LLC Not Liable For Injuries Suffered By Independent Contractor

LLC Not Liable For Injuries Suffered By Independent Contractor

      Auslander Properties, LLC (the “LLC”), owned jointly by Steve Auslander (“Auslander”) and his wife (not otherwise named in the opinion), owned several residential and commercial buildings in Bardstown and Louisville. When a tenant complained about some tree limbs overhanging a building, Auslander contacted Joseph Nalley, an experienced handyman who had previously been retained to do work for the LLC. While removal of the first offending branch went fine, unfortunately, while working on the second tree, Nalley put his weight on some decorative wooden rafters, leading to a fall to a concrete surface where he sustained injuries including fractures of his spine and traumatic brain injury. Nalley filed suit against the LLC, and both the trial court in the Court of Appeals agreed that the LLC was liable. That determination was reversed by the Kentucky Supreme Court, finding that, as an independent contractor, the LLC was not responsible for Nalley’s injuries.  Auslander Properties, LLC v. Nalley, Case No. 2016-SC-000099-DG, 2018 WL 2979947 (Ky. June 14, 2018).

      At trial, while the LLC was exonerated on a common-law negligence claim, it was held liable for violations of certain regulations of the Kentucky Occupational Safety And Health Act (“KOSHA”)in that the LLC had not provided appropriate safety equipment for an employee working more than 10 feet above the ground.  The Court of Appeals, in affirming the action the trial court’s decision, agreed that the LLC was Nalley’s  employer as defined in KOSHA. On a theory that is somewhat confusing, Nalley asserted that Auslander was an employee of the LLC. Reading between the lines, this may be an argument that Auslander, in assisting Nalley, was doing activities integral to the operation of maintaining the various pieces of rental property, and that Nalley was simply assisting in those efforts. Regardless, the Supreme Court rejected that characterization, noting that:

A member of an LLC conducting business and performing work as agent of the LLC does not automatically become an employee of the LLC. 2018 WL 2979947, *5 (footnote omitted).

      From there the Supreme Court laid out the boundaries of its opinion. First, it held that Nalley’s independent contractor status, as contrasted with that of an employee of the LLC, is not fatal to his claim under KOSHA. It then reviewed a number of decisions which generally stand for the proposition that in retaining the services of independent contractors, the employer must give them the same protections as are given to its own employees. Conversely, it also reviewed cases in which independent contractors were injured when doing work dissimilar from that performed by its own employees. The court noted that, with respect to atypical work, the employer cannot be held to knowledge of the specific issues involved, that being the reason that specialized outside contractors are utilized rather than in-house labor. “[W]hen the employer engages the services of an independent contractor for a task alien to the core function of the employer’s business, the employer is relying upon the special expertise and ability of the contractor to know and obey the applicable safety standards of that activity.” Id., *6.

      Applying this rule, the Supreme Court determined that cutting away branches in the manner that gave rise to this case is not part of property management. Rather:

Certainly, some basic aspects of routine landscape maintenance fall within the core functions of managing and renting real estate, but specialized work like climbing rooftops and ladders, reclining into the tree itself, to cut branches requires specialized knowledge and skills beyond what is reasonably expected of an ordinary property rental business. Id.

      Ultimately, Nalley’s suit was dismissed:

At the time of his injury, Nalley was an independent contractor rather than an employee of the LLC, and he was performing specialized work unrelated to the normal operations of the LLC’s property rental business. The responsibility for complying with safety laws applicable to that specialized work was upon Nalley. Since the LLC had no duty of compliance, Nalley’s negligence per se claim fails as a matter of law.