If you own or run a business, chances are you have outsourced certain services to independent contractors–and, understandably, you rely on them to do the job well and exercise due care while doing it. Let’s assume for the moment that these particular workers are properly classified as independent contractors. If they mess up the work and cause harm to others–either your clients/customers, the public, their own or your employees that’s enitrely on them and not you, right? Well, maybe not… What??? You’re already doing everything you can think of to be sure that your company and employees are acting responsibly; you’ve made sure that your independent contractors really are independent contractors. Now they mess up–and you still might be liable? How can that be, and what can you do about it? Find out more–after the jump…
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Aren’t businesses absolved from liability for wrongful acts committed by independent contractors? Isn’t that one of the main reasons for hiring independent contractors? As a general rule, yes. As you know, however, general rules have exceptions. Here are a few:
Inherently dangerous activity: Examples include handling or transporting explosive materials, blasting land to construct roads or buildings, or handling wild animals. Generally speaking you cannot contract away the responsibility for inherently dangerous activities. You therefore risk liability for any of the contractor’s actions that constitute inherently dangerous activity and that cause harm to another. If however, a person harmed by the independent contractor has taken actions that play a part in the harm s/he suffers, the business may still escape liability.
For example, in Stout v Johnson 159 Wn App 344 (2011) a criminal injured by a bounty hunter hired as an independent contractor to a bail bondsmen sought damages from the bail bondsmen under the “inherently dangerous activity doctrine”. On appeal, the court accepted for the sake of argument that bounty hunting is inherently dangerous activity. The court however, found that the criminal brought the harm on himself by trying to escape by car from the bounty hunter’s attempts to apprehend him. (The bounty hunter blocked the criminal’s pathway, causing the criminal to veer off the road and hit a tree and sustain injuries necessitating amputation of his leg.) While the court ultimately found for the bail bondsman, it was only because of the criminal’s intervening acts. Since the court did accept that bounty hunting is inherently dangerous, it follows that had the criminal not tried to abscond but still been hurt, the bail bondsman might well have been liable for the injuries caused by the bounty hunter even though the bounty hunter was not the bail bondsman’s employee.
Maintaining a safe workplace: Similarly, while a business may outsource some of the services needed to keep its workplace safe, it cannot contract away liability. For example, you contract out to an agency that provides you security guards. One of your employees assaults another employee. The security guard could have prevented the assault. Your company may still be liable along with the company that employs the security guard. It’s your workplace. You control the work environment, and you still have an obligation to provide a safe work environment. Additionally if your company was supervising the security guard, then that points even more toward liability on the part of your company.
Sexual Harassment: Just as you are obligated to protect your employees from violence, so too are you obligated to protect them from sexual harassment — even if the harasser is not your employee. While you might ultimately have a claim against an independent contractor who either itself or through one of its employees harasses one of your employees, the harassed employee can still pursue a claim against your company if your employee can show that you knew or should have known about the harassment and did not take reasonable steps to stop it.
Agency principles: If the independent contractor is acting on behalf of your company then actions s/he/it takes that result in harm to others can render both your company and the independent contractor liable. For example, you hire an advertising company to design some ads that you then use, and the ads contain defamatory statements about one of your competitors. If your competitor can prove damages, both you and the advertising agency may be on the hook.
Negligent hiring: Guess what? Negligent hiring liability doesn’t only apply to employees. You still have a duty to exercise reasonable care with respect to contractors. If, for example, you hire drivers that interact with the general public, and in particular with more vulnerable members of the general public, such as children, the elderly or disabled people, you have an obligation to properly screen those drivers. Such screening may include a criminal background check. For example, Greater Houston Transportation Company, d/b/a Yellow Cab had to defend a lawsuit by a customer who alleged that one of its cab drivers, a five-time ex-convict threatened to rape her while driving her home.
It would seem then, that no matter what you do, you will still effectively have employer liability for others’ conduct, even when it’s clear to everything that those others are independent contractors. Well, that’s not entirely true. You are not without recourse. Here are some things you can do:
- If you do hire independent contractors, make sure you have a written contract with an indemnification clause, that requires the contractor to pay for legal fees and other costs arising out of allegations of misconduct on their part.
- Require your contractors to carry liability insurance, and to provide a certificate of insurance naming your company as an additional insured. Also, make sure that the policy and any endorsements covers the situations that may arise from the work that the contractors will be performing.
- Take proactive steps to ensure that your work environment is safe, regardless of whether you contract out some of the services involved in doing so to independent contractors. Maintain an active role in ensuring as much as reasonably possible the safety of your employees, your customers, and, when applicable the general public.
- If any independent contractors or their employees will be interacting with your employees or the public, consider taking steps to screen them.
- Speak with in-house counsel or competent outside counsel about risks specific to your business and implement appropriate policies and procedures.
Disclaimer: This post and all its contents are for educational/informational purposes only, are not intended as legal advice, do not create an attorney-client relationship, and are not intended to replace consultation with competent employment counsel in the state(s) in which you employ people.
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