Recreation Law Center: Employee or Independent Contractor? The Difference Really Matters!

Zajaczkowski v. Connecticut State Soccer Association, Inc. et al., 2010 Conn. Super. LEXIS 435 (Feb. 2010).

 

Peter Zajaczkowski was playing soccer with an adult soccer league when he collided with a goalie from the opposing team, suffering injuries.  Peter (“plaintiff”) sued the Connecticut State Soccer Association, Inc. ("CSSA") and the Amateur Soccer League of Connecticut ("ASLC"), the two entities organizing and sponsoring the league (“defendants”).  Among other things, Peter claimed that defendants were negligent in failing to properly train the referee officiating the game, and were vicariously liable for the referee’s negligence, both of which (the alleged inadequate training and negligent acts), plaintiff claimed, caused his injuries.    

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The defendants filed a motion for summary judgment before trial, claiming that the referee was not negligent, and even if he was: 1) they could not be held responsible (vicariously liable) for the referee’s actions, because he was an independent contractor and not their employee or agent, and 2) because he was an independent contractor, they had no duty to train him.

The Court ruled that the referee was not negligent in officiating the game, and that—in fact—neither the defendants nor the referee had a duty to protect the players from aggressive team sport play—risks inherent in such a sport.  The Court stated:  “Highly competitive members of athletic teams often take chances and risks that cause them to forget or to ignore the rules of the game. Their intent is to win, however, not to hurt other competitors.... Even when a player has been warned or is aware of behavior that creates a risk of injury to others, he may fail to heed such warning. As a matter of law, the defendants did not owe the plaintiff a duty of care.” (citing an earlier Connecticut case).

Even though the Court determined there was no negligence, the Court went on to discuss the relationship between the defendants and the referee.  The Court looked at the various factors Connecticut courts (as well as courts around the country) have used to determine whether an individual is an employee or independent contractor—critical to determining the duties and liabilities between the parties.  The key issue, the Court found, was the employer’s actual control of, or right to control, the employee.  The Court stated:  “It is as a result of this control that the theory of vicarious liability allows employers to be subject to liability for the physical harm caused by the negligent conduct of their employees acting within the scope of employment."  In contrast, the Court stated, an employer will not be held responsible for acts of its independent contractor.  The common rationale for this rule, the Court explained, is that: “...since the employer has no power of control over the manner in which the work is to be done...”  the contractor, rather than the employer, is the “...proper party to be charged with the responsibility of preventing the risk, and bearing and distributing it."

Critical to the employer/employee relationship (an “agency” relationship), the Court continued, are three things: 1) the employer’s acknowledgment that the employee will act on the employer’s behalf, 2) the employee’s consent, and 3) the parties’ understanding that the employer will be in control of the undertaking. 

The Court explained that in addition to the critical element of control, other factors considered in determining the nature of the relationship include: whether the individual has a regular business or occupation, other than (or in addition to) what he is doing for the organization; whether the individual supplies the tools for his work and the way in which the individual is paid.  Importantly, to be considered an agent/employee, the individual must be doing something “...at the behest and for the benefit of the principal.”  Finally, the Court noted, it doesn’t matter what the parties call themselves (the “label” they put on the relationship), but rather, the “operative terms” of their agreement—that is, the way they conduct themselves in the relationship.  The Court noted that the testimony of the referee reflected that he was not trained by the defendants, but attended training sessions through an independent referee organization separate and distinct from the defendants.  Representatives of that organization stated that all referees were independent contractors.  The referee was paid by the home team on a game by game basis, and not a salary.  Defendants could assign the referee to a match, but the referee was free to accept or decline the assignment.  The referee was in charge of enforcing the rules, and other referee matters within his or her sole discretion and control, all indicia that he was, in fact, an independent contractor.  As a result, the Court found, as a matter of law, that the referee was an independent contractor, granting defendant’s motion and dismissing the case before trial.

Discussion

  • It is interesting that the Court proceeded to discuss the employee/independent contractor question, considering it ruled that the referee was not negligent in conducting the game.  That ruling alone should have been sufficient to dismiss that claim.  That is—if the referee was not negligent, there was no referee negligence that the defendants could be vicariously liable for!  However, the case is instructive, and so we are pleased with the Court’s decision to discuss these concepts. 
  • The Court did not specifically discuss the dismissal of plaintiff’s claim that defendants were directly liable for their negligence in failing to adequately train and supervise the referee.  However, since the Court ruled that the referee was an independent contractor, the defendants, by definition, would have no duty to train the referee—precisely because he was an independent contractor. 
  • As the Zajaczkowski Court explains, the term “independent contractor” is used to generally describe an individual or entity that controls the details of how it conducts its work. An individual’s status as an independent contractor (vs. an employee) impacts three basic issues: 1) an organization’s obligation to withhold taxes, to secure workers compensation, and to pay unemployment and disability and other state or federal benefits on behalf of the individual; 2) an organization’s liability exposure in the event that the individual is injured or killed during a program or event; and 3) an organization’s liability exposure in the event the individual’s conduct causes a participant to be injured or killed during a program or event.  The Zajaczkowski case reflected a dispute over the third category.
  • As the Court discussed in Zajaczkowski, if an organization hires outside organizations or individuals to work as independent contractors, those contractors are generally responsible for their own actions. They should secure their own liability and workers’ compensation insurance, be responsible for their conduct, and, if the independent contractor status has been maintained, should (with some exceptions) be solely liable should a participant be injured in the activity controlled by the contractor. Interestingly, even though the referee in Zajaczkowski was found to be an independent contractor, the referee was not liable, because the Court found the injury resulted from the inherent risks of playing soccer, not from any referee negligence.

    Alternatively, as the Zajaczkowski Court explained, if an organization controls, or has the right to control the manner and method of the individual’s work performance, the individual may be considered an employee.  In that event, an organization can be held vicariously liable for the acts of that staff/employee within the course of their employment, and, potentially, for injuries/loss occurring to participants (caused by that employee) during the program or event.   In addition, without workers’ compensation, employers may be exposed to tort liability (suits brought by staff members) for staff injured in the course of their work. An organization may then be required to secure workers’ compensation insurance for its employees, withhold taxes, and pay unemployment and other taxes, as well as pay any penalties for failure to properly secure such coverage/benefits in the past. 

    There are a few different ways that this issue can come up for an organization:  1) As in Zajaczkowski, an injured participant can file suit, claiming an organization is vicariously liable for the acts of an independent contractor (who, they claim, really “looks” and acts like an employee). 2) an injured independent contractor can file suit, claiming that they were really an employee, and thus entitled to damages from the employer for their loss; or, 3) the federal or state government can audit or analyze the organization’s staff classifications, and determine that staff classified as independent contractors should instead be classified as employees (oftentimes focused on control or the right of control the work, and the factors discussed by the Internal Revenue Service (worth googling)).  Alternatively, an independent contractor may attempt to apply for unemployment compensation or makes a wage claim, urging that he or she is the organization’s employee (vs. an independent contractor).  Interestingly, the factors considered by the I.R.S. and state entities for employee tax/workers’ compensation purposes are quite similar to those considered by the courts in determining liability issues.

  • There was no written contract in the Zajaczkowski case outlining the relationship between the parties.  However, as that Court mentioned, don’t be fooled.  A written contract—or any other way that the parties attempt to label the relationship—will not guarantee that individuals will be viewed as an independent contractor.  As was the case in Zajaczkowski, courts will oftentimes look to a variety of factors, including the words and conduct of the parties, to determine whether the entity or individual actually acted independently.  As a result, even if the parties’ written contract, for example, states they intend an independent contractor relationship, a court can overrule the contract if the parties’ conduct points to an employer/employee relationship.  That being said, a written contract outlining the relationship of the parties and including a description of the parties’ responsibilities and liabilities is a valuable tool, with the important caveat that the parties actions should mirror what they have set out in their contract!  Note that these agreements can include, for example, the contractor’s agreement to defend and indemnify the organization, and their agreement to secure insurance and add the organization as an additional insured on its policy.
  • Although not discussed in the case, an organization can be exposed to liability for negligently selecting an independent contractor (and thus, appropriate screening of contractors is critical). 
  • Another way that an injured party can attempt to find an organization responsible for the acts of an independent contractor (or unrelated party) is under the doctrine of “apparent authority” (also termed “apparent agency”).  That is, an organization (the “principal”), through its actions or representations, makes it appear to the public to have given another party (the “apparent agent”) authority to act on its behalf—and is thus held responsible for the individual’s actions. The rationale for this rule is that if the organization has set up the situation, intentionally or not, and the public has relied on this apparent authority, the organization should not be able to escape liability.  To offset this possibility, organizations are wise to disclose to their participants, their use of independent contractors for specific aspects of their operation (e.g.: via the website, any agreements with participants, etc.).    An organization should also avoid any conduct that might allow a reasonable person to believe that an agency relationship exists—wearing the “employer’s” tee-shirt or uniform, for example. 
  • Note that if the Zajaczkowski Court had found that the referee was negligent, and that his negligence caused plaintiff’s injuries, the referee could also be named in a lawsuit and found individually liable for the harm.  Many folks, we have found, do not understand that employees can be exposed to individual liability for harm, for actions they take in the course of their employment or other agency.  Although an individual may not always be named in a suit (presumably because they may have few assets), they are subject to this potential exposure.  Usually, however, the employer’s insurance will cover their employees’ exposure to this liability (unless, of course, their conduct is outside the scope of the coverage—for example: intentional or criminal misconduct).  The case may be different for other types of agency relationships—check your insurance policy and talk with your insurance representative and legal counsel about these issues for your own organization.