Minnesota businesses face new risks when selecting independent contractors following a July 10 decision by the state’s Supreme Court.

The case involved a W2 employee, Alberto Lopez, who worked for Braaten Farms and contracted to drive for defendant Menholt Farms. On Oct.19, 2018, Lopez crossed a center line and collided with plaintiff Pedro Alonzo, who was operating a semi-truck and trailer owned by Johnson Farms. Both trucks were hauling sugar beets, and both drivers were injured.

Lopez and Braaten settled with the plaintiff, but the case against Menholt Farms continued with the plaintiffs alleging it was negligent in its selection of an independent contractor.

The issue on appeal was the existence of a cause of action for negligently hiring a contractor, according to a post by Lorie Skjerven Gildea of law firm Greenberg Traurig LLP. The court recognized a new tort, noting that the tort sought to hold Menholt liable for its own negligence and that such a claim is “a natural extension of well-established tort principles.”

According to the original lawsuit, Lopez did not have a valid driver’s license at the time of the accident and had a criminal record for driving while impaired as well as two previous speeding tickets.

“The employee had multiple driving-related criminal offenses and a suspended license. Braaten did not conduct any type of background check on the employee before hiring him and assigning him to drive for Menholt, who likewise did not conduct any background investigation on the drivers Braaten was using,” GreenbergTraurig stated.

Companies should consider independent contractors’ reputations before deciding to work with them, Ben Sandahl of law firm Littler wrote in a post. “Carefully consider whether the independent contractor is qualified to work with you,” Sandahl stated. “This is particularly a concern if you have reason to believe that an independent contractor is careless or incompetent or has such a reputation.”

According to Littler, the decision appeared to recognize concerns about having to “vet and investigate independent contractors (and their employees)” as valid, but it held that the level of care that must be exercised “turns on the circumstances of each individual case.” The court found that the more dangerous and more specialized the work, the more care an engaging entity must exercise in selecting independent contractors.

The case, Alonzo v. Menholt, did not define what kind of reputation requires investigation and does not address what information should be considered when evaluating an independent contractor’s reputation, according to Littler. The firm added that companies should consult with legal counsel before making decisions for their particular organization.