Who Pays When an Independent Contractor Causes Property Damage?

Make sure you know who pays the bill when an independent contractor causes property damage during a construction project.

Many businesses hire independent contractors for a multitude of reasons. For example, using an independent contractor for a job rather than an employee may save an employer money, since employers do not need to provide independent contractors with employer-provided benefits or pay independent contractors a salary. Working with independent contractors often provides employers greater flexibility by hiring independent contractors on a project by project basis. Employers may also benefit from using independent contractors because, in most instances, employers are not vicariously liable for the negligent actions of independent contractors. Although independent contractors are not employees, they are not completely separate from the company and the company may still be liable for any actions or omissions an independent contractor takes or fails to take while performing services for a company in certain circumstances. There is often a fine line between an employee and independent contractor. Just because a hired party is labeled an independent contractor, it does not necessarily mean that they are considered an independent contractor as opposed to an employee under the law. This topic will navigate through this complex area of law. It will provide a brief overview of what exactly an independent contractor is and the difference between an independent contractor and an employee, and will review the importance of having a written independent contractor agreement. This topic will also review the circumstances as to when the company or the independent contractor is liable in the event the person hired causes damage or performs some other negligent act. Finally, it will turn focus to presenting the best business practices to minimize risks.

Learning Objectives

• You will be able to identify the factors considered by courts in determining whether a hired party is an independent contractor or employee.
• You will be able to recognize the importance of written independent contractor agreements.
• You will be able to discuss the general rules relating to liability for the negligent acts and omissions of an independent contractor.
• You will be able to explain the differences between independent contractors and employees.