Breaking Down Liability
In determining liability, the courts will first review the general legal principles. In its simplest form, the general legal principle is that the party in charge of a job site is responsible for ensuring safe conditions for all employees on the property. Liability is predicated on the right to control the premises. This means that regardless of any contract between two parties, the party who has the right of control over a property, is responsible for maintaining safe conditions for all workers. Subsidiary property owners and contractors are exposed to liability because the law has found a public policy decision that the risk of loss should be borne by those best able to guard against it. Relying on public policy, the courts have decided that the construction industry is in the best position to minimize the risks of personal injury resulting from work on construction projects.
In addition to the general legal principles , the reviewing court will analyze the contract between the injured party and the property owner. A prime contract or a subcontract often dictates how liability should be allocated. The point of the analysis is important because it tries to determine as between the property owner and the party seeking indemnification, who is in the best position to prevent the risk of loss. While a contract may shift responsibility among the parties, this liability will not impact the rights of the plaintiff. In other words, the contract cannot shift responsibility for a plaintiff’s injuries. A contract is irrelevant to the issue of liability to a plaintiff. However, it is critical to note that the contract may limit who will pay damages owed to the plaintiff. Therefore, while the contract will not preclude a plaintiff from collecting damages, the contract itself will often dictate which party bears the burden of paying those damages. There are three important reasons to review the contracts in a construction accident case.
The General Contractor’s Role
When a project has many subcontractors, it is usually the general contractor that has the most control over the entire job site. In fact, in many cases, there is no direct contract between a subcontractor and the property owner and they are paid directly by the general contractor. Thus, a general contractor has the primary responsibility for coordinating the work of all the subcontractors on a job site. For this reason, injured subcontractors tend to file workers’ compensation claims against the general contractor rather than the property owner. Further, negligence claims are sometimes filed against the general contractor by injured subcontractors alleging that the general contractor is liable for any injuries when reasonable safety measures were not taken on the job site. Essentially, a general contractor is responsible for both keeping the job safe for their own employees as well as for coordinating and overseeing the entire job site.
Workers’ compensation laws emphasize a policy of promoting safety on job sites, with mandates to protect not only employees but also subcontractors and the general public. For example, in many cases a general contractor may be found liable for a violation of a safety regulation even if the general contractor was not the one to directly implement that safety measure. Because the general contractor is the one overseeing the subcontractors in an overall capacity, general contractors are thought to have the ability to anticipate risks and plan for those risks, regardless of whether or not the general contractor made the actual decision to implement the safety measure that violates the safety regulations. General contractors are required to foresee those risks and hundreds of cases have issued fines to or found liability against general contractors where there was a clear violation of relevant safety regulations.
The Owner’s Liability
In addition to vicarious liability, owners of premises may be directly liable for the construction-related injuries sustained by subcontractors. For example, if a plaintiff can establish that the owner breached its duty to maintain the work site in reasonably safe condition, the owner may be found liable. The duty owed to a subcontractor by a property owner is defined by New York case law as follows: [T]he general rule is that one who holds possession and control over premises has a duty to maintain those areas in a reasonably safe condition for the benefit of all who come onto that property. Thus, not only must the property owner keep the premises safe from dangers known or should be known, it must also inspect the premises for latent dangers that might injure a subcontractor. If the property owner fails to do so, it may be found liable for the injuries of the subcontractor.
Subcontracts and Risk Management
As with most contracts, the terms of a subcontractor agreement can dictate the liability of various parties both in the case of an injury to the employee of a subcontractor or third-party. For instance, while workers’ compensation coverage is not required for employees of an independent contractor in New York, a general contractor may still be liable for injuries suffered by an injured subcontractor’s employee where he or she hired the subcontractor and took on control of the job site to perform the work. Miller v. Picone, 225 AD2d 577 (2d Dept 1996). However, where the terms of a subcontractor agreement clearly and unambiguously transfer liability to a subcontractor, then the general contractor cannot be held liable for the injuries suffered by the subcontractor’s employee. Cortez v. St. Barnabas Joint Bd. of Managers, 307 AD2d 893 (2d Dept 2003).
While the terms in a subcontractor agreement will bind the parties to it, sometimes the terms specifically state that they are subject to the entire contract . Even if the injured subcontractor’s employee was covered by workers’ compensation insurance, then the general contractor may be required to reimburse the subcontractor for the amount of the workers’ compensation benefit paid out to the injured employee. See North Star Contrs. v. Lobel, 179 AD2d 517, 518 (2d Dept 1992).
In addition, where an independent contractor is covered by a workers’ compensation insurance policy, then the general contractor may also be covered for that claim. An example is where a construction contract specifies that the general contractor is covered by an independent contractor’s workers’ compensation policy, then the general contractor in that case is entitled to the benefits provided by the policy, including an additional insured’s coverage where one is specifically provided by the policy. Ortiz v. Williams-Scullen Contrs., 66 AD3d 711 (2d Dept 2009).
Mitigation Strategies
The best way to deal with the headaches of injured subcontractors is to prevent the legal battle in the first place. Here are a few strategies for avoiding the problem: Site Safety – Whenever possible, make certain that your site is compliant with all codes and industry standards. A proactive approach is the best approach. This means conducting regular inspections and staying on top of accident-mitigation measures. For example, if your site will entail modifications like demolition or water work, have proper placards and warning systems in place before job starts. Contract Provisions – When entering into contracts with subcontractors (or general contractors), include provisions in the contract that place responsibility for certain hazards and risks on the subcontractor. Include language that places the burden on the subcontractor to maintain all required insurance, and to remove the general contractor and property owner from any liability in the event that an injury occurs. Your specific state laws will dictate the language you include, and how you write the agreement to fully protect your interests. Insurance Requirements and Waivers – A good course of action is to require subcontractors to provide you with proof of a healthy insurance policy, and to provide your company with a waiver in the event that a lawsuit is filed. This agreement should require the subcontractor’s insurer to provide you with its own independent defense counsel in the event that a lawsuit names you as a defendant. In other words, the subcontractor’s carrier will be responsible for paying the defense costs associated with your representation, even if you are not at fault for the injury. You can also request a waiver of subrogation. This means that the subcontractor will waive any rights to seek reimbursement from you in the event that they spend a great deal of time or money defending against the injured worker’s claim. Not all subcontractors will agree to these substantive terms and conditions. That’s okay. You should attempt to reach a compromise, but don’t hedge on these issues if they are important to you. These, among others, are only two ways to mitigate potential liability exposure. It’s never too early to prepare yourself to protect your businesses against subcontractor lawsuits.
Examples Of Liability Cases
Case Study #1: Payne v. Leavey
A 35-year-old subcontractor, Horatio Payne, was electrocuted after he was pinned by an unmarked power line high above the construction site. His equipment, however, allowed him to work closer to the power line than the 10-foot requirement. The electrical company argued that the problem was caused by the actions of the subcontractor, and the court agreed. Payne had a responsibility to identify hazards that could endanger him, and failed to discharge his responsibility, even though it was clear he acted in good faith, and was unaware of the danger. The court looked at the subcontractor’s responsibility to exercise a reasonable standard of care for safety, as well as the existence of warning signs, and held the injury was due to the subcontractor’s failure to obey rules and use reasonable care.
Case Study #2: Moore v. J.E. Merit Constructors, Inc.
A 42-year-old employee of Merit Constructors, Inc., Juan "Junior" Pena-Vasquez, was injured working in a trench. After an inspection by OSHA, it was determined that emergency and other protective equipment was not available. His supervisor, an officer of Merit , admitted in court that he knew the company was required to use protective equipment at the site. The verdict was originally entered in favor of the defense on the grounds that the defendant owed no duty to the plaintiff because there was no legal or practical means for them to discover the subsurface conditions on the property. The court overturned the verdict and held that the plaintiff must be allowed to recover if he can establish that the excavation which resulted in his injury (where he stepped into the trench and fell) occurred because the risk was foreseeable and the trench was not properly barricaded to protect those who may be nearby.
Case Study #3: Alvarez v. Summit Vineyard
Plaintiff Armando Alvarez, 21, had three previous accidents that were also due to negligence of his employer, Summit Vineyard. Although Alvarez actually worked for Summit, he had no safety training because his employer did not provide it. Summit Vineyard’s employee handbooks stated that the employee’s family would be responsible for paying the bill if an employee were to get injured. The defendant stipulated liability, and did not ask any questions other than to make sure all medical expenses were paid, and agreed to pay $325,000 for past damages and $100,000 for future damages for pain and suffering.
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