The Minnesota Supreme Court recently issued a landmark decision recognizing the tort of “negligent selection of an independent contractor.” This development holds significant implications for businesses that engage independent contractors. The case in question is Pedro Alonzo, et al. v. Richard Menholt, et al.

Case Background

The case arose from a personal injury incident involving Pedro Alonzo, who was severely injured in a truck accident caused by Alberto Lopez, a driver employed by Braaten Farms—a subcontractor for Menholt Farms. Lopez had a suspended license and a history of driving infractions, which were not investigated by Braaten Farms or Menholt Farms before his employment.

Court’s Decision

  1. Recognition of Tort: The Minnesota Supreme Court officially recognized the tort of negligent selection of an independent contractor. This means businesses in Minnesota can now be held liable for failing to exercise reasonable care in selecting competent and careful independent contractors.
  2. Duty of Care: The court emphasized that principals (those who hire independent contractors) must exercise reasonable care to ensure that the contractors they hire are competent and careful. The extent of this duty depends on the nature of the work and its associated risks.
  3. Proximate Cause: To prevail on a claim, plaintiffs must prove that the principal’s negligence in selecting the contractor was a proximate cause of their injuries. This implies that the harm must stem from a quality in the contractor that made it negligent for the principal to entrust the work to them.

Practical Clarifications from the Court

The court acknowledged concerns from the United States and Minnesota Chambers of Commerce—represented by Winthrop & Weinstine, P.A.—and other amici about the potential increased business risks and costs. To address these concerns, the court clarified the following points:

  • Minimal Risk and Skill Work: For work requiring no special skill or training and posing minimal physical danger if improperly done, a principal “is entitled to assume that a [contractor] of good reputation is competent.” The principal need not investigate the contractor’s actual competence or verify their reputation unless they know the contractor is incompetent or has a bad reputation.
  • Limiting Liability: If a contractor is incompetent due to a “lack of skill and experience or of adequate equipment but not in any previous lack of attention or diligence,” the principal will only be liable for harm caused by that “lack of skill, experience, or equipment.” They will not be liable for harm caused by the contractor’s inattention or negligence. This causation requirement limits claims to circumstances where the principal could have reasonably anticipated the harm. In essence, if the principal had exercised reasonable care, they would have known of the contractor’s deficiency and avoided the harm.

Implications for Businesses

  • Potential Liability: Failure to adequately vet independent contractors could result in liability for any harm caused by the contractor’s negligence.
  • Legal Counsel: Businesses should consult with legal counsel to understand the full implications of this decision and to develop or update contractor selection policies.
  • Operational Adjustments: Companies may need to review and possibly revise their policies and procedures regarding the hiring and monitoring of independent contractors to ensure compliance with this new legal standard.

Conclusion

The Minnesota Supreme Court’s recognition of the tort of negligent selection of an independent contractor marks a significant shift in liability for businesses. For further advice and detailed guidance on adjusting your business practices in light of this decision, please contact your legal team at W&W.

July 12, 2024