Tennessee Court Studies Independent Contractor Rules

In Rogers v. Hadju, No. W2016-00850-COA-R3-CV (Tenn. Ct. App. Mar. 22, 2017), the Court of Appeals affirmed summary judgment in a negligence case, finding that defendant companies could not be held liable for the actions for what was determined to be an independent contractor.

Ford Construction was hired by the state to perform road construction. Ford subcontracted with Traf-Mark Industries for part of the work; Traf-Mark subcontracted with Kerr Brothers; and Kerr Brothers subcontracted with RDH Contracting. On the job site, an employee of RDH Contracting was backing up a truck when he hit an employee of Ford Construction. The injured Ford Construction employee filed this negligence suit against Traf-Mark, Kerr Brothers, RDH Contracting and the driver, arguing that the defendant companies were vicariously liable for the incident because the driver of the truck “was acting in the scope of his employment with them at the time of the incident.”

Traf-Mark and Kerr Brothers filed a motion for summary judgment, asserting that they were not liable for the driver’s negligence because RDH Contracting and the driver were independent contractors. The trial court granted summary judgment, and the Court of Appeals affirmed.

In Tennessee, “the doctrine of respondeat superior permits a principal to be held liable for the negligent acts of its agent.” (internal citation omitted). “While an employer may be held liable for the negligence of its employee, however, they are generally not liable for the negligence of independent contractors.” (internal citation omitted). When determining whether an employment or independent contractor relationship exists, courts should consider “(1) the right to control the conduct of the work, (2) the right of termination, (3) method of payment, (4) whether or not the worker furnishes his own helpers, (5) whether or not the worker furnishes his own tools, (6) self-scheduling of working hours, and (7) freedom to render services to other entities.” (citing Goodale v. Langenberg, 243 S.W.3d 575 (Tenn. Ct. App. 2007)).

Here, plaintiff argued that a trial was necessary to determine whether defendants were employers or contractors. Plaintiff pointed out that the contracts at issue did not specifically state that the defendant companies were hiring RDH as an independent contractor. Plaintiff also argued that the contracts, which gave the party hiring the other company “the sole authority to determine the acceptability or unacceptability of the work,” meant that Traf-Mark and Kerr Brothers were retaining a “right to control” the subcontractors’ work, making the relationship an employer/employee one. The Court, however, rejected these arguments.

The Court reasoned:

Although the contracts in this case do not define RDH Contracting and its employees as independent contracts, they do not define them as employees either….Additionally, the contracts in this case do not afford Appellees the sort of control over RDH Contracting and its employees necessary to establish an agency relationship. The mere fact that the contractor reserves the right to supervise the work to ensure that the end result conforms to the plans does not make the subcontractor an employee when the contractor does not control the actual conduct or method of work. Appellees retained control over the commencement, speed, and sequence of RDH Contracting’s work to ensure that it conformed to the project as a whole, but they did not retain control over the actual conduct or method of RDH Contracting’s work. Likewise, the fact that a contractor may breach its contract with a subcontractor by terminating its services is not equivalent to the unconditional right to terminate the subcontractor or its employees without cause. Here, Appellees did not retain a unilateral right to hire or terminate RDH Contracting’s employees. …Appellees did not pay RDH Contracting or its employees. Rather, Kerr Brothers paid RDH Contracting, who in turn paid its employees. RDH Contracting was required to ‘procure and furnish all materials, labor, supervision, equipment, facilities, licenses, and permits’ necessary to perform the work. Finally, the contracts between the parties did not prohibit RDH Contracting from self-scheduling its hours or rendering services to other entities.

(internal citations omitted). Accordingly, summary judgment was affirmed on the basis that the driver of the truck and RDH Contracting were independent contractors, and that Traf-Mark and Kerr Brothers were thus not responsible for the driver’s purported negligence.

This case offers a fairly thorough explanation of the facts a court will consider when determining whether the relationship between parties was one of employer/employer or an independent contractor situation.