Issue link: http://read.dmtmag.com/i/280096
16 | www.cedmag.com | Construction Equipment Distribution | March 2014 Play It Safe Dealers hire independent contractors to perform a variety of work, including maintenance and janitorial duties, building construction and renovation, customer or rental equipment delivery, and more. When you hire an independent contractor, do you know your risks? In theory, independent contractors are responsible for themselves and their liability is not transferred to you (the hiring company). However, several factors could actually transfer liability to your business, resulting in workers' compensation benefits being paid to injured contractors, or auto liability resulting from accidents while delivering your equipment. Knowing the risks associated with hiring independent contractors can help you protect your business from unnecessary and potentially harmful liability claims. Potential Liability Your dealership may be held liable for the acts or omis- sions of an independent contractor. Consider the follow- ing circumstances that may give rise to liability: Contributory negligence – It may be alleged that you are partly to blame for an accident. The likelihood of this increases if the contractor was using your equipment at the time of the accident, or if the loss occurred on your property. Negligent entrustment – It may be alleged that you either knew or should have known that the contractor you hired was incompetent, reckless or not qualified for the task. For example, you may be liable for an auto accident caused by a driver known to be reckless. A nondelegable duty – Some duties cannot be shifted to an independent contractor. For example, a landlord has a nondelegable duty to provide a reasonably safe environment to a tenant. Inherently dangerous activities – In some cases, strict liability may be imposed on a business engaged in inherently dangerous activities, such as the disposal of hazardous waste materials. Independent Contractor or Employee? Businesses have a higher degree of responsibility for their employees than they do for independent contractors. However, if a court rules that you have treated a contrac- tor as an employee, you could be held liable for injury or damages resulting from an accident. Courts will look at several factors to determine if a party is considered to be an independent contractor or an employee of your business. Although the factors are similar to those used by the IRS for tax status, courts may interpret them differently. In addition, interpretation and emphasis varies from state to state. Courts will typically review the factors including: the independence of (or your control over) the hired party during the scope of work, the tools and equipment used to perform the job, any formal contracts, and insurance covering the acts of the worker to make their final determination. How to Work Safely with Independent Contractors Select contractors based upon their expertise in performing the necessary work and their safety perfor- mance. Consider the contractor's accident rate, safety culture, compliance history, etc., to determine if the Know The Risks of Doing Business With Independent Contractors BY ERIC STILES Tips for minimizing your dealership's liability