Last Updated June 1, l999
A farm employer can he held liable for damages to third parties caused by the negligent acts of his or her employees on a strict liability basis, regardless of the innocence of the employer. Circumstances under which a farm employer may be liable for the acts of employees are as follows:
Servant. If the employer has the right to direct and control the physical manner by which the hired person performs his tasks, that hired person is a servant.
Agent. An agent is a person hired with authority either to (1) transact business or (2) manage certain affairs for her or his employer.
Independent contractor. An independent contractor is a person contracted to do a certain job according to his or her own methods.
The purpose of this publication is to provide information regarding some of the farm employer's liabilities for persons in the legal categories as defined previously. Since only the general legal concepts are cited, this publication is not intended to replace the services of a competent attorney when you are faced with a specific problem.
Farm employers are legally responsible for the personal injuries or property damages caused by employees who are acting as servants. However, the servant must be acting within the scope of his employment at the time the injury occurs. This type of liability placed on the employer or "master" is referred to as vicarious liability. In the first case cited in the introduction, the farm worker who killed the neighbor's cow probably would be classified as a servant, and, therefore, the master (employer) would be held liable for the servant's act.
It is important to point out that the employer in the first example may be held liable for the act of his employee even though he had not told his employee to drive cows from the fields by throwing rocks at them. In fact, he may have discouraged this practice. It is not necessary for the employer to have instructed his employee to do the very act that caused the injury. If this were the case, few employers would ever be held vicariously liable. It is only necessary to find that the servant was acting within the scope of his or her employment when the injury occurred to hold the master liable.
The issue of whether the employee is indeed a servant, and whether the servant was acting within the scope of her or his employment at the time of the injury, are both questions to be resolved by the jury during a trial. This is often a difficult task, and the determination of these issues may vary from case to case as the facts differ.
An employer is responsible for his agent's acts committed while "within the scope of his 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 within 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 stated, 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 is the party who must stand the loss. Thus, the dealer has a duty to contact the employer if he is in doubt. Because of the complex nature of this area of the law, it is difficult to make generalizations. Specific questions should be directed to your attorney.
Under some circumstances, a contract made by a person claiming to be your agent 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 he aware of all material facts and, either by words or conduct, ratify the purported agent's act. This is another area where you should contact your attorney before completing any deal.
There are important exceptions to this general rule which make the employer liable for the acts of independent contractors. These exceptions are:
Secondly, if your building collapses, then you are liable for injuries to third persons if you gave the contractor deficient specifications that 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 publication.
Of course, an employer also remains responsible for her or his own negligent acts which cause injury to others during the time an independent contractor is completing his 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 this lack of knowledge, the employer might be directly responsible for the contractor's injuries and the damages he caused.
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 suit as a "third-party" defendant. Since the employee is also a party to the lawsuit, a determination that you are responsible for his act also will require the conclusion that the employee is ultimately liable. Thus, if the employee later acquires money, he could be required to reimburse you for your expenses.
The rules that determine responsibility for your employee's injuries fall into two distinct categories: (1) coverage by worker's compensation insurance and (2) no such coverage.
In times when good hired labor is difficult to find, 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 15 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 willfully 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 15 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 5-1/2 consecutive work days per year). If the premium rate were $5.33 per $100 annual payroll, a total payroll of $15,000 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.
The common law outlined certain duties that an employer must take for the protection of employees. These protective measures included:
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.
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 activities and is responsible for employee-inflicted injuries when they occur within the scope of the servant's employment.
The principal-agent relationship usually 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 authority.
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 for the acts of an independent contractor. However, you may be liable for injuries he or she inflicts on others if (1) 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 type of liability insurance to cover the injuries of your employees to protect yourself from possible high damage awards set by a jury.
Issued in furtherance of Cooperative Extension Work Acts of May 8 and June 30, 1914, in cooperation with the United States Department of Agriculture. Ronald J. Turner, Director, Cooperative Extension Service, University of Missouri and Lincoln University, Columbia, Missouri 65211. • University Extension does not discriminate on the basis of race, color, national origin, sex, religion, age, disability or status as a Vietnam-era veteran in employment or programs. If you have special needs as addressed by the Americans with Disabilities Act and need this publication in an alternative format, write ADA Officer, Extension and Agricultural Information, 1-98 Agriculture Building, Columbia, MO 65211, or call (573) 882-8237. Reasonable efforts will be made to accommodate your special needs.