Third Party Liability in the New Economy

On Behalf of | Dec 13, 2015 | Personal Injury

Several months ago, a leading presidential candidate discussed the emergence of the so-called “gig economy” and its impact on the American capitalist system. These comments came shortly after the release of a 2014 study which found that one in three American workers are freelancers.

This development has significant implications in labor law, as the National Labor Relations Act states that only employees have the right to collectively bargain on issues like wages and benefits. This development also has a bearing on truck crashes and other negligence cases, because the question of “employee or contractor?” is becoming more difficult to answer.

Elements of Respondeat Superior

This third party liability theory applies when a tortfeasor (negligent person) is an employee acting within the course and scope of employment. In such an instance, the employer is liable for the plaintiff’s economic and non-economic damages.

The elements are very broadly defined. For example, courts have rather consistently held that any employee who creates even the smallest benefit for the employer is acting within the “course and scope” of employment. For example, a person who drives a company vehicle with a placard benefits the employer by providing advertising, regardless of what the worker is actually doing.

Who is an Employee?

The same analysis applies to a worker’s status. The term is very broadly interpreted; moreover, a worker may be a contractor for IRS tax purposes and an employee for negligence purposes.

Most courts look to the degree of control that the boss exerts over the worker to determine who is an “employee.” Some factors to consider include:

  • Behavioral: Does the company exert control over how the workers do their jobs? The answer is sometimes ambiguous: the boss may assign deadlines and set expectations as to work product, but the workers may choose their own hours.
  • Financial: How is the worker paid? Who is responsible for expenses? Who provides tools and supplies? Again, the answers to different questions often lead to contradictory conclusions.
  • Type of Relationship: Is there a written contract? Is the arrangement for a specific project or for a longer term?

As a rule of thumb, if there is any discernible amount of control, most courts classify a worker as an employee for negligence purposes.

The negligent driver may not be the only person responsible for the plaintiff’s damages. For prompt assistance in this area, contact an experienced personal injury attorney in New Braunfels. We do not charge upfront legal fees in these matters.