Employer Liability: When The Boss Must Pay

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Courts generally examine all the circumstances in these cases. They will ask such questions as, Who paid the painter's wages? Whose tools was he using? Who paid the insurance premiums covering him? If the painting subcontractor was paid a fixed price for the job and handled all of the details such as tools, insurance, choice of employees, and wages, a court will probably find that he is an independent contractor and hold him, rather than the owner or the general contractor, liable. If the general contractor pays the painter by the hour and exercises a great deal of specific control over when, where, and how the painter is to perform his job, however, the painter may be deemed an employee of the general contractor, at least as far as the "who pays" question.

This question arises often when truckers are involved in an accident. If they drive for an independent trucking company that hauls by contract, the hauling company usually must pay for the accidents. If they drive for the company whose product is being hauled, however, that company must pay.

One notable exception to this rule involves jobs that are inherently dangerous. for example, if a contractor hires a subcontractor to do his dynamiting for him on a road-repair job, he will be liable for injuries to bystanders even if the subcontractor is completely independent. The reason for this exception involves public policy. The courts do not wish to make it too easy for companies doing dangerous work to avoid liability by simply farming the job off to another corporation. Courts sometimes use this doctrine to decide liability in certain construction-site cases, as well. Thus, even the independent painter in our example could be deemed an employee of the owner of the site or the general contractor if a court finds that the overall job was inherently dangerous.

The "borrowed servant." A closely related situation that causes a good deal of trouble in the law of master and servant is that of the so-called borrowed servant. These are the cases in which a company "leases" another company's employee for a specific job. For example, who pays when a hired chauffeur driving a corpoate president has an accident -- the chauffeur company that owns the limousine and pays the driver or the corporate passenger's company? Courts decide this question by asking very specifically who was in control of the chauffeur at the time of the accident. Different states, however, have different rules.

Pennsylvania has perhaps the most sensible solution. If the accident occurred in this state, both corporations would be potentially responsible for compensating the victim since both are controlling the driver to some extent. California, Maryland, and Louisiana, among other states, have recently joined Pennsylvania and adopted the rule that recognizes potential liability for more than one employer where a borrowed servant is concerned.

Most states, however, try to determine which employer was exercising primary control at the time of the accident. If the passenger was telling the driver to go unusually fast or by a dangerous route, the passenger's company may have to pay. If, on the other hand, it was a routine trip to or from an airport, with the route determined by the driver, the chauffeur company is usually responsible.

Borrowed-servant cases tend to turn on their particular facts. In one Delaware case, for example, a dredging company leased a bulldozer and an operator, on an hourly basis, from an independent leasing partnership. The contractor told the operator what he needed done and where to do it. Soon after the work began, however, the bulldozer became mired in deep mud. The bulldozer was severely damaged.

The leasing company sued the contractor, claiming that the contractor controlled the bulldozer when it got stuck. The court decided, however, that the leasing company could not recover damages. The leasing company paid the operator's salary and the cost of the machine's upkeep. Moreover, only the leasing company could discharge the operator and only the operator knew how to work the machine. That, said the court, was enough control to require the leasing company to bear its own loss for this sort of accident.

Interestingly, you need not actually hire a borrowed servant to be responsible for his accident. Any employee or person under the company's control may trigger potential liability.

There is really no way to protect your company absolutely from suits brought by people injured by your employees. One way to minimize potential liability, however, is to get whatever insurance is available to cover the kinds of accidents your employees are likely to have. Of course, an employer may also try to recover what he can from the employee who caused the injury.

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