Say you are a conscientious developer, general contractor, subcontractor or design professional. Your goals are to build a project and send everyone home afterward in one piece. So you hire professionals to create a safety program to protect the hard-working tradespeople. You also expect that the contracts require workers to be covered by workers’ compensation insurance. These are the right things to do, and they protect you from liability should a worker sustain an injury on the job. Unfortunately, that is not enough.

Accidents Happen

The goal of safety programs is to eliminate accidents. Through inattention or distraction, people can make mistakes resulting in a worker’s injury. Fortunately, workers’ compensation insurance helps workers heal and provides disability benefits. Those benefits, though, compensate a worker for her or his impaired earning capacity while motivating her or him to return to work. They include no compensation for pain and suffering, and no one ever got rich on workers’ compensation benefits alone.

Employer Liability Law

Consequently, injured workers and their lawyers are, with increasing frequency, invoking the Oregon Employer Liability Law (ELL). It was enacted in 1907 (before workers’ compensation insurance was mandated) to protect employees from accidents. Even though workers’ comp insurance covers most employees, the ELL imposes liability for all damages on “indirect employers,” including owners, contractors, subcontractors and others responsible for work involving “risk or danger.” As it has evolved, the ELL allows imposition of liability on an indirect employer who: 1, is engaged with the plaintiff’s direct employer in a common enterprise; 2, retains the right to control the manner in which the risk-producing activity was performed; or 3, actually controls the method in which the risk-producing activity is performed.

The ELL requires indirect employers to use every device and precaution practicable for safety, limited only by the necessity for preserving the efficiency of the structure, machine or apparatus, and without regard to the cost of suitable material and devices. This is more demanding than a negligence claim because an indirect employee arguably need not show that similarly situated entities use such a device. If it exists, it must be used. Injured workers and their lawyers and consultants are imaginative. The key to avoiding an ELL claim lies in avoiding “indirect employer” status in the first place.

Avoiding “common enterprise” and “actual control” is straightforward. An entity might be an indirect employer where it intermingles its work with or controls the actual employer’s means and methods and is thereby involved in the injury-causing accident. Those patterns are less common and insidious than the “right to control” scenario because projects are wellcompartmentalized.

Wherever an owner, general contractor or design professional retains the right to control the work by contract or practice, it becomes an indirect employer and is subject to ELL claims. Recently, this analysis expanded to include all entities with a retained right of control – even where that control does not relate to the work-causing injury. Even an “if you see something, say something” ethos can lead to “indirect employer” status. Even when the indirect employer is not involved in the employee’s injury, the ELL claim may lie if it could have been involved.

Contractual allocation

To avoid a finding of “right to control,” parties must ensure the contract leaves no room for doubt and adhere to the contractual division of responsibility. All parties must bear
responsibility for their own workers’ safety. No party should assume responsibility for anyone else’s safety program, by either contract or practice. Even a subcontractor abiding by the general contractor’s safety measures, or a design professional being responsible for tradespeople’s safety measures, might lead to ELL liability. Fastidious adherence to this separation of responsibility is essential.

Insurance

A competent insurance team can guard against uncovered liability. Some general liability
policies exclude defense and indemnity for personal injury claims. Those policies are
inexpensive for a reason – they leave the insured bare. A good broker’s insurance placement can protect you. Ensure that the cost is built into the project accounting.

Conclusion

I am a defense lawyer. I only litigate these claims in the context of things going wrong. Too frequently, things go wrong when good companies misunderstand each other. Clear allocation of responsibility is essential to workers’ safety, and confronting thorny issues like the allocation of safety responsibility early, even despite difficult conversations or additional expense, is always worthwhile. The most time-consuming, expensive and dangerous claims I have encountered are those in which the parties did not execute a contract or left ambiguity in the contract. Rooting out that misunderstanding from the beginning and ensuring the insurance is sufficient are the only ways any professional can avoid the complication Oregon’s third-party liability laws pose.

Column first appeared in the Daily Journal of Commerce on August 24, 2017.