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Legal Issues
Jan 21, 2019

Employer Liability for Workers: Independent Contractor vs. Employee

Sponsored Content provided by Deedee Gasch - Attorney, Cranfill Sumner & Hartzog LLP

Under North Carolina’s doctrine of respondeat superior, a principal may be held vicariously liable for the torts of his agent. 
 
What that means is that a company or business can be held liable if its employee is negligent when on the job, even if the business itself was not negligent. 
 
Take, for example, the case of a car accident. An employee, who is in the course and scope of his employment, is involved in a motor vehicle accident resulting in injuries to a third party. The employee is at fault. The injured party can sue not just the employee, but also the employee’s employer under a respondeat superior theory of vicarious liability. 
 
Employers have attempted to avoid this potential for liability by labeling employees as independent contractors. If it is determined that one is truly an independent contractor, his employer is not vicariously liable for on the job negligence of an independent contractor. 
 
As a recent North Carolina Supreme Court case illustrated, the title that is used is not determinative. Calling someone an independent contractor for purposes of payroll taxes or applicability of the Workers Compensation Act does not end the inquiry for purposes of vicarious liability. 
 
Our Supreme Court has instructed that whether an agent is an independent contractor or employee for purposes of determining vicarious liability of the employer is the “degree of control retained by the principal over the details of the work as it is being performed by the agent.” Specifically, an independent contractor is not accountable to his employer as to the manner in which he performs his work but is only accountable as to the result. 

If an employer has retained the right of control over the contractor or employee as to details of performance, that worker is considered an employee under the law regardless of title. Also, it does not matter if the employer actually exercises control as long as the employer has the right to do so. 
 
In its recent decision, the Supreme Court applied the eight factors enumerated by the Supreme Court in Hayes v. Board of Trustees of Elon College in determining whether one is an employee or independent contractor for purposes of vicarious liability of the employer. 
 
Those look at the extent to which an employee:

  • is engaged in an independent business, calling, or occupation;
  • is to have the independent use of his special skill, knowledge, or training in the execution of the work;
  • is doing a specified piece of work at a fixed price or for a lump sum or upon a quantitative basis;
  • is not subject to discharge because he adopts one method of doing the work rather than another;
  • is not in the regular employ of the other contracting party;
  • is free to use such assistants as he may think proper;
  • has full control over such assistants; and
  • selects his own time. 
After applying the above analysis, the North Carolina Supreme Court held in McKenzie v. Charlton late last year that a “paraprofessional caregiver” was an employee for purposes of vicarious liability. In that case, Richard Charlton struck and killed a pedestrian while in the course and scope of his employment with RFI. Specifically, he was employed as a caregiver for a disabled client, who was in the vehicle with him when the accident occurred. 
 
The case against RFI, the employer, was initially dismissed finding Charlton was an independent contractor. The Supreme Court reversed, noting that RFI exerted control over Charlton’s work as opposed to just being a “broker or middleman” who placed caregivers. 
 
The takeaway is this – if you are an employer, do not get lulled into the false belief that merely labeling a worker an independent contractor will get you off the hook in the event that employee is involved in an accident or otherwise injures or damages someone else. If the business is going to retain control over the performance, it is likely the business is vicariously liable for an employee’s negligence while on the job. 
 
Review your business insurance and make sure you have adequate coverage. Also, if you are truly intending to hire independent contractors, ensure you have sufficiently given up control over the individual’s performance and structure your independent contractor agreements using the above factors to show that lack of control. 
 
This does not constitute legal advice. Please seek counsel from a legal professional to assess your specific situation.

Deedee Gasch has over a decade of experience litigating catastrophic claims involving serious injury or death. While Deedee’s practice is primarily focused on the defense of premises liability, trucking and commercial vehicle accidents, and medical malpractice, she also has a wide range of civil litigation experience. She spent approximately half of her career representing injured plaintiffs before returning to her first love of civil litigation defense work. This experience on both sides of a case uniquely situates her in negotiations and at trial if settlement is not possible. Deedee is a third-generation Tar Heel and attorney, following in the footsteps of her grandfather, a North Carolina Resident Superior Court Judge (deceased), and her father, a career trial lawyer. She has dual degrees in Journalism and Political Science and earned her law degree cum laude from Florida Coastal School of Law in Jacksonville, Florida, where she attended on a prestigious merit based scholarship. She is licensed to practice law in both North Carolina and Florida. 

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