The New Jersey Appellate Division recently found that a jury must resolve whether a company is liable for the negligence of its independent contractor because a genuine issue of material fact exists concerning whether the company exercised such control over its independent contractor that he is deemed an employee for the purpose of such claims.

This case involves a motor vehicle accident that resulted in the death of one individual and serious injuries to another. On August 29, 2006, Renso Arango crashed a dump truck owned by his employer, LG Trucking, into a vehicle driven by third-party Richard Tappel. Tappel suffered serious injuries in the accident and his passenger, Edwin Johnson, was killed. On the day of the accident, Arango was driving from the LG Trucking parking lot to a site in Mount Hope, New York owned and operated by Tilcon New York ("Tilcon").

Tilcon produces construction materials, provides road construction services, and operates asphalt plants. Tilcon contracts with independent trucking contractors to deliver construction materials; it does not use its own trucks to deliver materials. Tilcon pays the trucking companies on a per-delivery basis to haul materials either to a Tilcon site or to an outside customer. LG Trucking did not have any business or customers other than Tilcon.

Tappel filed a lawsuit against Arango, LG Trucking, and Tilcon in the Superior Court of New Jersey. Tilcon argued that it should not be a party to the lawsuit and was not responsible for the accident because it did not employ Arango. The trial court agreed and dismissed Tappel's claims against Tilcon, noting that when a company engages an independent contractor, who conducts an independent business, the company is not liable for the negligent acts of the contractor in the performance of his contract. Tappel appealed.

The New Jersey Appellate Division reversed and reinstated the claims against Tilcon. It noted that an independent contractor may be deemed an employee of the company with which his employer contracts, if the company exerts "substantial control" over him or her.. The Appellate Division found that there were sufficient facts for a jury to conclude that Arango was an employee of Tilcon because it maintained substantial control over its trucking contractors. Specifically, the Court considered that Tilcon supervised the loading and unloading of its materials and Tilcon dispatchers directed the "independent" drivers, including Arango. Additionally, after making his delivery for Tilcon, Arango was required to return to the Company, where he would receive additional instructions. The Tilcon dispatcher would also relieve Arango from his duties each day. The Appellate Division explained that "the greater degree of control an entity exercises over a worker, the greater the likelihood that an employer-employee relationship will be found to exist."

This case demonstrates that employers who exercise too much control over independent contractors can be held liable for their negligent acts. New Jersey employers should think twice before engaging in acts that demonstrate control like setting schedules for contractors, directing how they perform their work, mandating the hours that they work and requiring them to follow the company's policies.

Originally published on the Employer's Law Blog

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