Practice of Business and Ethics- Extent

Added on - 13 Sep 2019

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Practice of Business and ethics- extent to which the employer can be held liable for the acts of anindependent contractorThe question of the ‘course of employment’ and ‘within the scope of the duties’ when given a widedefinition includes delegation of authority, regular employment or hiring of independent contractorson work to work basis. Although the procedural and the substantive laws binding the principle ofrespondeat superior,in a strict sense, is[ CITATION WHA61 \l 1033 ]not binding between theemployer and an independent contractor, the question of vicarious liability arises between the two,making the employer liable for the acts of the independent contractor under certain circumstances.When the principal who directs another to act in a particular manner, it is expected that he takesreasonable care and caution in supplying proper goods and ensuring that the deliverables are fittedas per safety guidelines; whosoever, he may choose to employ. In this case, the corporation hadsupplied the widgets to Texas Customer as per the specifications and had given clear instructions toLyle to proceed with the installations of the widgets. However, due to sheer negligence the lastwidget installed by Lyle gave way causing suffering and injury to the Texas customer.This report analyzes whether the Widget Corporation is liable; and, if so to what extent and limit.Since the business involves a number of ethical issues, it is vital to understand whether thecorporation has acted in an ethical manner and in accordance with the principles of business andethics. This report also analyzes whether this issue can be resolved in an equitable manner and inaccordance to the terms and conditions acceptable to both the corporation and the Texas customer.Issues the company will faceIf the company is liable for the tort committed due to the negligence of independent contractor,during the scope of employment?Whether the company had given clear instructions pertaining to installation and inspection ofwidgets to Lyle?Whether the company has supervised and overlooked the installation and made sure that thewidgets installed by him are fit for use and safe consumption of the customer?Whether the corporation had taken reasonable care before employing Lyle as contractor forinstallation of widgets?Liability of the employer for the negligence of the independent contractorAs a long established doctrine ofrespondeat superiorthat the employer of an independentcontractor is immune from vicarious liability for damages to a third party for the negligent acts ofcontractor, committed during the performance of the agreement.§409,[ CITATION Wil84 \l 1033 ]of the Law of Torts,state the general Law principles governing the employer and independentcontractor wherein, the principals are not liable for the torts and acts of independent contractor.However, in case where the where the principal has provided specifications for the independentcontractor’s procedures and processes, the principal is made liable. The independent contractor hasto follow the instructions of the principal, which will also entail liability to the principal.[ CITATIONMar15 \l 1033 ]In other words, the independent contractor steps into the shoes of the principal to
carry out the duties as perthe instructions given by the principal. For which reason, the same has tobe carried out by use of reasonable care, caution and understanding.In this case, Lyle has carried out the specific instructions given by the contractor, which hefailed to follow; as a result of which the injury was caused. The principal is liable as it was hisduty to oversee and supervise that the work is carried out in the manner in which it has tobe carried out.The relation between employer and an independent contractor presupposes that the employer hasto regularly inspect the work of the independent contractor to make sure that it is being performedin accordance with the contract specification. Such supervision is a part of the employer’s duty andwill not change the worker’s status as an independent contractor[ CITATION Rog14 \l 1033 ]. This isall the more so, when there is reasonable danger that canbe expected such as this case. In the caseof Bower v Peate, (1876) it was held that “ a man who orders a work to be executed, from which inthe natural course of things, injurious consequences must be expected to arise, unless means areadopted by which such consequences may be prevented, is bound to see to the doing of that whichis necessary to prevent the mischief and cannot relieve himself of his responsibility by employingsomeone else to do what is necessary to prevent the act he has ordered to be done from becomingwrongful ” this holds true whether the person is an independent person, or a contractor or anemployee. Similarly, in the case of Privette v. Superior Court (Contreras) (1993) it was held that aperson engaging the services ofan independentcontractor to perform work that is inherentlydangerous can be held liable for tort damages when the contractor's negligent performance of thework causes injuries to others.Ethically speaking, Widget Corporation owed a duty of reasonableness and care towards thecustomer that necessarily entails supervision during the course and after the installation.Having failed to adhere to the basic checklist that is required of every employer, thecorporation has failed to exercise its duty of due care and reasonableness.In determining whether the employer can be held responsible for he acts of the independentcontractors, it is vital to examine the nature or work and the relationship binding the two. Althoughthe rules are prescribed by the IRS, similar parameters are adopted to measure the nature andextent of the liability of the employers over independent contractors.[ CITATION IRS161 \l 1033 ]The criteria used by the courts in determining whether a worker has the status of an employeeinclude the following questions:How much control can the employer exercise over the details of the work?- in this case, it isthe corporation which has the wherewith alls with respect to the installation methods,stating considerable control over the details of the workUnder whose direction and instructions is the work being carried out?- in this case,employer’s direction is a must signifying employee statusWhether the employer supplies the tools with respect of work?-since it is the corporation inthis case, it signifies the status of employee[ CITATION Rog141 \l 1033 ]Lyle having committed this act of negligence during the course of his business with thecorporation also fulfills all the above parameters required for independent hiring of contractorsfor which the principal can be held liable.
Adding to the above points in determining the control, an employer-contractor agreement providesthe evidence of extent of control. The contract gives an input into the contractor’s methods byrequiring the contractor to carry out his work as per the terms and conditions specified by theemployer. The requirements for such determination have been laid down in Joseph v Hess Oil(2011), where it has been held that the contract though, is not a conclusive proof; can prove to be asufficient proof in determining control of an employer on the independent contractor.The employer-contractor relationship which exerts significant control over the details of the workshows a typical employer-employee relationship, as against the one who controls the more generalprocess by which the assignment is accomplished- who can be termed as an independent contractor.[ CITATION Maj59 \l 1033 ]The level of autonomy, the language of the contract is a determinativefactor in assessing the relationship between the two. Applying the factors determining the relationbetween the employer and independent contractor to this case, it can be established that theCorporation had control over the methods of installation and the tools involved for the process. Thewherewithal of the manner in which the widgets are installed is determined and exercised by theCorporation, which goes to prove that the employer is liable for the acts of the Lyle to the extent ofthe job undertaken by him.Defenses that the Corporation may take-in the light of business ethicsThe Texas customer had accepted the delivery of the widgets from Lyle after inspection andexamination, is what is clear from the case. Hence, as a defense, the Corporation can state that thecustomer had done the necessary formalities and gave a ‘go ahead’ signal to proceed with theinstallation. Examination of the deliverables is thus a strong defense that is available to the companyto be not held liable for the injury caused to the Texas customer.Secondly, the corporation can take a defense that the work delegated to the contractor was notinherently dangerous in nature. By stating and proving that the widgets manufactured by thecompany is not inherently dangerous by nature so as to cause loss to person and property, or injuryto others, the Corporation may be to some extent, be successful in avoiding the liability on itself.The installation of widgets is not of a nature that could involve a peculiar danger or special risk.[ CITATION Row13 \l 1033 ]In order to prove that the nature of the job is not abnormally dangerous,it is vital to state that the likelihood of the harm resulting from such installation is minimal and thatthere is little or no risk of harm to person, land or chattels of others.Extent to which the Corporation is liable for negligence of the independent contractorThe Corporation is liable for the actions and negligent actions committed by the independentcontractors both under law and equity. Although by a thumb rule, Widget Corporation is notvicariously liable for hiring the independent contractor, it has been proved beyond reasonable doubtthat the relationship between the two is sufficiently close to make vicarious liability appropriate. Thismakes the corporation liable for the breach of act committed by Lyle. However, one of the strongdefenses in this case, being that the installation of widgets by itself, is not an inherently dangerousactivity. This defense can, to a certain extent reduce the liability of the Corporation. Using theAlternative Dispute Resolution methods, particularly arbitration and mediation, Widget Corporation