Will my business be liable for the acts of independent contractors that I hire?

There is a long standing doctrine that when someone engages a contractor who conducts and independent business with his or her own employees, then that person is not liable for the acts of the independent contractor in the fulfillment of the contract.  This doctrine however has three exceptions: the principle or owner can be liable for the actions of an independent contractor (1) where the owner retains control of the manner and means of the doing of the work which is the subject of the contract; (2) where the owner engages an incompetent contractor, or (3) where the activity contracted for constitutes a nuisance per se or is inherently dangerous.

Thus to avoid liability for your business when hiring independent contractors, owners should be aware that the broad goals of the contract can be controlled but they should avoid dictating the means and methods for bringing about those goals.    Likewise the competence of an independent contractor is not restricted only to skill and experience but also includes the financial responsibility to respond to tort claims and lawsuits.

An example of a situation would be the demolition of part of a building in a densely populated downtown metropolis.  The owner of the building should not dictate the set up, staging, execution or precautions to take, but can help the independent contractor be aware of unforeseen dangers or access requirements that need to be met.  The owner must also contract with a skilled an experienced demolition contractor who is bonded and insured and is capable of protecting its own company, as well as the owner, from liability.  And finally, to avoid liability for the third exception, because demolition is inherently dangerous, it would behoove the owner to purchase insurance for the scope and duration of those activities.

 

If it so happened that the independent demolition company injured pedestrians on the street below, or even a nearby building, the owner of the company would have two lines of defense before his own insurance would be tapped to pay for damages.  If the independent contractor’s activities were not inherently dangerous, such as installing carpet, then the owner would be protected because of the entity’s independent contractors status.

 

These suggestions are general and should be coupled with the statutory requirements and holdings of your state and local jurisdiction as well as counsel from your local attorney.

 

Photo By: Aaron Huey