What duties does your business owe to the employee of a customer or vendor? This may not be a question many companies have considered. They have contractual relationships with their customers and vendors that spell out the duties each owes to the other. Furthermore, that contract may require that each party obtain workers compensation insurance specifically to recompense any employee injured on the job.
Liability Doesn't End With Your Employees
Unfortunately, the answer to the question does not end there. If an employee of another organization is injured in or around a work-site or machinery within the control of your business, you may face potential liability.
First, while you may have a contractual relationship with that employee’s organization, the injured employee is not a party to the contract. Their employer lacks the authority to bind the employee to the terms of that contract. As such, the contract can only offer you limited protection.
Second, recovery through workers compensation is limited. Most states set strict limits on the amount of money an injured worker can recover from their employer through workers compensation depending on the type of injury. That often creates an incentive for workers to look for other entities from whom they can seek recovery.
The Importance Of Disclosing Information
Imagine the case of a business that hires a contractor to make repairs to its roof. The business is aware of a structural weakness in one area of the roof, but fails to inform the contractor of the issue. As a result, an employee of the roofing contractor is injured while working on the business’s premises.
In this situation, the business had control and knowledge of a potential unsafe working condition and failed to either remedy the situation or inform the roofing contractor and their employees of the issue. That failure opens the business up to potential legal liability to the injured worker.
Absence Of Control
When there is absence of control over work conditions and specific acts of negligence, a Court will generally not find a business liable for injuries suffered by another organization’s employees, especially where the injured worker’s employer caused the injury through their own negligence. That in of itself though will not prevent the worker from suing, which can lead to expensive legal bills, claims against your insurance, and probably a cost-effective settlement.
Companies Should Utilize Indemnity Agreements
Companies would be better served to try and use indemnity agreements and hold harmless provisions to protect themselves. While a contract between businesses cannot bind employees, the businesses can require that each indemnify the other from the result of their own negligence. This won’t protect a company that negligently creates an unsafe working condition for another company’s employee, but it will protect them from being sued for injuries that resulted from the contractor’s negligence.