heavy metals. In addition, however, I’ve heard many unconfirmed reports of prosecutors threatening CCLA prosecution in part to induce potential defendants to plead guilty to lesser criminal offenses or significant civil settlements.
Self-Assessment Checklist
Does the organization assess its facilities, operations, and products to evaluate potential hazards to employees or customers exposed to its operations or products?
If so, has the organization identified any hazards that may not be readily apparent to exposed individuals (i.e., “concealed” hazards for purpose of CCLA)?
If so, are any of these concealed dangers “serious”?
If so, has the organization abated or reported every such serious concealed danger?
If not, has any individual manager disclosed each such danger to other management-level personnel in the organization, or to Cal/OSHA?
Where Can I Go For More Information?
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CCLA (California Penal Code § 387) (on state legislature website)
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Cal/OSHA’s policy and procedures document for responding to CCLA notifications
Specialty Technical Publishers (STP) provides a variety of single-law and multi-law services, intended to facilitate clients’ understanding of and compliance with requirements. These include:
About the Author
Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 25 years. He was involved in developing 13 existing products, including Environmental Compliance: A Simplified National Guide and The Complete Guide to Environmental Law.
Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).
Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).
You may contact Mr. Elliott directly at: tei@ix.netcom.com