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Professional Liability Concerns When Working with Contract Engineers

More companies today are using 1099 contract engineers as a way of bolstering manpower for temporary assignments or inexpensively filling gaps in their own expertise. Though a legitimate strategy, using contractors comes with its own set of risks. It's important to know what liabilities you might face if you plan on hiring contractors anytime in the future.

Where Risk Exists: Liabilities Associated with Contractors

Where Risk Exists: Liabilities Associated with Contractors

Clients bring the vast majority of lawsuits against engineers. The disputes often arise out of miscommunication, false assumptions, or mismanagement between the engineering firm and the project owner. (To learn more about that, read the article, "Engineer Professional Liability Concerns with Clients.")

Recently, however, more third parties have sought ways to bring lawsuits against engineers. As the threat of litigation increases, it's important for firms to tighten weak contracts and eliminate risks. Without proper precautions, your firm can be liable for…

  • The negligence of contractors working on your project.
  • Inaccurate cost estimates.
  • Delays in construction.
  • Personal injury resulting from contractor work.
  • Economic losses experienced by the client.
  • Building code violations.
  • Environmental law violations.

Just because a contractor isn't your employee doesn't mean you're free from liability arising from their actions. Often, you'll need specific contract provisions to separate the responsibilities of the contractor from your firm.

How to Limit Risks When Working with a Contract Engineer

How to Limit Risks When Working with a Contract Engineer

Before bringing a contract engineer on board for a project, take the following measures:

  • Make sure their Professional Liability Insurance is theirs alone. Many contractors operate without Professional Liability coverage, but unless you're willing to take responsibility for their actions, insist that they have it. If they are employed full-time at another business but work part-time as a contractor, they need to have an insurance policy in their name. You can outline your insurance requirements in the employment contract. (Related: "Contracts to Manage Engineers' Professional Liability.")
  • Verify that they are truly a contractor. The employment status of a contractor isn't decided by the contract, but by state and federal laws. If their job description technically makes them an employee, you have to cover them with your own insurance policies. Consult the AIA's guide to determining employment status for a potential contractor. The guide specifies architects, but engineers are very similar from a liability standpoint.
  • Delineate responsibility. The clearest way to avoid increasing your liability is to always emphasize to the client that the contract engineer is liable for their own work. You may even want to document this for your client and have them sign off on it. Foster good communication between yourself, your contractor, and your client so that everyone understands who is responsible for what.
  • Check references and examples of past work. This ensures that the contractor has good business practices and doesn't bring added risk.

By taking these steps, you prevent the risk that your contractor will land you in any legal hot water. If they end up making a professional mistake while working on your project, these precautions can support your claim that the contractor is liable — not your business.

For more tips on how to limit your liabilities, read the article, "Insurance Considerations for Engineering / Construction Projects."

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