When it comes to someone getting injured on the job, who is liable?
No matter how safe your facility might be, working around horses can be a risky proposition for you and your employees. To make sure you are covered in the event of an employee injury, it pays to understand the difference in employee status…and to be well insured.
We’ve asked two expert attorneys for help, but note that neither is providing specific legal advice to our readers, only opinions for our story.
If You’re Not Sure
We asked equine attorney Julie I. Fershtman the following questions about employees being injured on the job.
Trainer injuries: Who’s responsible when a trainer is injured? Do trainers have recourse against customers? After all, the customer “hired” the trainer to ride the horse. Past lawsuits have found courts siding with both the trainer and the customer, depending on the facts and applicable state law, Fershtman says.
Although equine liability laws force in 46 states, the “sign on the barn wall” isn’t all-encompassing.
“Most laws state that an equine professional, equine activity sponsor or ‘another person’ should not be held liable if someone is injured as a result of an ‘inherent risk’ of equine activity,” says Fershtman. “The laws typically include exceptions that could allow certain kinds of lawsuits to proceed.”
Trainers are more likely to lose their cases when the risk was inherent in the activity, she says. “This means that the trainer bucked off by a young colt being ridden for the first time would find it difficult to succeed in a case against the owner. But if the owner neglected to notify the trainer that the horse had an unusually dangerous history, the trainer might have a better chance of success, depending on the law.”
If you’re walking a precarious fine line with an employee who’s filled out a Form W-9 for independent contractor classification, a recent ruling in Maryland demonstrates how your liability isn’t necessarily absolved. According to The (Baltimore) Daily Record, a Hancock, Md. teenager was awarded $274,010 by a jury that found that she was an employee, not an independent contractor, and that her farm employer was negligent. She was filling feeders in a field for 30 horses when she was kicked in the hand—the girl originally sought $1.7 million in claims after the farm denied her workers’ comp based on the belief that she was not an employee. However, a jury found differently because the plaintiff demonstrated that she was an employee by using farm tools and equipment, attending training seminars and working up to seven days a week.
“Businesses in the equine industry sometimes call their workers ‘independent contractors’ to avoid the burdens and expenses associated with employees, such as withholdings, overtime, worker’s compensation, unemployment compensation, insurance, health insurance, and retirement accounts,” Fershtman says.
However, these employers control and direct their employees on important details of how, when, and where the work must be done, Fershtman points out. Independent contractors, by comparison, carry on an independent business and contract to do particular jobs or tasks.
“Look carefully at the entire relationship, and consider the degree or extent of the right to direct and control,” she advises.
No one factor stands alone in making this determination, Fershtman says, but the IRS has set forth some factors to be considered—relevant factors in one situation may not be relevant in another. Check out www.irs.gov for more information.
What You Can Do
Read IRS Forms: The IRS website provides and explains forms, such as Form W-9 (Request for Taxpayer Identification Number and Certification) and Form 1099-MISC (Miscellaneous Income).
Seek advice: “Businesses can consider whether it is appropriate to ask the IRS to determine whether their workers are independent contractors by submitting a Form SS-8, entitled ‘Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding,’” Fershtman says.
Confirm the Status: Business owners who believe their workers are “independent contractors” can make sure it is mutual through a contract that, among other things, confirms the status and that the contractor accepts responsibility for obligations such as liability insurance, self-employment taxes, health insurance, and withholdings. You should ask an attorney to draft or review that contract, but there is no guarantee that a court will accept it, Fershtman says.
“A court applies the facts to the law in every given case on a case-by-case basis,” says Robyn Ranke, Esq., of Equus Law. “Oftentimes, what may appear straightforward on the facts may evolve into sophisticated and complex legal issues before the court.”
So, taking a few precautions as a business owner are in order. Here, Ranke offers some advice:
Don’t overlook the obvious. Have you incorporated? “If not, you have set yourself up for personal liability exposure,” she says, “meaning a prevailing party can pursue collections against you personally and your personal assets—most often seen in instances where there is no other ‘deep pocket’ to satisfy a judgment entered against you, such as insurance coverage.”
Don’t assume. For you and for others, get necessary contracts in place, get the right insurance and keep everything current—most policies renew on an annual basis. Get a copy of your trainer’s insurance policy and make certain you and/or your facility are named as additional insured. Require boarders to have equine personal liability coverage—which is not expensive—and personal medical health care insurance, and again, keep copies of those documents. See the sidebar on Insurance for a description of options.
Finally, if you pay people under the table and/or hire illegally, you expose yourself to potential immigration law and/or state/federal tax law violations and penalties, Ranke warns.
“To the extent a violation carries a criminal penalty, I suppose, depends on the circumstances and applicable law violated,” she says.
In today’s environment, you need layers of protection, so make sure you’ve covered all possible bases.
Insurance: A Quick Guide
a) Health insurance: It’s meant to cover injuries or illness, work-related or not.
b) Workers’ compensation: In most states, coverage usually provides that when an employee is injured, ill, or even dies in the course of employment, he or she—or their families or dependents—may be entitled to collect benefits like medical expenses and a percentage of lost wages or other sums of money.
c) Disability Insurance: This will pay a sum of money, usually a percentage of the worker’s earnings for a certain period of time, if a serious injury or illness renders the worker unable to work.