An Employer Can Be Sued for Negligent Selection of an Independent Contractor in South Carolina

In Ruh v. Metal Recycling Services, LLC, the SC Supreme Court held, in a matter of first impression, that an employer (referred to as the “principal” to avoid confusion) can be liable for negligent selection of an independent contractor.

Below, we will take a look at what that means (it only applies to the principal’s own negligence in selecting the contractor) and what it does not mean (there is no “vicarious liability” on the part of a principal for the actions of an independent contractor, and it does not affect the status of independent contractors in workers’ compensation cases).

Negligent Selection of an Independent Contractor is a Cause of Action in SC

The Fourth Circuit Court of Appeals certified the following question to the SC Supreme Court: “Under South Carolina law, can an employer be subject to liability for harm caused by the negligent selection of an independent contractor?”

The SC Supreme Court’s answer was: “Yes, the principal in an independent contractor relationship may be subject to liability for physical harm proximately caused by the principal’s own negligence in selecting the independent contractor.”

What is a “Certified Question?”

When it is necessary to answer a question of state law to decide a case in the federal court, the federal court will often “certify the question” to the state’s supreme court, allowing the state court to decide issues of interpretation of state law.

For example, in Ruh, the accident happened in South Carolina, and the lawsuit was filed in SC state court, but the defendants removed the case to the federal district court, presumably based on diversity jurisdiction.

Rather than answer the relevant state-law question itself (can an employer be liable for negligence in hiring a contractor?), the Fourth Circuit Court of Appeals asked the SC Supreme Court to decide the issue.

What is an Independent Contractor?

When a company or individual is classified as an independent contractor, the general rule is that the employer (principal) is not liable for the contractor’s actions.

In many cases, employers are careful to consider the factors that determine whether a worker/company is an employee or an independent contractor, because it may impact the principal’s liability for 1) the contractor’s negligence and 2) workers’ compensation claims.

Not Vicarious Liability

Principals (employers) are not “vicariously liable” for the actions of an independent contractor as they would be for the negligence of an employee.

But, when the claim is based on the principal’s own negligence in selecting the contractor, a plaintiff can sue both:

1. The contractor based on the contractor’s negligence, and
2. The principal based on “the principal’s negligent failure to select a competent and careful contractor.”

Does Not Apply to Workers’ Compensation Laws

Ruh also does not affect the rule that employers are not required to provide workers’ compensation insurance for independent contractors.

When Can You Sue for Negligent Selection of an Independent Contractor?

When is a principal/employer liable for the negligent selection of an independent contractor in South Carolina?

The SC Supreme Court refers to Section 411 of the Restatement (Second) of Torts (but does not expressly adopt Section 411 as the law in SC) to identify four considerations in determining whether a principal is liable for negligent selection of an independent contractor:

1. Whether the principal exercised reasonable care,
2. The standard of care varies based on the risk of physical harm,
3. The standard of care relates only to selecting a “competent and careful contractor,” and
4. The principal’s negligence was a proximate cause of the physical harm,

The Court also notes that other features of Section 411 “not anticipated here” may be relevant in future cases.

Reasonable Care

The plaintiff must 1) establish the standard of care in a particular case and 2) prove that the principal breached that standard of care.

The plaintiff must establish by proof a standard of care for selecting a contractor for the particular work and that the principal breached that standard,” taking into account the sophistication of the principal and recognizing that “one who employs” a contractor to perform relatively simple and safe work within the contractor’s field “is entitled to assume that [a contractor] of good reputation is competent to do such work safely.”

Standard of Care/ Risk of Harm

The standard of care will vary from case to case, because “Subsection 411(a) contemplates liability of the principal only when the work of the contractor involves a “risk of physical harm unless it is skillfully and carefully done.”

If the work to be completed is dangerous, requiring “peculiar competence and skill for its successful accomplishment,” then the principal “may well be required to go to considerable pains to investigate the reputation of the contractor . . . and ascertain the contractor’s actual competence.”

For example, the standard of care required for a contractor who will deliver newspapers may be minimal, while the standard of care for a contractor who will transport hazardous chemicals is higher because there is a greater risk of physical injury.

Competence

The standard of care is “reasonable care in selecting a competent and careful contractor.”

“Competent and careful” means “a contractor who possesses the knowledge, skill, experience, and available equipment which a reasonable [principal] would realize that a contractor must have in order to do the work . . . without creating unreasonable risk of injury to others, and who also possesses the personal characteristics which are equally necessary.”

Proximate Cause

The principal’s negligence must be the proximate cause (or a proximate cause) of the plaintiff’s injuries.

For example, if a negligent independent contractor truck driver hauling dangerous chemicals causes injuries by failing to yield the right-of-way at an intersection, but the hazardous cargo or the driver’s lack of training is unrelated to the injuries suffered in the accident, there may not be any liability on the part of the principal.

On the other hand, if the injuries are caused by a chemical spill and the driver was unqualified to handle emergencies that may arise while hauling toxic chemicals, the principal may be liable for the negligent selection of an unqualified independent contractor.

Got Axelrod?

If you have been injured due to another person or business’s negligence, including the negligent selection of an incompetent independent contractor, your SC personal injury lawyer on the Axelrod team will help you to determine who is liable and how to recover the maximum damages that you are entitled to receive under SC law.

Call now at 843-353-3449 or send us a message for a free case evaluation.