Engagement as an employee and as an independent contractor are not the same. The differences in how these two entities are viewed can be extremely important if there is a question about who is legally responsible for negligent acts that cause injury or damage to a third party. Traditionally, a person harmed by the negligence of an independent contractor was not able to sue the employer of the contractor for damages to compensate for harm or injury caused by their negligence.
However, several exceptions to this rule have developed. Now, a claim against the employer of an independent contractor may be possible in the same way that a claim against the employer of an employee for negligence is possible.
An employee is a person who provides their work efforts to an employer on a consistent full- or part-time basis, and the employer has control over the employee’s conduct when they are on the job.
An example of an employee would be a person who works as a salesperson in a hardware store. This employee has regular hours and most importantly, their work is supervised on the job site, i.e. in the store, by an owner or manager. The law provides that the employer can be responsible for the negligent acts of an employee that occurred within the course and scope of their employment.
An independent contractor is a person who provides work on a more intermittent basis and who, under their own direction, produces a product or service for the person who hires them.
Examples of independent contractors would be consultants, freelance workers, or those who are self-employed and are hired by customers or clients. Traditionally, the employers of independent contractors could not be held liable for the negligence of the contractor, but several exceptions to this rule have developed.
What Factors Are Used to Identify Employees vs. Individual Contractors
One of the most common factors used to identify whether a person is an employee or an independent contractor is whether the employer has control over what the employee does and how it is done. Other factors include whether the employer follows the applicable laws and pays Social Security and Medicare withholdings for the employee, withholds income taxes from their paycheck, contributes to unemployment insurance, and pays at least the minimum wage and overtime, if overtime hours are worked by the employee.
A wide variety of factors help to identify a party as an independent contractor. Support for viewing a person as an independent contractor can be found if there is limited control over the worker’s conduct. Additional factors are whether the worker provides their own equipment to complete the work and whether the worker is free to compete in the open market to find additional work.
Also, the employer of an independent contractor does not withhold taxes from payments for their services or withhold contributions for Medicare and Social Security. Usually, an independent contractor is responsible for making their own tax withholdings and Social Security and Medicare contributions.
What Is Vicarious Liability?
Identifying a party as employee or independent contractor might be important to an employer when it comes to the concept of vicarious liability. Vicarious liability is a legal theory that allows one entity to be made legally responsible for the acts of a third party. Employers are vicariously liable for the negligent acts or omissions of their employees committed within the course and scope of their employment. Under the theory of vicarious liability, an injured party can seek to recover from an employer for damages for the losses they have suffered because of the negligent act of an employee.
By contrast, as a general rule, employers are not liable for the acts of independent contractors, however there are several exceptions to the general rule. The reality today is that corporations face many liability issues when dealing with independent contractors and suppliers. The company that employs an independent contractor may also be sued directly by an injured third party.
There are exceptions to the rule that an employer cannot be held liable for the acts of an independent contractor and they are as follows:
- Right to Control: If the hiring party has the right to control the manner in which the independent contractor performs their job, then the hiring party can be responsible for the negligent acts of the independent contractor;
- Negligent Supervision: If the hiring party is negligent in selecting, instructing, or supervising the independent contractor, they may be liable for the negligent acts committed by the contractor.
- Non-delegable Duty: The employer may have a duty of care in connection with an activity that cannot be delegated to another party in the view of courts. The duty may arise out of some obligation imposed by public policy. To allow a party to delegate responsibility would be inviting rampant negligent behavior by allowing companies to hide behind indemnity clauses in order to pass the costs of injury on to others. Courts in some states have decided that it is in the public interest not to allow the delegation of the duty of care and safety in these instances.
What Is an “Inherently Dangerous Activity”?
Still another important exception to the rule of no liability for the acts of independent contractors, is one for work that is inherently dangerous. An employer will be found liable for damage caused by the acts of an independent contractor if the work they engage in is an “inherently dangerous activity.” The classic examples of this type of activity would be transporting or handling material that is highly combustible or explosive, blasting for the purpose of demolition or the construction of roads or buildings, and handling wild animals, e.g. venomous snakes..
A court may impose liability on the employer of an independent contractor for injury and damage caused by negligent acts committed in the course of carrying out an inherently dangerous, because of the greater likelihood for injury as well as the specialized nature of these activities,
Should I Consult an Attorney?
The law of vicarious liability varies by state. If you have become involved in a liability issue where you are the employer, employee, or independent contractor, you should contact an experienced employment attorney right away.
An experienced contract attorney can review the facts of your case and advise you as to the law in the state in which you operate. He can explain why an employer may or may not be liable for the negligence of an independent contractor whom the employer has hired. If you are the victim of the negligence of an independent contractor, an experienced personal injury attorney can advise you as to whether you can sue the company that hired the contractor to recover damages for your injury. In either event, a personal injury lawyer is the one who can advise you about the best way to proceed in your case.