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Home > How To Steer Clear of Liability Issues When Using Temps and Independent Contractors

Many businesses are using temporary workers and independent contractors when the need for permanent workers is uncertain. However, be sure your working agreements cover certain key liability issues. Are your procedures steering you into or away from problems?

In this era of the evolving workplace, employers may rely upon independent contractors, as well as temporary employees. Depending upon the status of the individuals, there can be significant liability issues under OSHA, workers' compensation and negligence.

Who Has The Obligation To Temporary Workers?

In Secretary of Labor v. Froedtert Memorial Lutheran Hospital, Inc ., OSHRC Docket No. 97-1839, the OSHA Review Commission recently conducted an exhaustive analysis of these relationships as they impact an employer's legal duties to these individuals requiring safety and health compliance. The decision indicates that OSHA and the Commission are closely examining these relationships to determine who (i.e., the temporary employee service provider, independent contractor or host employer) has the obligation to protect these individuals from workplace hazards.

In the Froedtert case, the employer was a hospital that utilized temporary workers from two outside temporary help agencies to provide housekeeping services at the hospital. Among the expected duties, the temporary workers would have potential for contact with blood. The temporary workers were told to use gloves and proper chemicals for cleaning. They were not given training by the hospital regarding blood-borne pathogens or hazard communication, nor were they offered the HBV vaccine.

During the scope of their work, six temporary employees suffered needle stick injuries requiring medical treatment with prescription medication. The hospital did not record any of these injuries on its OSHA Log.

OSHA conducted an inspection and issued citations, four of which were willful, involving: failure to record the needle stick injuries on the log; failure to make the HBV vaccination available to the temporary employees; failure to provide hazard communication training; and failure to provide training regarding blood-borne pathogens.

Employment Agreement Unclear

At trial, the evidence was unclear whether the hospital or the temporary agencies had agreed who was responsible for providing safety and health training to the temporary employees. Because the hospital exercised a high degree of control over the temporary employees the commission found that it was the "common law employer" and had the duty to comply with the cited regulations.

The Review Commission did confirm that an employer can in fact delegate its OSHA compliance obligations. If it does it effectively, that is, the third party can perform these agreed upon responsibilities. If the hospital had developed appropriate contractual language with the temporary agencies regarding the training and vaccinations, it could have avoided liability if the agencies had performed these obligations.

The Review Commission also examined the relationship between independent contractors and host employers. The commission indicated that it would utilize the common law agency doctrine, with emphasis on the ability of the host (or putative) employer to control the activities of the independent contractor and its employees, to determine whether a real independent contractor relationship exists.

The U.S. Supreme Court in Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318 (1992), set out the test which the commission will utilize, including:

• hiring party's right to control the manner and means by which the product is accomplished; the skill required;
• source of tools and instrumentalities;
• location of the work;
• duration of the relationship between the parties;
• whether the hiring party has the right to assign additional projects to the hired party;
• discretion of the hired party over when and how long to work;
• method of payment;
• hired party's role in hiring and payment of assistants;
• whether the hired party's work is part of the hiring party's regular work;
• whether the hiring party is in business;
• whether any employment benefits are provided;
• and the tax treatment of the hired party.

What's Needed To Avoid Unexpected Liability

In order to avoid unexpected OSHA liability, as well as other potential liabilities arising under workers' compensation and negligence, the following actions are essential:

• clear contract or agreement setting out the nature of the relationship between the parties (i.e., lessor-lessee; independent contractor) prior to commencement of the work;
• language in the contract or agreement that identifies which party is responsible for safety and health compliance; and
• appropriate indemnification language for failure to comply with the contract duties, as well as insurance indemnification;
• documentation that the various parties are in fact complying with their agreed upon contractual obligations (e.g., that actual employee safety and health programs have been developed; employees have been trained, and the programs are being enforced with discipline).

Mark A. Lies II is a Labor and Employment Law attorney and partner, Ronald A. Lipinski, is an attorney and partner in the Litigation Practice Group with the law firm of Seyfarth Shaw LLP.

This information is compiled and provided by George S. May International Company.
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