Are Construction Companies Liable for On-The-Job Injuries or Deaths?
Hard hats are required on construction sites for good reason: you never know what might hit you on the head. For contractors, legal and liability dangers are nearly as tangible as cement, drywall, lumber and paint, especially considering that every mishap has the potential to evoke fines from regulators and seven-digit pay-outs from liability lawsuits.
“As professionals in a labor-intensive industry, builders and contractors know that no matter how careful a business is, accidents happen, especially when untrained visitors enter a worksite,” says Ted Devine, CEO of Insureon.com, which specializes in construction related coverage.
Things are generally safer in American workplaces today than they were before the U.S. Occupational Safety and Health Administration (OSHA) began inspecting work sites 45 years ago. According to OSHA, workplace fatalities have declined since the law took effect by 65 percent, occupational injuries or illnesses by 67 percent.
But hundreds still die every year in construction accidents – 874 in 2014 – and thousands are injured.
To safeguard their businesses against lawsuits in an unpredictable and increasingly litigious environment, Devine says, contractors need several types of coverage. A basic, all-purpose liability policy covers claims that can range from bodily injury and death to property damage to vehicle damage to complaints that a contractor violated somebody’s copyright in their advertising.
Tweet ThisTo safeguard their businesses against lawsuits, contractors need several types of coverage.
Contractors should also have workers’ compensation insurance; property insurance; coverage for company vehicles; and, depending on what state they’re in, a surety bond that guarantees that clients will be reimbursed if the terms of a contract are not met.
There’s more: Contractors must protect themselves by rigorously abiding by industry safety standards. Most of those standards are spelled out in OSHA regulations.
For instance, OSHA guidelines outline safety standards intended to prevent falls, specifying when workers performing jobs at heights of more than six feet must be protected with guardrails, safety nets or personal fall arrest system (harnesses with rigging attached to anchorages). Still, falls are the chief cause of construction site fatalities, followed by electrocution, death from flying objects and getting caught between objects or within powered machinery.
Violate OSHA rules and your company can be hit with fines by the agency itself or by any of the 27 state OSHAs, which coordinate with the federal agency. For serious violators, fines can be significant – up to $7,000 for a notable violation, $70,000 for a willful violation (where the contractor willfully disregards prior warnings).
When workers die because of unsafe working conditions, fines can climb to $50,000 or $60,000.
Fines and Punishment
Those penalties are easily eclipsed by the costs of litigation related to on-site mishaps. For example, in 2012, an Illinois jury awarded $64 million to ironworker Ron Bayer, who was left paralyzed by a fall from a steel beam. The jury found his employer negligent and in violation of OSHA regulations. It was the largest-ever verdict for a quadriplegic in Illinois.
The OSHA standard is often crucial to a plaintiff’s case. “A violation of an OSHA standard can be damning evidence and can lead to a substantial verdict in a construction worker injury case,” according to the legal information site Alllaw.com.
The aim of most personal injury claims is to show that the defendant – in this case, the contractor – acted negligently. “Violation of an OSHA safety standard can help prove that the defendant failed to meet its duty to take reasonable steps to ensure worker safety,” relates Alllaw.
The rules for construction safety can appear paradoxical to someone unversed in common legalities. Alllaw cites the example of a worker injured in the collapse of a scaffold – which he built himself. The key issue is not who built the scaffold but who was responsible for monitoring safety on the site.
“If the workers at the site consistently built scaffolds that did not comply with some of the OSHA standards, many courts would hold the construction company responsible for the worker’s injuries,” according to Alllaw, highlighting the legal tendency to position the general contractor as the party of greatest responsibility.
Most construction projects are not a single job but many separate jobs – handled by electrical workers, plumbers, plasterers and other subcontractors – choreographed to complete the project. Exactly which party is responsible for which violation can quickly become a tangled dispute. If a subcontractor is negligent or performs shoddy work, is the general contractor partially responsible?
It’s important for general contractors to protect themselves. Requiring subcontractors to sign indemnity agreements can help give general contractors assurances that they won’t be held liable for the subcontractor’s negligence and that they won’t have to pay for claims against negligent subcontractors.
“It is important that a general contractor negotiate with its subcontractors indemnity agreements that are specific and enforceable under the law of the state that governs the contract,” according to the American Bar Association.
“It also is important that the general contractor negotiate (and enforce) insurance specifications by which the subcontractor names the general contractor as an additional insured and procures liability coverage that is broad enough (and has sufficient limits) to cover the subcontractor’s indemnity obligation.”
Construction contractors and subcontractors must navigate a minefield of liability just as carefully as they walk through job sites. It’s only prudent to put on the business equivalent of a hard hat – proper insurance policies – to help prepare for every contingency.
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