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Culling a contract company - are you a clever consumer?

MANY GUIDES HAVE BEEN WRITten for selecting a good contract security firm. Many, if not most, are produced by contract security firms themselves. However, it would be unwise for clients of these companies to rely on these firms to determine what constitutes acceptable job performance by their personnel. This practice would be like allowing employees to set their own performance standards and conduct their own evaluations.

Clients of contract security firms have the responsibility to monitor them because even reputable firms can make costly mistakes. Some clients rely too heavily on the general terms of a security contract and develop a false sense of security from liability. This false sense of security stems from the general rule in tort law that an employer of an independent contractor such as a contract security firm is not liable for the negligent acts committed by that independent contractor or its employees.

However, for every rule there is an exception. The following exception directly affects the security profession: Where the work to be performed is inherently dangerous, duties commensurate therewith cannot be delegated to an independent contractor so as to relieve the delegator of liability.

Take, for example, Dupree v. Piggly Wiggly SHOP Rite Foods Inc. The grocer contracted for security services from the firm to protect it from retail theft. An incident occurred between a security officer and a patron of the grocer that resulted in a suit for false imprisonment and malicious prosecution.

The court in Dupree cited the general rule and exception mentioned earlier. The court was left to resolve whether the work of guarding property from shoplifters is inherently dangerous so that it constitutes a dangerous, nondelegable duty to the owner.

The court decided the security work itself was not automatically considered inherently dangerous. Whether an employer (client company) was to be held liable depended on its knowledge of the danger inherent in the work or on a finding that a reasonably prudent man should, in the exercise of due diligence, have known of such dangerous work

According to the court, Public policy requires [that] one may not employ or contract with a special agency or detective firm to ferret out the irregularities of his customers or employees and then escape liability for the malicious prosecution or false arrest on the ground that the agency and/or its employees are independent contractors.

The court, in clear and stem language, found exception to the general rule by holding clients of security services responsible. The court could have used the exception of inherently dangerous work and applied that standard to the facts in Dupree. Instead, it chose to emphasize that client liability exists. The result in this case is that a client may not escape liability by hiring an independent contract security firm. The degree of care required by a client in selecting a contract security firm is that which a reasonable man would exercise under the circumstances of each individual case.(6) This general rule applies to all clients and employees of contract security firms.

MANAGEMENT HAS ONLY DONE half its job once it selects a contract security firm. Monitoring the firm's performance is just as important. The client company must ensure the guidelines it used in making its decision are adhered to. This attention is important not only to ensure it receives its money's worth but also because it is still responsible for any legal problems brought on because of the contractor's negligence. Numerous articles have been written stating that the client company should present its requirements and performance standards to the contractor, attend the contractor's training sessions, meet with its operations personnel, and examine its reports and records for audit or inspection purposes. But the client still needs a more proactive approach. Proper monitoring of the contractor by a client can be more cost-effective in the long run.

For example, in Welsh Manufacturing Division of Textron Inc. v. Pinkerton's Inc., Welsh contracted with Pinkerton's to provide security services for its manufacturing plant. Welsh, a manufacturer of gold sunglasses, kept large quantities of gold on-site.

Pinkerton's placed a new guard at the plant without investigating his work history or personal data and without training him. Also, during the guard's short employment with Pinkerton's, the company had problems with his behavior and honesty. The guard was later found to be a coconspirator in connection with thefts in the plant. Welsh sought recovery against Pinkerton's based on negligent guard hiring, training, and supervision.

An employer has the duty to exercise ordinary care in hiring persons who, because of the nature of the employment, could present a threat of injury to the public. The scope of an employer's preemployment investigation is related to the degree of risk a potential employee poses to a third party.'

The definition of ordinary care depends on the facts in each case. The greater the risk of harm, the higher the degree of care necessary to constitute ordinary care. In Welsh, a high risk of harm to the client and significant loss of property existed. Pinkerton's was hired to protect against these risks. It was thus required to hire honest, trustworthy, and reliable personnel for this sensitive job.

Pinkerton's duty did not end at the hiring stage; there is also a duty to retain only those employees who are fit and competent. Pinkerton's lacked proper preemployment screening skills and did not consider the type of job in which the employee would be placed. Once the officer's honesty and trustworthiness were questioned, Pinkerton's should have reconsidered having him guard gold. Pinkerton's lack of care resulted in the loss of over $200,000 in gold.

Simmons Inc. v. Pinkerton's Inc. is a clear example of improper training and supervision by a contract security firm. Simmons, a manufacturer of residential and commercial bedding, contracted Pinkerton's to provide guard protection seven days a week, 24 hours a day. The contract said Pinkerton's would "ensure a professional, reliable, and efficient effort to protect its client's property and personnel against security hazards. "

Pinkerton's explicitly accepted liability for all acts of negligence, fraud, or dishonesty on the part of its employees in performance of their duties but disclaimed any other liability. Pinkerton's also claimed its employees were trained both in security and fire protection.

Unfortunately, the guard assigned by Pinkerton's to Simmons's warehouse was hired without undergoing a background check and was not trained in fire protection. When a fire started in the warehouse, the guard attempted to put it out, but he was unsuccessful since he was not trained to use the equipment available. Extensive fire and smoke damage consequently occurred in the warehouse.

Evidence uncovered during the investigation indicated the guard had intentionally set the fire. Simmons filed suit against Pinkerton's for breach of contract to provide fire protection and security services and negligence in failing to use reasonable care in selecting, training, and supervising its personnel.

The court found for Simmons since Pinkerton's was in breach of contract for failing to provide fire protection and personnel supervision. Pinkerton's could also be liable under the respondeat superior theory-since the guard's actions were negligent, Pinkerton's was liable for his actions committed within the scope of his employment there.

The court also found negligence in the hiring procedures used by Pinkerton's. A background check would have uncovered several relevant facts about the individual: He was discharged from the army after going AWOL several times, had been fired from several other jobs, had previously been employed by Pinkerton's but was fired for missing work, had received criminal charges for driving with liquor in the car, and had written several bad checks.

Monitoring a contract security firm's hiring and training procedures alone is not enough. The client company should also monitor other factors to protect it from possible liablity. The accompanying chart is not an all-inclusive list of these factors but rather a sample.

The courts are not trying to impose standards that will make an employer an insurer against harm. Under the circumstances, the standard of reasonable and ordinary care requires an independent contractor to at least minimally scrutinize the persons it evaluated under the same standards.

The circumstances in which contract security firms operate call for reasonable background checks on all potential employees. If the contract security firm offers protection from loss of property to a client where high risk is involved, a higher standard should be imposed on the employer in evaluating reasonable care taken in providing those services.

Simmons and Welsh are both cases where the client company sued the contract security firm for negligence. Yet, a suit could be brought against the client if a third party was injured by actions of the contract security firm's employee. The same standards for contract security firms in hiring could be evaluated in a case of negligent hiring by the client. As Dupree indicates, the courts hold client companies of contract security services responsible.

Corporations will always try to maximize profits. However, management needs to realize that maximizing profits at the expense of security may not be a cost-effective step. The cases mentioned earlier indicate that cutting corners may actually cost much more than the time and dollars invested in a sound security program. Corporations need to heed the lessons learned by others.

About the Authors . . . Julie Gilmere and John Chuvala III, CPP, are both assistant professors in the Law Enforcement Administration Department at Western Illinois University in Macomb, IL. Robert J. Fischer, PhD, is a professor and chairman of the Law Enforcement Administration Department at Western Illinois University and is the senior editor for the Journal of Security Administration. Chuvala and Fischer are members of ASIS.

Factors to Monitor in Working with a Contract Security Firm

EMPLOYEE SELECTION. THE 19 client should have a say in the contractor's employee selection process, specifying applicants' minimum age, education, and experience. The client should also request that all personal references and past employers be checked and made available to the client. The client should also have the final say as to whether an applicant is hired based on reference checks and personal interviews.

Training. The client should not only examine a contractor's training materials and sit in on training classes but also review all copies of training files, materials, and results. In addition, the client should require the training to be done before a person works at a post. Pressure to fill open posts is often great. However, a costly mistake could be made if an individual were put on a post without being prepared. Standards and coverage. The client should set standards for the contract security personnel on a post-by-post basis. For example, all security personnel should be prepared to conduct investigations and write reports. These skills can save money in the event of litigation.

Billing. The client should be sure all hours billed are verifiable and that no posts are unstaffed. It should also check that salary increases and raises are correct to protect both parties.

Supervision. The client should inspect the contractor's officers and their performance independently of the contractor. The contractor should also be accountable for its own inspections.

Also, the client's upper-level managers should be educated in the theory and practice of security. If this education is not feasible, this responsibility should be delegated to someone who has the necessary time and knowledge. The use of an in-house director and supervisors would give the client company more control over the security operation.

Equipment. Vehicles, radios, and any other equipment should be checked to see they are in good working order, and all personnel must be trained to use them properly.
COPYRIGHT 1990 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes related information; selecting a good contract security firm
Author:Gilmere, Julie; Chuvala, John, III; Fischer, Robert J.
Publication:Security Management
Date:Mar 1, 1990
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