Farm owners and operators who hire employees increase their potential liability. The farm employer may be held liable for the acts of employees, as well as for injuries to them. This guide discusses generally the farm employer's exposure to liability and steps that could be taken to protect against such liability.Revised 7/80/12M

Matthews, Stephen F.

Triplett, Timothy W.

University of Missouri: MOspace

Liability of Farm Employers Stephen F. Matthews and Timothy W. Triplett Department of Agricultural Economics College of Agriculture Potential Liability for Acts of Servants A major factor affecting the legal classification of a hired person is the degree of control wh ich an employer has over his employee. An employer has the greatest right of control over the Sel'1'Wl/. A general farmhand whose work is either supervised by the employer' or completed by following the employer's detailed instructions may well be classified as a servant. The relationship here is legally referred to as a . 'rna.I'ter-servant" relationship.A farm employer can be held liable for damages to third Farm employers are legally responsible for the personalparties caused by the negligent acts of his or her employees on injuries or property damages caused by employees who are a strict liability basis. regardless of the innocence of the acting as servants. However, the servant must be acting em~loyer. Circumstances under which a farm employer may within the scope of his employment at the time the injurybe hable for the acts of his employees are as follows: occurs. This type of liability placed on the employer or• One of your farm workers kills a neighbor's cow with a "master" is referred to as vicarious liability. In the first caserock in attempting to remove her from your corn field. Can cited in the introduction of this guide, the farm worker whoyou be required to reimburse your neighbor for the value of killed the neighbor's cow probably would be classified as a the cow? servant, and, therefore, the master (employer) wOlJld be held • Assume you give your farm manager $50 with instruc­liable for the act of his servan t.tions to buy two new tires from a local service station you It is important to point out that the employer in the first have dealt with before. Ifhe keeps the money and has the tires example may be held liable for the act of his employee evencharged to your account, can the service station owner force though he had not told his employee to drive cows from theyou to pay this bi](? fields by throwing rocks at them. In fact, he may have• You hire apilot to spray your row crops with a weed and dlscouraged this practice. It is not necessary for the employerinsect killer. If the drifting spray damages your neighbor's to have instructed his employee to do the very act that caused property, are you liable? the injury. If this were the case, few employers would ever beThe employer's liability under these three cases is deter­ held vicariously liable. It is only necessary to find that themined by the legal classification of the person employed. Such servant was acting within the scope of his employment when persons may be grouped into three categories: servants, the injury occu rred in order to hold the master liable. agents or independent contractors. These legal classifica­The issue of whether the employer is indeed a "servant,"tions are defined as follows: and whether the servant was acting within the scope of hisServant. If the employer has the right to direct and control employment at the time of the injury are both questions to be the physical manner by which the hired person performs his resolved by the jury during a trial. This is often a difficult tasks, that hired person is a servant. task, and the determination of these issues may vary from Agent. An agent is a person hired with authority either to case to case as the facts differ. (I) transact busin'ess or (2) manage certain affairs for his employer. Potential Liability for Acts of AgentsIndependent Contractor. An independent contractor is a person contracted to do a certain job according to his own An employer has a lesser degree of control over a person methods. classified as an agent. An agent is a person with authority The purpose of this guide is to provide information either to (l) transact business or (2) manage certain affairs for regarding some of.the farm employer's liabilities for persons his employer. The employer-employee relationship, in the In the legal categones as defined above. Since only the general case of agents, is legally referred to as a "principal-agent" legal concepts are cited, this publication is not intended to relationship. For example, a farm manager who makes replace the services of a competent attorney when you are business decisions for his employer could be classified as an faced with a specific problem. agent. 451 Archive versio -- S extension.issui.eduAn employer is responsible for his agent's acts committed while' 'within the scope ofhis authority." There are basically two distinct types of authority-actual authority and apparent authority. If the agent carries out express employer direc­tions, then the employer is responsible for the agent's acts since they are within the scope of his actual authority. For example, if the employer instructs his agent to buy tires for him, the employer would be obligated to pay for them when the agent carries out these orders. An example of apparent authority might be the second case cited in the introduction. The employee may have had authority to purchase tires on credit on several occasions. Even if the employee keeps the money on this occasion, it would probably reasonably appear to the tire dealer that your employee was authorized to make this credit transaction because of previous credit purchases. Since your agent appears to be with in the scope of his authority, you may be liable for his acts regardless of whether he actually had been authorized to purchase the tires on credit. To protect yourself in this situation, it would be necessary for you to contact the tire dealer, informing him that your agent no longer has the authority to bUy tires on credit. It may not be clear if a given transaction is made with "apparent" authority. The rule that "you deal with an agent at your own peril" is often staled, because apparent authority exists to the extent that it is reasonable for the person (in our example, the tire dealer) dealing with the agent to believe that the agent actually is authorized to conduct certain business. This means the tire dealer is dealing with the agent at his own risk. Under this rule, if the agent does not have the purported authority, the tire dealer isthe party who must stand the loss. Thus, the dealer has a duty to contact the employer ifhe is in doubt.·Because of the complex nature of this area of the law, it is difficj,)lt to make generalizations. Specific questions should be directed to your attorney. Under some circumstances a contract made by a per­son claiming to be your agen t may be binding on you, even though the purported agent has no actual or apparent author­ity to make such a contract. In order to be bound, you must be aware of all material facts and, either by words or conduct, rallIy the purported agent's act. This is another area where you shou Id contact your attorney before completing any deal. Potential Liability for Acts of Independent Contractors The employer has the least amount of control over an independent contractor. As defined, the independent con­tractor is hired to do a certain job. In contrast with the servant, the employer has minimal control over the manner in wh ich an independent contractor completes a job. As a general rule, an employer is not responsible for the acts of an independent contractor. There are important exceptions to this general rule which make the employer liable for the acts of independent contrac­tors. These exceptions are: • negligently selecting an independent contractor: • furnishing the contractor with faulty plans or specifica­tions: or • hiring a contractor to perform a task which is inherently dangerous. The first exception flows from general negligence law. Selecting a known incompetent as an independent contractor increases the chances that someone may be injured during the course of the job. Therefore, an employer remains directly responsible to those injured if he hires an incompetent contractor. Secondly, if your building collapses, then you are liable for injuries to third persons if you gave the contractor deficient specifications which caused the building to collapse. The third exception recognizes that some tasks are simply inherently dangerous. An employer is not allowed to avoid liability for injury or damage by delegating such tasks to a contractor. Rather, the employer remains fully liable, unless an agreement is made with the independent contractor whereby he knowingly agrees to accept all responsibility for harm done, and to indemnify the employer for all losses. An example of an inherently dangerous task might be the aerial spraying situation set out in the third case at the beginning of this guide. Of course, an employer also remains responsible for his own negligent acts which cause injury to others during the time an independent contractor is completing h is task. For example, if the employer in our aerial spraying example had negligently failed to warn the pilot of special hazards or dangers like power lines across the field and the pilot was injured as a result of th is lack of knowledge, the employer might be directly responsible for the contractor's injuries and the damages he caused. Where the Ultimate Liability May Fall Even if you as an employer should be held liable for an employee's conduct, the ultimate liability for the damage or injury is upon the employee. The wrongdoing employee must indemnify (repay) the employer for any payments made for damages and i'ljuries. However, an employee may be "judgment proof." That is, he has few or no assets with which to pay a jUdgment rendered against him. Therefore, the aggrieved party may sue the employer because he has "deeper pockets." Quite often an employer may have sufficient assets to pay a judgment where his employee does not. If you are sued as an employer in a "master-servant" relationship situation, you can bring your servant or employee into the su it as a "th ird-party" defendant. Since the employee is also a party to the lawsuit, a determination that you are responsible for his act also will requ ire the conclusion that the employee is ultimately liable. Thus, if the employee later acqu ires money, he could be required to reimburse you for your expenses. Employee Classification Can Change The legal classification s for employer-employee relation­ships can change qu ite often. It is possible that you may have one person who serves in the capacity ofa servant, an agent and an independent con tractor all in the same day. Thus, the factor determining liability for an employee's conduct is the legal classification existing at the time of damage or injury. Injuries to Employees Every farm employer also has a responsibility to see that his employees are free from physical harm in the performance of their duties. For example, suppose your employee is pJow­ing with a tractor which has a defective lift. The plow falls on his foot, causing severe injuries. In this case, you knew that the lift was defective and even had promised to repair it. Are you liable for his injuries? An Illinois court said yes in the case of Fox vs. Beall, 314 III. App. 144(1942). The rules which determine responsibility for your em­ployee's injuries fall into two distinct categories: (I) coverage by worker's compensation insurance and (2) no such cover­age. 451 Who is Required to CarryWorker's Compensation? Missouri amended its worker's compensation laws as they affect farm labor in 1978. Before this amendment, employers offarm labor were required to carry the insurance if they had more than five employees and a total annual payroll in excess of$2,500. The /978 taw exempts employers oj/arm tabor}i-om carrying worker's compensation insurance. Employers of non-farm labor are required to carry worker's compensation insurance if they have five or more employees. If laborers work more than 5Y.! consecutive work days per year, then each counts as an employee. Family labor, including minors, may be counted. What are the Pros and Cons of Coverage? The Farmer-Employer. By voluntarily choosing to carry worker's compensation insurance, farmers are offering their employees the fringe benefit of assured compensation for farm accidents. In times when good hired labor is difficult tofmd, worker's compensation coverage is another attraction to offer laborers. At the same time, farmers are limiting their liability for farm accidents to the coverage under the insurance policies-no further action can be taken against the farmer-employer, However, if the employee's injury or death is caused by the employer's failure to comply with any safety statute, then the compensation or death benefits may be increased by IS per­cent. Although cost to the employer is a negative aspect of worker's compensation insurance, the cost for such insurance is an income tax deduction. ~ The Employee. Under worker's compensation insurance, the primary disadvantage to the employee is that compensa­tion is limited to the maximum set out by the policy. But this is offset by the advantage to the employee of usually assured compensation for job injury. However, if the employee wilt­jillty inflicts injury or commits suicide, compensation will be denied. Also, if the employee's injury is caused by his or her willful failure to use safety devices provided by the employer or by his or her failure to obey work rules that the employer has posted conspicuously, the compensation or death benefits will be reduced by IS percent. The premiums for the insurance must be paid by the employer. The statute forbids the employer from charging employees for any part of the insurance premiums. The pre­miums are approximately 4 to 6 percent of the total payroll. For example, consider the employer with one full-time employee and four part-time helpers who qualify as employ­ees (work more than SY.! consecutive work days per year). If the premium rate were $S.33 per $100 annual payroll, a total payroll of $IS,OOO would cost the employer about $800 in premiums. In light of the liability protection for the employer, this cost may be reasonable. Thus, employers may want to consider voluntary coverage by worker's compensation in­surance. No Worker's Compensation Coverage If you do not carry worker's compensation, your legal responsibilities to employees who are injured while working for you are governed by the general court-made law of the state. Basically, you can be held liable when the injury of your employee is caused by your negligence. The negligence can be either an affirmative act that a reasonable person would not have taken in the same or similar circumstances; or, a failure to take an action that a reasonable person would have taken in the same or similar circumstances. The common law ou tlined certain duties that an employer must take for the protection of employees. These protective measures included: • the duty to provide a safe place to work; • providing safe appliances, tools and equipment; • the duty to give warnings of dangers about which the employee might reasonably not know; and • the duty to make and enforce rules for the conduct of employees which would tend to make the work safer. Without coverage under worker's compensation, the em­ployee may not recover damages for an injury simply because it occurred as a result of a work-related accident. The em­ployee must prove that the injury was caused directly by the negligence of the employer. It is also important that the em­ployee did not contribute through his or her own negligence to the accident which caused the injury. Nor can the employee recover if the jury finds that he or she "assumed the risk" of the injury-causing activi ty. However, the farm employer should be aware that, unlike coverage under worker's compensation insurance, the dam­ages a jury may award to an injured employee not under worker's compensation are not limited by a statutory sched­ule of benefits. Rather, the amount of damages to be awarded to an injured employee are assessed by the particular jury deciding the case. Because these jury awards may be very high, it is important for the farm employer to carry some type of liability insurance to cover injuries to employees. Although at first glance it may seem difficult for employ­ees to prove that the negligence of their employer caused their injury, employees often do recover large money judgments against negligent employers. The farm employer should con­sider this important factor before deciding against worker's compensation coverage. Summary There are circumstances under which you are responsible for the acts of your employees. Your liability varies depending on whether you and your employee have created a master­servant, principal-agent, or an employer-independent con­tractor relationship. The master-servant relationship usually exists when an employee performs a task requiring no particular training. Here the employer has a high degree of control over the worker's activi ties and is responsible for employee-inflicted injuries when they occur within the scope of the servant's employment. The principal-agent relationship usuaUy exists when you hire someone to transact business on your behalf or otherwise represent you in your affairs. You are liable for contract damages or losses suffered because of your agent's acts if he or she acts within the scope of actual or apparent authori ty. The employer-independent contractor relationship exists when you hire someone who has full control over the physical manner in which the work is done. As a general rule, you are not liable forthe acts of an independent contractor. However, you may be liable for injuries he or she inflicts on others if (I) you are negligent in the selection of the independent contrac­tor; (2) you furnish faulty plans or specifications; or (3) you hire an independent contractor to perform an inherently dan­gerous task. You also may be responsible for injuries suffered by em­ployees. The extent of your personal liability depends on whether you carry worker's compensation insurance. If you are not under the protection afforded by worker's compensa­tion insurance, your actions are governed by the rules of the common law. It is necessary, therefore, for you to carry some 451 type of liability insurance to cover the injuries of your em­ployees to protect yourselffrom possible high damage awards set by ajury. Other Information The material contained here is only a general statement of the law. Therefore, if you have specific questions, you should discuss them with your attorney. This guide discusses only liability for the acts of your employees and for injuries suf­fered by your employees. If you have questions about injulies suffered by "guests" while on your property, see UMC Guide 452. Information about your liability for personal inju­ries or property damages caused by your domestic animals is contained in UMC Guide 453. Guide 460 provides more information about worker's compensation insurance for farm­ers and their employees. You may get these guides at county UM Extension Centers. • Issued in furtherance of Cooperative Extension Work Acts of May 8 and June 30, 1914 in cooperation with the United States Department of Agriculture. Leonard C. Douglas, Acting Director, Cooperative Extension Service, University of Missouri and Lincoln University, Columbia, Missouri 65211. • An equal opportunity institution. 451 Revised 7/80/12M 

Liability of farm employers (1980)

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