As a business owner, you could be held liable for the actions of other people’s employees.
U.S. employment law has long recognized that workers may have an employment relationship with multiple entities at the same time. That means your company could get stung with OSHA fines, Title VII discrimination claims, and other actions that arise from the conduct of an employee you thought was a subcontractor.
Here’s Why:
In Secretary of Labor vs. Summit Contractors, the 8th Circuit ruled that companies exercising overall control of a job site can be held liable for workplace infractions—even when the individual or individuals directly responsible for the infraction were employees of another firm and no employees of the controlling employer were directly involved.
Furthermore, even if your company doesn’t exercise direct supervisory control of subcontractors, courts have held that a de facto employment situation exists if the controlling employer simply reserves the right to exercise control.
Protecting Yourself
Here are some ways to safeguard yourself from joint employer liability:
- Ensure that all subcontractors have employee liability insurance and general liability insurance of their own.
- Check the vendor or subcontractor’s track record with safety and OSHA-related claims.
- Research the subcontractor’s bonding history.
- Ensure your employer’s liability insurance covers claims that may arise from contractors and vendors working on your property or on worksites your company controls.
- Negotiate for an indemnification clause in any vendor contracts or subcontracting arrangements.
- Don’t rely on verbal assurances: Put the subcontractor’s responsibility for complying with OSHA standards and labor laws in writing as part of the contract.
- Hold regular safety meetings with representatives from the subcontractor’s firm and document them.
- Don’t sign a contract with a manpower or employee leasing firm unless you have reviewed it for liability exposure.
- Ensure the vendor or subcontractor provides job site supervision. At a minimum, ensure their management is checking on the site regularly. If all supervision is left to you, federal regulators may deem these workers to be your employees.
- Don’t discipline the subcontractor’s workers directly. Work through the subcontracting entity wherever possible. If your supervisors attempt to discipline their employees or direct their work too closely, courts may find that a de facto employment relationship exists with your firm, exposing you to liability.
- Train your middle managers and foremen not to act as supervisors to subcontractors’ employees and onsite vendors.
- Don’t lend heavy equipment, power tools, or vehicles to subcontractors unless you also send a designated operator. Contractors are expected to maintain their own equipment. When you send your own operator with equipment, you can help ensure the subcontractor doesn’t expose you to liability from an unqualified operator.
About BGES Group
BGES Group specializes in helping businesses protect themselves from liability exposure and risk management challenges. With extensive experience in employee liability insurance, OSHA compliance, and workplace safety solutions, BGES Group provides expert guidance tailored to your unique business needs.
Contact Information: Gary Wallach
BGES Group
Phone: 914-806-5853
Email: bgesgroup@gmail.com
Website: www.bgesgroup.com
For more information or to schedule an insurance and risk exposure review, call us today!