General Contractor Liability for Injuries to Subcontractors

In Montana, when an employee is injured in the course and scope of their employment (a.k.a. at their job), the sole remedy is almost always workers’ compensation. Workers’ compensation provides benefits to an employee through the employer’s insurer, without any determination of fault. The net effect of no fault coverage means that there is no investigation or analysis as to whether the employer is at fault for the injury or the employee is at fault for the injury or somewhere in between, if the employee is hurt at work, they get the benefit. In exchange, an employee can not bring a lawsuit against their employer and the benefit from workers compensation is their only remedy.

While the workers’ compensation framework typically prevents an injured employee from suing their employer, it does not preclude the injured employee from bringing lawsuits against other individuals or entities. Narrow exceptions to exclusivity exist, specifically where an owner or general contractor contracts with a subcontractor to perform some work on the owner or general contractor’s behalf. These arrangements often arise in the areas of construction and mining, but can arise in any situation where an entity utilizes independent subcontractors. The question then arises, when is an owner or general contractor potentially liable for injuries to the employee of an independent subcontractor?

The general rule in Montana is that an owner, employer or general contractor does not have a duty to prevent injuries to an independent contractor’s employees. There are three exceptions to this general rule: 1) the existence of a non-delegable duty in a contract; 2) negligence while conducting an inherently dangerous activity; or 3). negligence in exercising retained control. When a court finds that an exception to the general rule may apply to a certain set of facts, this creates a question of fact as to whether or not the general contractor can be held liable for injuries sustained by a subcontractor or its employee. Questions of fact cannot be dismissed by the court and are required to be presented to a jury.

Under the first exception, a defendant can be held responsible for injuries sustained by another as a result of an independent contractor’s act if the defendant contractually obligated itself to ensure safety. Liability may be based on a non-delegable duty of the owneronly when a contractual provision establishes that the owner has assumed responsibility for initiating, maintaining and supervising safety precautions. Where the defendant has not contractually accepted the responsibility for the safety of others, however, the general rule of ‘no duty’ attaches, the exception is not applicable and any assertions of liability under that exception must be dismissed.

What does this mean for you as an owner or a contractor? The old adage of, “an ounce of prevention is worth a pound of cure,” applies to the contractual exception to the general rule. A carefully constructed contract drafted before the work is started or the employee is injured can often prevent the first exception to the general rule from becoming an issue. At MDS, we are experienced in drafting contracts for owners and general contractors with specific provisions to help limit the exposure to the individual or entity. If you need assistance in reviewing your current contract or drafting a contract to help to limit your future exposure we would be happy to consult with you to meet your business needs.