Introduction: Employers have long used independent contractors to efficiently and effectively perform work and provide services while at the same time insulating themselves from direct liability for the contractors' conduct. When brought into cases by claimants, employers have turned to common law and contractual indemnification principles to defend and shield themselves. The general rule is that an employer is not vicariously liable for the negligent acts of an independent contractor. Duane v. Presley Const. Co. Inc., 270 S.C. 682, 244 S.E.2d 509 (1978). However, an employer may remain liable if it delegates a duty to an independent contractor and the independent contractor breaches that duty by acting negligently. Simmons v. Tuomey Rgl. Med. Ctr. 0341 S.C. 32, 533 S.E.2d 312 (2000). There are also certain circumstances when the nondelegable duty doctrine applies, such as statutory relationships between employers and employees or landlords and tenants, and in matters involving inherently dangerous activities. Rock Hill Tel. Co. v. Globe Communications, Inc. 363 S.C. 385, 611 S.E.2d 238 (2005).
History of the Case: Metal Recycling Services ("MRS") hired an independent contractor, Norris Trucking ("Norris"), to transport materials. A driver employed by Norris hit the car Ruh was driving, causing her injury. Ruh sued MRS and its parent company, Nucor Corporation. The Case was filed in state court and then was removed to federal court. Ruh sought to amend her pleadings to allege a cause of action that MRS was negligent in selecting Norris to transport its materials. The District Court denied the motion to amend and Ruh appealed to the 4th Circuit. The 4th Circuit 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? In answering the certified question, Justice Few, for the majority, responded: "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."
Result: What has followed the Ruh decision in South Carolina has been a slew of recent filings with plaintiffs alleging direct claims against principals of independent contractors for negligent hiring, training, maintenance, and supervision, to name a few, in addition to direct negligence and gross negligence claims against the independent contractors. In Ruh, the Court provided some guidance, explaining that the extent to which an independent contractor should be investigated and vetted may vary depending on the degree to which the work involves a risk of physical harm unless done skillfully and carefully. Plaintiffs are looking to employers' practices of vetting independent contractors, such as applications, background checks, driving records, and criminal histories, as readily available sources of information upon which the employer should make informed choices when engaging independent contractors.
Recommendation: Unfortunately, even best practices and exercising proper care to hire competent and careful independent contractors may not prevent a principal from getting sued. Therefore, it is time to break out those contracts and revisit the "indemnification" and "hold harmless" provisions. Usually, indemnification provisions will only cover that party's negligent conduct. South Carolina does allow contract indemnity provisions where a party may be responsible for the negligence of another party, but it must be clearly written, and this intent must be evident because these provisions are strictly construed. Laurens EMS, P.A. v. M.S. Bailey & Sons Bankers, 355 S.C. 104, 584 S.E.2d 375. (2003). Consider adding warranty provisions in which the independent contractor makes affirmative representations to the principal that it engages in best practices such as checking driver records, training employees, providing necessary equipment, maintaining oversight, etc. Additionally, revisit your insurance coverages. Require independent contractors to provide a copy of their insurance declarations in addition to a written contract with indemnification and hold harmless provisions. Finally, consider requiring increased coverage limits and express inclusion as a third-party insured or covered beneficiary beyond a standard ACCORD.
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