From JDSupra, Matthew Pecoy discusses a recent case in which a federal court asked the Supreme Court of South Carolina if an an employer be liable for negligently selecting independent contractor. In general, an employer is not liable for the negligence of an independent contractor, but this case asks whether an employer can be liable if it was negligent when it selected the independent contractor. Matthew writes:
Instead of toiling over a 130-page private placement memorandum as an attorney or reviewing payroll as the head of the family business, imagine for a moment that you are Method Man, the de-facto lyrical leader of the Wu-Tang Clan. You and your Wu brethren have inked a deal with Escobar himself — Nas — to embark on the “New York State of Mind Tour” this summer.1 In order to secure specialized skill, pay lower costs, and limit liability, you and the Illmatic One outsource event security to a third-party by way of an independent contractor relationship instead of tasking an individual already employed by Shaolin Nation or the Queensborough King. During your first show in Charleston, South Carolina, the front row of the crowd snarls along with Inspectah Deck’s opening lyrics to “Triumph” — “I bomb atomically, Socrates’ philosophies and hypotheses / Can’t define how I be dropping these mockeries / Lyrically perform armed robbery.”2 The older security guard protecting the stage, unfamiliar with Mr. Deck’s kung-fu wordplay, perceives the crowd’s chant as a bomb threat and pepper sprays the crowd, causing a teenager to fall and break her leg.
Despite this literal “[w]atch your step, kid”3 moment, you and the other future Hall of Fame MCs performing that night may not be held liable for the security guard’s acts. The reason — because an employer is generally not liable for the torts of an independent contractor, subject to certain exceptions discussed below. However, the Fourth Circuit Court of Appeals in Ruh v. Metal Recycling Servs. has certified the following question to the South Carolina Supreme Court:
“Under South Carolina law, can an employer be subject to liability for harm caused by the negligent selection of an independent contractor?”4
Depending on the ruling, you, the Wu-Tang Clan, and any other individual or entity hiring an independent contractor may be liable for such contractor’s negligent acts if you fail to properly select or retain them.
“Microphone Checka, Swinging Sword Lecture:”5 The Ruh Case
To set the stage, the Plaintiff in Ruh, Lucinda Ruh, sustained injuries when a commercial motor vehicle operated by Cecil Norris, an employee of Norris Trucking, LLC, struck the vehicle Ruh was driving.6 At the time the Defendants hired Norris Trucking, the Plaintiff alleged large amounts of publicly available information existed showing that Norris trucking was unsafe and incompetent.7 Ruh further claimed that, at the time of the accident, Norris Trucking was transporting scrap metal pursuant to a contract with Metal Recycling Services, LLC (“MRS”) and/or MRS’s parent company, Nucor Corporation, and that Norris Trucking’s negligence was the immediate cause of the accident.8
Ruh then filed a civil complaint against MRS and Nucor in a South Carolina state court, seeking actual and punitive damages on the ground that MRS and/or Nucor breached a duty of care by hiring and/or retaining Norris Trucking when they knew or should have known that Norris Trucking had a poor safety record.9 Defendants removed the action to the United States District Court for the District of South Carolina and filed motions to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6).10 The district court granted Defendants’ motions to dismiss on the grounds that the complaint did not allege (1) an employment or similar relationship between Defendants and Norris Trucking, or (2) facts that would support an exception to the general rule that a contracting party is not liable for the torts of an independent contractor.11
After the district court delayed entry of its order to permit Ruh to file an amended complaint, Ruh alleged in her proposed amended complaint that MRS negligently hired Norris Trucking because of its incompetence.12 The district court denied the motion to amend as futile and dismissed the action with prejudice, relying on South Carolina’s general rule that an employer is not liable for the actions of an independent contractor and cited Ruh’s failure to allege facts that would avoid this general rule.13 Ruh then limited her appeal to the issue of whether MRS was negligent in selecting Norris Trucking as an independent contractor.14
Enter the 36 Chambers: The Restatement (Second) of Torts § 409 and The Exceptions
Those hiring independent contractors in South Carolina have previously been shielded from both negligent hiring of independent contractor claims and attempts to hold employers of independent contractors vicariously liable for the wrongful acts of their contractors.15 The Restatement (Second) of Torts § 409 (1965) serves as the foundation for this longstanding defense, which provides that “the employer of an independent contractor is not liable for physical harm caused to another by an act or omission of the contractor or his servants.”16 This absence of liability arises because the employer has no control over the acts and work of an independent contractor. Sections 410-429 define the exceptions to this general rule, and South Carolina has adopted a portion of these carve-outs.18
The Restatement (Second) of Torts § 411 is the exception Ruh requests South Carolina to adopt to extend liability to employers of independent contractors, and it provides as follows:
An employer is subject to liability for physical harm to third persons caused by his failure to exercise reasonable care to employ a competent and careful contractor (a) to do work which will involve a risk of physical harm unless it is skillfully and carefully done, or (b) to perform any duty which the employer owes to third persons.19
Although South Carolina is the only state that has not directly ruled on this issue, every other state in the Fourth Circuit has either expressly adopted § 411 or otherwise imposed a duty to hire a competent independent contractor.20 Moving outside of the Fourth Circuit, similar claims have been upheld imposing similar duties of care in hiring and retaining independent contractors on employers.21
Implications – “Can It Be [That It Was] All So Simple” Then?
As if GZA, the most cerebral MC in the Wu-Tang Clan, was eloquently predicting the potential impact of Ruh 20 years in advance, “[t]his witty unpredictable [case] is critical.”23 With The McKinsey & Company’s spring 2022 American Opportunity Survey finding that 58 million Americans perform independent work,24 employers’ use of independent contractors is unequivocally on the rise. In this tumultuous, post-COVID world, the increase in contract work is logical due to its greater flexibility than the traditional employer/employee relationship as the workforce can be expanded and downsized quickly and with a reduced long-term commitment. Hiring contract workers instead of employees can also provide a more efficient, cost-effective tool to bring specialized expertise to a job that can produce immediately. Furthermore, this independent contractor relationship has been treated by the courts as a safe haven from litigation exposure.
However, the South Carolina Supreme Court’s decision in Ruh is “not an average Joe with an average flow”25 by any means. Should the Restatement (Second) of Torts § 411 be adopted, businesses will likely be required to exercise the same or similar reasonable care and diligence when hiring contractors as currently required when hiring employees. Depending on the Court’s precise ruling, such diligence could include:
- Developing background screening policies of independent contractors to minimize the risk of contractor theft and to ensure a safe workplace.
- Requesting and reviewing contractors’ criminal convictions and pending prosecutions, sex offender registry records, and civil litigation history.
- Checking all contractor references.
- Requiring contractors to submit to the same drug testing programs as employees.
If such investigation reveals that the contractor “grew up on the crime side, the New York Times side” where “[s]taying alive was no jive,”26 Ruh’s potential extension of negligent hiring claims to independent contractors should make you think twice about engaging in such relationship.
Should the Plaintiff in Ruh prevail, businesses that fail to sharpen their diligence sword when screening potential contractors may find a killer bee swarm of newfound liability for contractors’ negligence. Prudent employers of independent contractors should closely watch the resolution of this case and be prepared to implement enhanced contractor screening practices. Such heightened diligence may minimize the risks associated with the potential extension of negligent hiring claims to the contractor relationship and protect their proverbial necks.
1See Allison Hussey, “Wu-Tang Clan and Nas Announce 2023 Tour,” Pitckfork March 12, 2023, https://pitchfork.com/ news/wu-tang-clan-and-nas-announce-2023-tour/
2Wu-Tang Clan, Lyrics to “Triumph,” Wu-Tang Forever, Loud Records / RCA, June 3, 1997.
3Wu-Tang Clan, Lyrics to “Protect Ya Neck,” Enter the Wu-Tang, Loud Records, November 9, 1993.
4Ruh v. Metal Recycling Servs. No. 20-1440 (4th Cir. Jan. 24, 2022).
5Method Man and Redman, “Da Rockwilder,” Blackout!, Def Jam Records, September 28, 1999.
6Ruh, at 2.
8Ruh, at 2.
11Id. at 3.
13Ruh, at 3.
14Id. at 3.
15Duane v. Presley Constr. Co., Inc., 244 S.E.2d 509, 510 (S.C. 1978)(“Generally, an employer is not liable for the torts of an independent contractor committed in the performance of contracted work.”); see also Rock Hill Tel. Co., Inc. v. Globe Commc’ns., Inc., 611 S.E.2d 235, 238 (S.C. 2005).
16Restatement (Second) of Torts § 409.
17Osborne v. Adams, 338 S.C. 82, 525 S.E.2d 268 (Ct. App. 1999), rev’d, 346 S.C. 4, 550 S.E.2d 319 (2001).
18See, e.g., Simmons v. Tuomey Reg’l Med. Ctr., 533 S.E.2d 312, 322 (S.C. 2000) (adopting § 429 of Restatement (Second) of Torts and holding that hospital could be liable for negligence of independent contractor if independent contractor’s services were accepted by someone on reasonable belief that independent contractor was member of hospital staff); Durkin v. Hansen, 437 S.E.2d 550, 553-54 (S.C. Ct. App. 1993) (holding, under § 419 of Restatement (Second) of Torts, that landlord could be liable for negligence of independent contractor based on nondelegable duty of reasonable care to tenants).
19Restatement (Second) of Torts § 411.
20See, e.g., Perry v. Asphalt & Concrete Servs., Inc., 133 A.3d 1143, 1155 (Md. 2016) (“[A]n employer is liable for the acts of an independent contractor under the theory of negligent hiring if the harm is caused by ‘some quality in the contractor which made it negligent for the employer to entrust the work to him.’” (quoting Restatement (Second) of Torts § 411 cmt. b)); Little v. Omega Meats I, Inc., 615 S.E.2d 45, 48 (N.C. Ct. App. 2005) (recognizing “a direct claim against the employer based upon the actionable negligence of the employer in negligently hiring a third party”); King v. Lens Creek Ltd. P’ship, 483 S.E.2d 265, 269 (W. Va. 1996) (stating that employer can be liable “for its negligence in hiring an independent contractor who is not careful or competent” (citing Restatement (Second) of Torts § 411)); Philip Morris, Inc. v. Emerson, 368 S.E.2d 268, 278 (Va. 1988) (affirming imposition of liability on employer “for negligent hiring of an incompetent independent contractor” (citing Restatement (Second) of Torts § 411)).
21W. Stock Ctr., Inc. v. Sevit, Inc., 195 Colo. 372, 578 P.2d 1045, 1048 (1978) (quoting W.E. Shipley, Annotation, When is Employer Chargeable with Negligence in Hiring Careless, Reckless, or Incompetent Independent Contractor, 8 A.L.R. 267 (1949)); see also Arthur v. Holy Rosary Credit Union, 139 N.H. 463, 656 A.2d 830, 834 (1995).
22Wu-Tang Clan, Lyrics to “Can It Be All So Simple,” Enter the Wu-Tang (36 Chambers), Loud Records, November 9, 1993.
23Wu-Tang Clan, Lyrics to “As High as Wu-Tang Get,” Wu-Tang Forever, Loud/RCA Records, June 3, 1997.
24McKinsey & Company, “Freelance, Side Hustles, and Gigs; Many More Americans Have Become Independent Workers,” August 23, 2022, .
25Wu-Tang Clan, “Method Man,” Enter the Wu-Tang (36 Chambers), Loud Records, November 9, 1993.
26Wu-Tang Clan, Lyrics to “Cream,” Enter the Wu-Tang (36 Chambers), Loud Records, November 9, 1993.