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Limiting liability for negligent hiring of independent contractors if they cause an accident
By Mark A. Lies, II
In the wireless construction industry, it is frequently necessary for a party (e.g., employer, landowner) to hire an independent contractor to perform a task which requires specialized  knowledge or expertise (e.g., construction, demolition) or tools or equipment (e.g., cranes, excavation equipment, welding, etc.). The organization that hires the independent contractor as a general contractor, subcontractor or otherwise to perform the work does not want to incur liability for the acts of the independent contractor if it causes an accident involving personal injury or property damage to third parties. This article will discuss the potential liability issues involved and recommend certain steps to limit liability.
Employer of independent contractor generally not liable for its negligence
As a general rule, most jurisdictions recognize that an organization that hires an independent contractor is not responsible for the negligence of the contractor. The rationale behind this rule is that the independent contractor has been employed because of its particular skill and expertise to perform the work and the independent contractor in utilizing its independent judgment (as opposed to that of the employing party) to perform the work.
Depending upon the particular jurisdiction, there may be requirements by statute, regulation or court decision, which defines what constitutes an “independent contractor” in that jurisdiction for various purposes. Assuming that those conditions are satisfied, the employing organization enjoys a degree of protection from liability for claims brought by parties who suffer personal injury or property damage because of negligence of the independent contractor.
Negligent hiring of independent contractor
A developing body of case law in federal and state court has opened the door for potential liability against the employing party if the injured party can establish that the independent contractor was “negligently selected or hired.”
In developing this area of liability, the courts have relied upon the legal cause of action contained in the Restatement (Second) of Torts, §411, known as Negligence in the Selection of a Contractor. The Restatement of Torts is a recognized legal source of authority for defining liability in commercial and other transactions. Under the Restatement, a party who hires an independent contractor is subject to liability for physical harm to third persons caused by the failure “to exercise reasonable care to employ a competent and careful contractor,”
(a) to do work which will involve a risk of physical harm unless it is skillfully done, or
(b) to perform any duty which the employer owes to third parties.
In deciding whether the party who hired the independent contractor was negligent (and may be liable to a third party for its damages), the court will not decide the issue based on whether the independent contractor was in fact negligent and caused the underlying accident. Rather, the court will examine the actions of the party that hired the independent contractor before the hiring occurred to determine if there was some negative or adverse quality in the independent contractor which made it negligent for the hiring party to entrust the work to the independent contractor at the outset.
Duty to evaluate the independent contractor
A recent federal court case illustrates these potential issues. An employee was killed at a construction site while hanging vinyl siding. The decedent’s estate sued the general contractor as well as several subcontractors, including Ark Contractors, a company that provided roofing, siding and rain gutters for homes being constructed.
Ark had in turn subcontracted the actual installation to another company, which subcontracted to the decedent’s employer. While the decedent and a co-employee were installing a scaffold-like structure, a pole fell on the decedent causing fatal head injuries.
The decedent’s estate claimed that the general contractor was negligent because it did not inquire into the qualifications of Ark’s subcontractors (one of whom was responsible for the accident). The court determined that the proper inquiry was the general contractor’s decision to hire Ark and not Ark’s decision to hire the subcontractors. Thus, the court reviewed whether the general contractor had been negligent by being aware of information about Ark which would indicate knowledge of a risk due to Ark’s performance of the work. The court found that the general contractor was not negligent in selecting Ark as an independent contractor relying upon certain factors:
• Ark had the business and financial resources to complete the work;
• Ark was probably the largest roofing and siding company in the state;
• There was no evidence to suggest that the general contractor knew that Ark subcontracted work to dangerously unskilled workers;
• Ark had stated criteria for hiring subcontractors, including the subcontractor requirement to supply the needed equipment, licenses and insurance, as well as experience in hanging siding;
• Ark verified the experience and quality of subcontractors by calling previous customers;
• Ark required its subcontractors to comply with applicable OSHA regulations;
• Ark provided the subcontractors with written OSHA guidelines; and
• Ark employed a manager who had been certified as an OSHA safety inspector.
Recommendations
As indicated above, there is a growing body of case law in which negligent hiring of an independent contractor has been made. In order to avoid liability when an accident occurs, any party that employs an independent contractor to perform work (particularly work with recognized risks such as fall hazards, confined space, use of mechanical equipment) must be able to establish that it had a reasonable belief that it was entrusting the work to a “competent and careful” contractor.
Utilizing the factors identified by the court in this article, and expanding them to include where appropriate, that the subcontractor provide evidence of its written safety and health programs, employee training records and OSHA Logs and workers’ compensation historical data, will substantially reduce the potential for liability for negligent hiring.
 Mark A. Lies, II is a labor and employment law attorney and partner with the law firm of Seyfarth Shaw, 55 E. Monroe Street (Suite 4200), Chicago, IL 60603; 312-269-8877; mlies@seyfarth.com. He specializes in occupational safety and health law and related employment law and personal injury litigation in the communications industry and is a frequent contributor to WirelessEstimator.com
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