Are Independent Contractors Putting Your Business at Risk?

After reading the title you might be thinking: At risk? How so? Do I now need to audit my practices and every internal procedure that applies to my independent contractors? Well—as the old saying goes—it depends.

Generally, a business is not liable for the negligent acts of its Independent Contractors. For example:

• An independent contractor’s employee is injured while working on the principal employer’s property; or
• An independent contractor negligently spills materials on the floor, causing a customer to slip and fall.

This general rule is recognized in most jurisdictions, but every state has its own exceptions. Wisconsin is no exception. If your business relies on independent contractors, understanding those exceptions can help you better evaluate potential liability before a problem arises.

Wisconsin’s Two Exceptions

In Wisconsin, there are two exceptions to the general rule that a principal employer is not liable for the negligent acts of an independent contractor or its employees. First, a principal employer may be held responsible if its own affirmative act of negligence causes or contributes to the injury. Second, a principal employer may also be held liable when an independent contractor is performing inherently dangerous work that results in the plaintiff’s injury. The Wisconsin Supreme Court’s decision in Wagner v. Continental Casualty Co., 143 Wis. 2d 379 (1988), provides the foundational analysis of both exceptions.

In Wagner, a principal employer hired an independent contractor to demolish a dilapidated building. During the demolition, an employee of the independent contractor, who had no prior demolition experience, caught his glove on a steel tripod, fell approximately 40 feet, and suffered a permanent leg injury. Id. at 383-84. The Wisconsin Supreme Court ultimately held that the principal employer was not liable and analyzed both exceptions in reaching its decision.

Exception 1 – Affirmative Acts

The first exception is that a principal employer may be liable for the negligence of an independent contractor based on its own affirmative act. In Wagner, the Court explained that Wisconsin law requires something “extra,” such as an affirmative act of negligence that increased the risk of injury. Id. at 389.

The Court also distinguished between an affirmative act and an omission. In Wagner, the jury initially found the principal employer liable for failing to adequately vet the contractor. The Wisconsin Supreme Court reversed that finding, holding that a principal employer owes no duty to an independent contractor’s employee to “carefully select the contractor.” Any failure to do so is, at most, an omission, not an affirmative act that creates liability.

In other words, a principal employer is generally not liable for the negligence of an independent contractor unless the employer’s own conduct increases the risk of injury. For example, if a principal employer dims workplace lighting to conserve energy and creates an unsafe work environment for a contractor, that affirmative act could expose the employer to liability. A simple way to reduce this risk is to communicate with contractors, identify potential hazards before work begins, and address them whenever possible.

Exception 2 – Inherently Dangerous Activities

The second exception applies when the work being performed is inherently dangerous.

In Brandenburg v. Briarwood Forestry Servs., LLC, 2014 WI 37, ¶20, 354 Wis. 2d 413, 424, 847 N.W.2d 395, 401, the Wisconsin Supreme Court affirmed a decision holding a property owner liable after hiring a contractor to spray herbicides that damaged neighboring properties. The Court concluded that herbicide spraying was an inherently dangerous activity.

The Court explained that spraying herbicides presents a foreseeable risk of harm unless reasonable precautions are taken. Id. at ¶21. Citing the Restatement (Second) of Torts § 416, the Court noted that these are the types of risks a principal employer should consider before entering into a contract. Id. at ¶¶ 37-38.

For businesses, the takeaway is simple.  If the work being contracted is inherently dangerous, you should carefully evaluate the nature of the work, hire qualified contractors, and ensure appropriate precautions are in place before the work begins. Having experienced legal counsel assist in evaluating those risks can help reduce potential liability.

In summary, Wisconsin law recognizes two exceptions to a principal employer’s immunity from liability for an independent contractor’s negligent acts: (1) when the employer’s own affirmative conduct increases the risk of harm, and (2) when the work being contracted involves inherently dangerous activities. Understanding these exceptions before work begins can help businesses better evaluate potential liability and reduce unnecessary risk.

In conclusion, as with most matters of tort liability, there is almost always an argument to defend against claims or to justify bringing one. It is important for business owners and corporate leaders to engage prudent, informed counsel when navigating the complexities of tort liability, particularly when hiring independent contractors to perform work that could foreseeably expose the business to liability. Consulting an MWH attorney before work begins can help identify potential risks and reduce unnecessary exposure.