Independent Contractors – Are They Really Worth It? Can You Afford the Risk?

Written by Robert G. Brody and Rebecca Goldberg on December 19, 2011

Hiring temporary workers through a staffing agency may be an efficient and cost-effective way to provide staffing for your business.  But if the worker gets injured on the job, your business can be on the hook for substantial costs because you will not be protected by the workers’ compensation system.

Pyramid, a construction company responsible for building a Super Stop & Shop in Canaan, Connecticut, recently agreed to pay $11.35 million to a temporary worker injured in a horrific accident.  In 2006, temporary worker Benjamin Wohlfert became paralyzed after plunging 25 feet from a forklift while following the orders of the foreman, Gerald Bates.  Bates’ supervisor at Pyramid had warned him against using that kind of forklift for elevating people.  Wohlfert and Bates were temporary workers employed by two different staffing agencies.

Typically, an employee can only collect through the workers’ compensation system and may not sue the employer in court.  But, because Wohlfert was not Pyramid’s employee, the workers’ compensation system did not preclude him from suing Pyramid.  Wohlfert also sued Bates and the company that employed him.  His total payout could exceed $23 million.  To top it off, Pyramid was fined for violating OSHA rules regarding the types of devices that can be used to lift workers.

How can your company avoid becoming the next Pyramid?  First, carefully consider the pros and cons of using independent contractors.  Several studies have shown that temporary workers carry a higher risk of occupational injury than their permanent counterparts.  Temporary workers often have less training and experience than permanent ones.  This is an especially important consideration if your industry is a hazardous one, such as construction.  If you choose to use temporary workers, make sure you provide appropriate training and supervision and that you comply with workplace safety requirements.  In addition, you may be able to claim the protections of the workers’ compensation system if the staffing agency has an alternate employer rider on its policy, which is designed to list you and cover you if a workplace injury occurs.  While eight-figure settlements are certainly not the norm, catastrophic injuries can occur in any workplace and those who use non-employee workers must know and manage the risks.

Brody and Associates regularly advises management on all employment issues involving workplace safety matters, including OSHA compliance.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

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Related Topics: Legal Updates, Workplace Safety

About the Authors

Robert G. Brody is the founding member of Brody and Associates, LLC. He has been quoted and published in national publications and appears as a guest T.V. commentator on contemporary Labor and Employment issues. Learn More