California clarifies third-party liability for workplace injuries.

Two recent California Supreme Court rulings allow employees of an independent contractor to seek recovery for workplace injuries from the entity that hired the contractor. Critics of the decisions say they create a confusing standard, but plaintiff advocates believe that they clarify earlier rulings. (Hooker v. Dep't of Transp., 38 P.3d 1081 (2002); McKown v. Wal-Mart Stores, Inc., 38 P.3d 1094 (2002).)

Earlier decisions of the California high court had barred many third-party lawsuits because of the availability of workers' compensation.

The court had held that one who hires an independent contractor is not liable for injury to the contractor's employees under the "peculiar risk" doctrine, which imposes liability on one who hires an independent contractor to do dangerous work but fails to protect against its peculiar risks. (Privette v. Superior Court, 854 P.2d 721 (Cal. 1993); Toland v. Sunland Housing Group, Inc., 955 P.2d 504 (Cal. 1998).)

The court reasoned that because the contractor's liability is limited to providing workers' comp coverage, holding hirers liable would unfairly subject them to greater liability than that faced by the contractor, whose negligence caused the employee's injury.

Last year, the court applied the same rationale to bar third-party suits based on "negligent hiring." These cases allege that the hirer failed to use reasonable care to employ a competent contractor. (Camargo v. Tjaarda Dairy, 25 P.3d 1096 (Cal. 2001).)

But the two new cases relied on a different theory--negligent exercise of retained control--to allow possible third-party liability whether or not workers' comp is available.

Justice Janice Rogers Brown, who wrote the majority opinion in both cases, distinguished the previous rulings: It is not unfair, she wrote in Hooker, to impose liability on someone who hires an independent contractor when the hirer retains control over the workplace and its negligent exercise of that control "has affirmatively contributed to the injuries of the contractor's employee."

In Hooker, the plaintiff lost. Paul Hooker, who worked for a contractor hired by the California Department of Transportation (Caltrans), was killed when the crane he was operating tipped over. The crane's outriggers had been retracted to allow construction vehicles to pass by, rendering it unstable. Caltrans safety personnel knew that the crane's outriggers had to be retracted to make room for traffic, and they allowed construction vehicles to pass near the crane.

The court affirmed summary judgment for Caltrans in the wrongful death action brought by Hooker's widow. She had raised triable issues of fact as to whether Caltrans had retained control over safety on the site, the court held, but this was not enough.

"[A] hirer of an independent contractor is not liable to an employee of the contractor merely because the hirer retained control over safety conditions at a work site, but [only] insofar as a hirer's exercise of retained control affirmatively contributed to the employee's injuries," Brown wrote in the opinion. The plaintiff had not raised triable issues of fact on that point, the court held.

In the other case, the plaintiff won. Brian McKown was an employee of a contractor hired by Wal-Mart to install sound systems in its stores. Wal-Mart furnished a forklift for the work, but only one chain on it secured an extension to the vehicle; the platform above the extension was unsecured. After discussing the problem with a coworker, McKown proceeded to use the unsecured platform and was injured when it fell.

In its verdict, the jury allocated fault for the injury among McKown, his employer, and Wal-Mart.

The court affirmed Wal-Mart's liability because even though it had not required the contractor to use its forklift, it had a policy of asking its contractors to use its equipment whenever possible, and the contractor may well have believed that refusing to use the store's equipment would have generated ill will. "By negligently furnishing unsafe equipment to the contractor," Brown wrote, Wal-Mart had affirmatively contributed to McKown's injuries.

What's confusing about this? Nothing, according to plaintiff attorney Morgan Smith of San Francisco, who wrote an amicus brief in Hooker on behalf of the Consumer Attorneys of California, a nonprofit advocacy group.

"It's pretty clear," he said. "It won't be enough to say that a general contractor could have prevented an injury to a subcontractor's employee. There must be some affirmative act and negligence on the part of the general contractor."

The decisions are "extremely important" to plaintiffs in construction accident cases, he added. "There was a lot of conjecture that the California Supreme Court was going to ban all third-party suits in the construction area, because Toland can be read very broadly. But these cases resolve the issue. If a general contractor is negligent, it won't be protected by workers' compensation."