Can You Be at Fault if Your Subcontractor Performs Shoddy Installation Work? Ask a North Dakotan.

Interstate 94 in North Dakota near Gladstone

Interstate 94 in North Dakota, near Gladstone, demonstrating why ND is the least visited of the 50 states. Photo from Wikipedia.

According to the official tourism website for North Dakota, the Peace Garden State “leads the nation in production of spring wheat, durum wheat, dry edible peas, dry edible beans, honey, flaxseed and canola.” North Dakota is also the #1 producer of honey in the U.S., a fact you can learn more about by clicking on this official North Dakota State Bee Map, on which you can locate the most active apriaries, which is a place where bees are kept and which is a word that I did not know was a word, so you see, we have all learned something today.

In addition to giving us more dry edible beans than any one of us could safely consume, North Dakota also gives us a recent case that reminds us of an important principle: If your company contracts to perform a service and subcontracts the service, your company is probably still liable under contract law to ensure that the service is properly performed.

In Bakke v. Magi-Touch Carpet, the Supreme Court of North Dakota examined a case where Magi-Touch subcontracted the installation of a shower door, which later “imploded,” according to the narrative in the opinion. I envision something less dramatic than the implosion of the Georgia Dome (cool video), but nonetheless if it were my shower door, I’d be unhappy with that sort of installation job.

The subcontractor apparently stunk it up (too many dry edible beans?), and the homeowner sued Magi-Touch for negligence, fraud, breach of contract, and bunch of other stuff that its creative attorney could come up with. The Court ruled that this was a basic breach of contract case, not a tort case and not a negligence case. Magi-Touch had an obligation to ensure the proper installation of the door, since that what it had contracted to do. Retaining a subcontractor did not relieve Magi-Touch of its contractual obligation to install the door, and Magi-Touch could be held liable under a breach of contract theory for failing to complete the installation in a workmanlike manner.

On the bright side for Magi-Touch, it could not be held liable for negligence or other tort claims. Any damages were limited to the type of damages available for a breach of contract — namely, what it could take to repair and properly install the door.

While this may seem like an obscure shower door case from a state you’ll never visit, the principles of law discussed in the case apply fairly universally. The N.D. Supreme Court decided this case based on common law principles, which generally apply no matter where in the U.S. you are located.

The important thing to remember is that subcontracting a service that your company has contractually agreed to perform does not relieve your company of the contractual obligation to perform the service. Subcontract at your own risk, and take steps to ensure the work is properly performed before paying the subcontractor.

Be sure your contracts are clear as to whose obligations are whose — both in your contracts with customers and in your contracts with subcontractors.

And if you ever find yourself planning a trip to North Dakota, aim for September in Grand Forks and prepare to witness greatness. According to the N.D. Tourism site, “The world’s largest french fry feed is held every year in Grand Forks, during Potato Bowl USA. A new record was set on September 10, 2015, when 5,220 pounds of french fries were served.” Sounds healthy but delicious.

For more information on joint employment, gig economy issues, and other labor and employment developments to watch in 2019, join me in Philadelphia on Feb. 26 or Chicago on Mar. 21 for the 2019 BakerHostetler Master Class on Labor Relations and Employment Law: Meeting Today’s Challenges. Advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com. If you list my name in your RSVP, I will have your registration fee waived.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Village People’s Construction Worker Character Wins! Court Expands OSHA Liability for General Contractors

Village People from Wikipedia 1978

The Village People (1978), from Wikipedia

According to the Official Website of the Village People, the group’s original lineup included Disco King, Construction Worker, Cowboy, Leatherman, Indian, and two “Nondescripts.” They were later joined by Cop, G.I., and Biker. Keeping with the times, as we know the Village People do, the costume formerly known as Indian has been rebranded as Native American. (True!)

But Cop or No Cop, Biker or No Biker, there has always been a Construction Worker since the band’s founding in 1977.

A recent court case involving construction workers tests whether a general contractor in control of a worksite (we’ll call him “Macho Man,” after the 1978 hit) has a legal duty to protect another contractor’s employee (we’ll call him “Hot Cop,” after a different 1978 V.P. tune), when none of Macho Man’s own employees are at risk.

The issue arose during a library construction project in Austin, Texas. One subcontractor refused to allow its employees to work near a 12-foot high wall of dirt that had not been properly sloped or reinforced. A citation was issued to the general contractor for allowing the unsafe condition, but it was undisputed that none of the general contractors’ own employees were endangered by the wall of dirt.

“Why does that matter?” you might be asking.

Although the condition was a violation of the Occupational Health and Safety Act (OSHA), the Fifth Circuit Court of Appeals had taken the position since 1981 (when the V.P. released the album, Renaissance) that “OSHA regulations protect only an employer’s own employees.”

The Court’s ruling earlier this week abandoned that rule, instead finding that a general contractor could be cited under OSHA for allowing an unsafe condition that affected only the employees of another contractor.

In response to the Court’s ruling, the Village People have reportedly abandoned plans to introduce a nebishy Health Inspector character on their next tour.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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