An Incentive-Based Approach to Regulating Workplace Chemicals
65 Pages Posted: 10 Oct 2011 Last revised: 10 Sep 2012
Date Written: February 22, 2012
The United States’ system for regulating employee exposures to hazardous chemicals is broken. Absent regulation, the labor market fails to produce efficient levels of precaution against chemical exposures. Information asymmetries, long disease latency periods, and other characteristics of chemical exposures thwart the market’s ability to produce efficient risk/wage tradeoffs. These same characteristics permit employers and chemical manufacturers to externalize the costs of injuries caused by chemical exposures. The current U.S. regulatory system, including a combination of OSHA regulations and state workers’ compensation programs, is not correcting the labor market’s failure. The result is a level of workplace chemical exposure risk that is systematically too high, and a level of precaution that is systematically too low.
The reforms proposed in the literature to date do not harness the financial incentives of the least-cost information providers and least-cost risk avoiders: chemical manufacturers and employers. This Article takes the search for a solution in a new direction by using state workers’ compensation laws to capitalize on the incentives of chemical manufacturers and employers. The Article argues that state workers’ compensation laws should be amended in two ways: (1) shift the default burden of proof on causation to the respondents, but only in cases where there is no applicable OSHA exposure limit, and (2) allow employers to include chemical manufacturers as respondents in workers’ compensation proceedings for purposes of apportioning liability. These amendments could be implemented by convening a new National Commission on State Workers’ Compensation Laws. The result would be a new push for OSHA chemical exposure limits by chemical manufacturers and employers – the entities in the best position to provide the toxicity and precaution information necessary to support OSHA regulations.
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