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Gail S. Kelley, P.E., J.D.
ConstructionRisk, LLC

Where the employee of a roofing subcontractor died after falling from the roof of a Walmart being constructed in Nebraska, Walmart was not liable for the worker’s death under any of the exceptions to the independent contractor rule. However there were genuine issues of material fact with respect to the general contractor’s liability. Consequently, the Nebraska Supreme Court found that the district court had erred in granting the general contractor’s motion for summary judgment. Gaytan v. Wal-Mart, 289 Neb. 49, 853 N.W.2d 181 (2014).

Graham, the general contractor building a Walmart store in Nebraska, hired D & BR Building Systems, Inc. to install steel decking on the roof. Dominguez, a D & BR employee, died after falling from the roof when the decking gave way. Dominquez was not wearing his personal protective equipment (PPE) at the time he fell.   A subsequent investigation showed that the decking had originally been secured with temporary screws, but that the screws had been removed or cut off.

As a subcontractor hired by Graham, D & BR was an independent contractor of both Walmart and Graham. An employer of an independent contractor generally is not liable for any physical harm caused by the contractor. However, many states, including Nebraska, allow four exceptions to this general rule. An employer of an independent contractor can be liable for physical harm to another if:

(1) the employer retained control over the contractor’s work; (2) the employer was in possession and control of premises; (3) a statute or rule imposes a specific duty on the employer; or (4) the contractor’s work involved special risks or dangers.

Gaytan, the administrator of Dominguez’s estate, sued both Walmart and Graham under these exceptions. The district court granted the defendants’ motions for summary judgment and Gaytan appealed. After carefully analyzing the facts and relevant contracts, the Nebraksa Supreme Court found that while none of the exceptions applied to Walmart, there were genuine issues of fact as to whether Graham could be held liable under the “control over work” exception.

(a) The Control Over Work Exception

When either a general contractor or an owner retains control over an independent contractor’s work, it has a duty to use reasonable care to prevent injuries to the workers. In order to impose liability for injury to a subcontractor’s employee, however, the control must include the ability to dictate how the work is performed; it cannot be just a general right to stop work, inspect progress, or make suggestions. In particular, the general contractor or owner must have (1) supervised the work that caused the injury, (2) had actual or constructive knowledge of the danger that caused the injury, and (3) had the opportunity to prevent the injury.

Gaytan pointed to certain provisions in the Walmart/Graham contract as evidence of Walmart’s control over D & BR’s work. She cited the contract’s reference to an “Owner Construction Manager” who was to be Walmart’s representative on the jobsite. She also noted that all work was required to comply with the contract and Walmart retained the right to enforce the terms and conditions of the contract.   The Supreme Court dismissed these contentions, stating:

“Even assuming Wal–Mart had an authorized representative on the jobsite, … there is no reasonable inference that such representative controlled the roofing work performed by D & BR. And the contractual provisions relied upon by Gaytan demonstrate no more than a general power to stop and start work. “

In analyzing Graham’s potential liability, the court looked at two relevant factual elements: (1) the use of safety equipment by workers on the roof and (2) the manner in which the decking was secured to the roof. Nothing in D & BR’s subcontract gave Graham the authority to dictate how D & BR installed the decking, and the record showed that Graham employees did not do so.   However, the Supreme Court found that since there were genuine issues of material fact with respect to the claim that Graham retained control over the safety practices on the jobsite, and specifically the use of PPE by D & BR workers, the district court erred in concluding that Graham could not be held liable to Dominguez under the control of the work exception.

i. Supervision of Use of Safety Equipment

Graham’s contract with D& BR gave Graham the general right to supervise D & BR’s work and D & BR was required to comply with all applicable safety regulations, including Graham’s own safety rules. Graham had supervisory personnel on the jobsite and had monitored whether D & BR employees were wearing PPE. In addition, Graham had developed a fall protection plan for D & BR and had provided Dominguez with instruction about safe work practices. After the accident, the Occupational Safety and Health Administration (OSHA) cited Graham because the work area had been improperly designated with cones rather than a guardrail. OSHA noted that even though Graham employees were not exposed to the roofing hazard, Graham was “the controlling employer for the site, and had explicit control over the overall safety and health of the site.”

Based on this evidence, the Nebraska Supreme Court found that the contract authorized Graham to control the use of safety equipment by D & BR workers and that it actually did so. Because there could be a reasonable inference that Graham’s control over the use of safety equipment was directly related to Dominguez’ injury, there was a genuine issue of material fact on this sub issue.

ii. Knowledge of PPE Usage

With respect to knowledge of the PPE usage, the court noted that:

“Even if Graham controlled the work which caused Dominguez’ injury, it can be liable only if it had actual or constructive knowledge of the danger which ultimately caused the injury … there is no evidence that Graham had actual knowledge prior to the accident that Dominguez or any other D & BR worker was working without his PPE. Thus, the question is whether there is any evidence to support an inference that Graham had constructive knowledge that D & BR workers were not using PPE. Constructive knowledge is generally defined as knowledge that one using reasonable care or diligence should have.”

Because the evidence suggested that failure to use PPE was so widespread that Graham should have known of it, the Supreme Court found that there was a genuine issue of material fact as to whether Graham had constructive knowledge that D & BR employees were not using PPE.

iii. Opportunity to Prevent Injury

With respect to Graham’s opportunity to prevent injury, the court noted:

“Graham had the contractual authority to require D & BR to comply with safety requirements, which reasonably includes the proper use of PPE. Thus, Graham had the ability to require D & BR employees to wear PPE while on the roof and the opportunity to prevent the injury to Dominguez to the extent it was caused by his failure to use his PPE.”

(b) Control of Premises/Safe Place to Work

Noting that the “safe place to work” exception relates to the physical condition of the premises and is separate and distinct from the “control of the work” exception, the court explained that if the owner retains control over the premises:

“The fact that the owner does not retain sufficient control of the work so as to become liable for injuries to employees of an independent contractor does not mean that the owner is relieved of its nondelegable duty to provide a safe place to work for employees of independent contractors.”

Walmart was not in possession or control of the premises during the construction, so, as a matter of law, it had no duty to maintain the premises in a safe condition for Dominguez. Gaytan argued that some entity must be in control of the premises and that if Walmart was not, then Graham was and had a duty to provide a safe place to work. The Supreme Court agreed that Graham had such a duty, but Dominguez was not injured because of any breach of Graham’s duty. Instead, he was injured because he failed to follow proper safety procedures.

(c) Duty Imposed by Statute or Rule

Graham was cited by OSHA for violating 29 C.F.R. § 1926.760, which requires that employees working in steel erection more than 15 feet above ground be protected from fall hazards. However, the Supreme Court noted that nothing in any part of § 1926 provides that responsibility for worker safety and use of safety equipment always rests with the general contractor and cannot be delegated.

(d) Peculiar Risks

The court in a previous Nebraska case, Parrish v. Omaha Public Power Dist., 242 Neb. 783, 496 N.W.2d 902 (1993), had found that because the risk involved in steel construction is not encountered by an average person on a day-to-day basis, it was a ‘peculiar risk’. Gaytan thus argued that Walmart and Graham had a nondelegable duty arising from the “peculiar risk” associated with steel construction.

After examining the claim in light of the rulings of other states and public policy, the Nebraska Supreme Court held that that liability under the peculiar risk exception does not apply to personal injury claims by employees of subcontractors against general contractors or owners. Central to the court’s holding was the fact that a subcontractor’s employees are generally covered by workers’ compensation. The policy concern underlying this exception, which is to provide a remedy to those injured as a result of a peculiar risk at a construction site, is already addressed in the case of a subcontractor’s employee covered by workers’ compensation. Furthermore, the employer of the subcontractor has indirectly funded this remedy because workers’ compensation premiums are included in the contract price.

Under the exclusive-remedy provisions of workers’ compensation, an injured worker cannot bring a negligence claim against its employer.  Summarizing the rulings from other states, the court noted:

Some courts reason that under agency principles, the subcontractor’s release from tort liability to an injured employee by operation of workers’ compensation laws operates to release the party which employed the subcontractor. And as the California Supreme Court noted in overruling its prior cases .. “to impose vicarious liability for tort damages on a person who hires an independent contractor for specialized work would penalize those individuals who hire experts to perform dangerous work rather than assigning such activity to their own inexperienced employees.”

Comment:

This case highlights the importance of understanding potential liability for job site safety. It also highlights the fact that when analyzing potential liability for an accident, the actual conduct of the parties will be considered relevant.

 

 

About the Author:  As a professional engineer, Gail Kelley has performed structural design and analysis of post-tensioned structures, has performed constructability reviews, due diligence inspections, and condition assessments, and has provided litigation support for construction defect and delay claims in both state and federal court.  She received her B.S. in Civil Engineering from Cornell University, and Master of Science in Structure and Materials from Massachusetts Institute of Technology (MIT), and she received her Juris Doctorate from American University, Washington College of Law.  She provides risk management services for ConstructionRisk, LLC.

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