[This article by Aaron Morris originally appeared in the Orange County Business Journal]


Aaron Morris, Esq.

If you're a manager, take heed.

There is a law on the books that is directed right at you. It's called the Corporate Criminal Liability Act ("CCLA"), but attorneys have already taken to calling it the "Be a Manager, Go to Jail Act." It is a potential trap for the unwary manager.

The CCLA (Penal Code section 387) provides that anyone "who is a manager with respect to a product, facility, equipment, process, place of employment, or business practice" is guilty of a misdemeanor or felony if they: (1) have actual knowledge of a serious concealed danger; and (2) fail to report that danger to the affected employees and the Department of Industrial Relations (DIR). Violation of the Act is punishable by up to three years in state prison and a $25,000 fine.

If the CCLA functions as planned, it should afford safer working conditions for employees and safer products for consumers. But the CCLA is not without its problems.

To begin with, what is a "serious concealed danger?" The CCLA defines it as a condition that is not "readily apparent" and that creates a "substantial probability of death or bodily harm." That definition, however, simply adds its own ambiguities. For example, does a one in 1,000 chance of injury amount to a "substantial probability of harm?" How about one in 10,000? And how apparent is "readily apparent?"

Adding to the confusion is the CCLA's definition of "manager." A manager is deemed to be anyone with "management authority" and "significant responsibility for any aspect of a business." With such a broad definition, employees who do not hold the title of manager within their company could nonetheless be subject to the provisions of the CCLA.

A simple hypothetical demonstrates the potential pitfalls of this Act.

A painting company has been awarded a contract to paint the lines in an underground parking structure. It's a simple job, so the boss sends out three workers, and tells Joe that he is in charge.

Is Joe now a "manager?" If he is, is he required to warn the other workers about the dangers of paint fumes in an unventilated area, or is such a danger readily apparent? Must he warn anyone who ventures into the garage? Should he notify the DIR before he begins work? What if he takes a break and leaves someone else in charge -- is that person now a manager and subject to criminal liability if he fails to give the necessary warnings?

This is a simplistic example to be sure, but the fact that even a simple job can raise these questions demonstrates just how dangerous the CCLA may prove to be. So what is a manager to do? Until the parameters of the CCLA become more defined, managers should notify their employees and the DIR of all possible hazards, no matter how seemingly obvious. The CCLA seems to encourage this approach, and in fact provides a limited immunity to corporations and managers that report hazards. It states that notifications made pursuant to the Act "shall not be used against any manager in any criminal case, except a prosecution for perjury or for giving a false statement."

But the shotgun approach to notification is not without its own pitfalls. Suddenly notifying your employees of "hazardous conditions" that have existed all along may invite employee claims. And if an employee is subsequently injured by one of the hazards you identified, you will be hard-pressed to then argue that the condition was not really dangerous.

Additionally, each such warning subjects your company to the scrutiny and authority of the appropriate government agencies. The resulting inspections and remedial orders could be disruptive to your company's operations.

Nonetheless, the realities of monetary versus criminal liability must be weighed. It is far better to over-notify and risk a possible suit from a litigious employee than to remain silent and risk jail. Undoubtedly, that is precisely the sort of paranoia the CCLA was designed to engender.

For more information, go to Corporate Criminal Liability Act.


Aaron Morris is a Partner with the law firm of Morris & Stone, LLP, located in Santa Ana, Orange County, California. He can be reached at (714) 954-0700, or by email.  The practice areas of Morris & Stone include employment law (wrongful termination, sexual harassment, wage/overtime claims), business litigation (breach of contract, trade secret, partnership dissolution, unfair business practices, etc.), real estate and construction disputes, first amendment law, Internet law, discrimination claims, defamation suits, and legal malpractice.

Aaron Morris attended Southwestern University School of Law, where he was Editor-in-Chief of the Law Review and graduated cum laude in 1987. His practice areas include Free Speech, Defamation and SLAPP Law, as well as employment law (wrongful termination, discrimination, etc.) business litigation (breach of contract, trade secret, partnership dissolution, unfair business practices, etc.). He received national attention after prevailing against Bank of America for banking violations. A recognized expert on Internet law, he recently prevailed in two major Internet cases on behalf of clients that were fighting spammers. Every year since 2008, Mr. Morris has been rated “Best Orange County Attorney” by Tustin Magazine. He is the author of California SLAPP Law and How to Start Your Own Law Firm. He has lectured as an Adjunct Professor at both Whittier Law School and National University, teaching “Litigation Skills & Strategies”. He is the current President of the California Defamation Lawyers Association. Mr. Morris is a writer and lecturer on the subjects of law and law office efficiency, and has been a featured speaker at such functions as the American Bar Association TechShow.



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