Companies in Minnesota that work with independent contractors should be aware of a new legal risk.  In Alonzo v. Menholt,¹ the Minnesota Supreme Court recognized a claim for the negligent selection of an independent contractor.  Companies operating in Minnesota might be held responsible for inadequately screening their independent contractors or their employees.

Background

Two drivers hauling sugar beets crashed into each other on a rural Minnesota road.  One of the drivers had a suspended license and several other blemishes on his driving record. The driver crossed the road’s centerline and seriously injured the other driver. That driver (the plaintiff) sued the other driver and his employer, Braaten Farms, for his injuries.  Braaten Farms had not interviewed the driver, done a background check on him, reviewed his driving record, or done several other pre-employment screens when it hired him.

The plaintiff also sued a larger farm, Menholt Farms.  Braaten Farms had agreed to provide services to Menholt Farms as an independent contractor.  Menholt Farms did not perform any background checks on Braaten’s employees, and it did not ask how Braaten “hired or screened the employees who hauled Menholt Farms’s sugar beets.”  So, the plaintiff claimed that Menholt Farms was negligent in engaging Braaten to provide services as an independent contractor.

The driver and Braaten settled with the plaintiff, but the case against Menholt Farms continued. 

Ruling and Framework

Menholt Farms moved for summary judgment on two grounds.  First, it argued, “Minnesota does not recognize a claim for negligent selection of an independent contractor.”  Second, even if it did, Menholt Farms argued that it was not negligent in selecting Braaten Farms. 

The Minnesota Supreme Court held, however, that Minnesota law does recognize a claim for negligent selection of an independent contractor.  Referring to a Minnesota federal court decision and a provision in the American Restatement of Torts, Second, the Minnesota Supreme Court distilled a negligent selection of an independent contractor claim to two elements.  A claimant must establish that the principal (1) breached their duty to exercise reasonable care in selecting a competent and careful contractor, and (2) that this breach of duty caused the claimant’s physical harm.

The Minnesota Supreme Court seemed to recognize concerns about having to “vet and investigate independent contractors (and their employees)” as valid, but it held that the level of care that must be exercised “turns on the circumstances of each individual case.”  The court found that the more dangerous and more specialized the work, the more care an engaging entity must exercise in selecting independent contractors.

Key Takeaways and Action Items

Minnesota’s recognition of a negligent selection of an independent contractor claim is not especially groundbreaking.  The Minnesota Supreme Court found that a solid majority of states recognizes such a claim.  The Alonzo case, however, raises several issues for companies working with independent contractors and leaves some important questions open.

Companies should consider independent contractors’ reputations before deciding to work with them.  Carefully consider whether the independent contractor is qualified to work with you. This is particularly a concern if you have reason to believe that an independent contractor is careless or incompetent or has such a reputation. The Alonzo case left open the question what kind of reputation requires investigation, and does not address what information a company should—or should not—consider when evaluating an independent contractor’s reputation.

Companies may need to vet the independent contractors they work with, including employees of those contractors.  Companies should consider how dangerous and likely to cause physical harm the work is that independent contractors are doing, as well as how specialized it is.  The more dangerous and skilled the work is, the more closely the company should investigate the contractor.  But the decision in Alonzo intentionally left the question of how much screening is appropriate open to the facts of each particular case.  Companies are often reluctant to do too much screening of independent contractors (particularly if the contractor is an individual) in light of the possible risk they will be found to be an employer of that individual.  The Alonzo case did not address that issue.

Because of these open questions and other issues, companies should consult with legal counsel before making decisions for their particular organization.