Articles Posted in Business Law

Last session, the Indiana General Assembly passed, and Governor Pence signed, House Enrolled Act 1494, amending Indiana Code Title 12, Article 17.2 by establishing new requirements for national criminal history background checks for employees and volunteers of regulated child care providers.

A national criminal history background check involves the submission of an individual’s fingerprints to the Federal Bureau of Investigation for comparison to a national database. (Note that there is a separate process for background checks for individuals under 18 years of age.) The new requirement for a national background check replaces a previous requirement for a background check at the state level, but it is in addition to the requirement for substance abuse testing.

This article discusses the new requirement for background checks in broad terms. More detailed information is available from the Bureau of Child Care of the Indiana Family and Social Services Administration. Note also that HEA also creates some other new requirements for some child care providers that are not addressed by this article.

Applicability

The requirement for background checks applies to essentially all individuals who have any contact with children at any type of regulated child care providers, which include

• child care centers and child care homes that must be licensed;
• child care ministries that are exempt from licensing but must be registered; and
• child care homes and facilities that are exempt from licensing but receive funding from the Child Care Development Fund, a federal program administered by the state.

For all types of regulated providers, background checks are required for all individual caregivers, including both employees and volunteers. For child care homes, the requirement also extends to any member of the household who is 18 years of age or older (or, if younger than 18, who has been previously been charged with a crime and waived from juvenile court to adult court), even if he or she will have no contact with children.

Background checks are required when the child care center, home, or ministry applies for a license or registration; when an unlicensed provider applies for certification of eligibility to receive CCDF funding; when a new employee is hired or a new volunteer begins work; and every three years after that. The requirements for new applications and new employees and volunteers (and for child care homes, new household members) took effect on July 1, 2013. Other regulated providers have until July 1, 2014, to comply with the requirements for existing caregivers and household members.

Prohibitions

The purpose of the background check is to identify individuals who are prohibited from being child care provider, an employee or volunteer of a child care provider, or a member of the household at a child care home. An application for a license, registration, or CCDF certification may be denied if the provider, a caregiver, or (for child care homes) a household member has been convicted of certain types of felonies or misdemeanors or if the individual has been charged of such a crime while the application is pending. Note that only convictions or pending charges count; previous charges that were dismissed or resulted in an acquittal do not disqualify an individual.
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Earlier this year the General Assembly passed HEA 1394 which made several changes to the Indiana Business Flexibility Act, the statute that governs limited liability companies. We have already looked at some changes to the Act that enhance the use of Indiana LLCs for estate planning purposes. This article discusses new alternatives for LLC management structure.

The Indiana Business Flexibility Act already provided for a great deal of flexibility for management structure. One of the key steps in designing the management structure of a limited liability company is to establish who has the apparent authority to bind the company, for example by signing contracts on behalf of the LLC. Prior to the changes there were essentially two choices. In a member-managed LLC, the members have that authority. In a manager-managed LLC, the members appoint managers (who may or may not also be members) who have that authority.

HEA 1394 provides a third choice — officers, who may or may not be members. At first blush, there may seem to be little difference between officers and managers because, like the managers in a manager-managed LLC, officers have the apparent authority to bind the LLC to third party agreements. But there is at least one important difference: In a manager-managed LLC, only the managers, and not the members, have the apparent authority to bind the company. The new revisions allow the members of an LLC to establish officers who have the apparent authority to bind the company, while also retaining that authority themselves. In fact, a manager-managed LLC can also have officers. In that case, both the managers and the officers, but not the members, have apparent authority to bind the LLC.

HEA 1394 includes other changes to the statute that enhance the alternatives for LLC governance. For example, the Act now permits the operating agreement to make certain significant decisions, including mergers, dissolutions, and amendments to the operating agreement, subject to the approval of a third party who need not be a member.

One context in which such provisions may prove useful is in estate planning. Imagine the founder of a business, held by a limited liability company, with multiple heirs, who wants the business to remain in the family. Although the operating agreement may create significant restrictions on transfers of membership interests and admission of new members, the heirs could later agree to amend the operating agreement to remove those restrictions. The Act now allows the operating agreement to name a trusted outside party who must approve any amendments to the operating agreement, thus increasing the likelihood that the founder’s desires will be honored.
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July 17, 2014. Update. Today the Indiana Supreme Court reversed the decision of the Court of Appeals. Check back soon on the Indiana Business Law Blog for a discussion of the Supreme Court’s decision.

A ruling in a recent case, Fischer v. Heymann, illustrates the pitfalls one can encounter when selling real estate. By not changing a light bulb and pushing the little red button on a couple of electrical outlets, the seller lost over $90,000!

The Case
Gayle Fischer entered into a contract to sell a condominium to Michael and Noel Heymann for $315,000. The buyers could inspect the property and, if they found serious defects, cancel the sale unless she agreed to fix the problems. On February 10, 2006 the Heymanns demanded that Fischer fix some minor problems: a couple outlets weren’t working and a light bulb needed to be changed. Fischer wrote back on Feb. 13th, saying she’d respond by Feb. 28th. The Heymanns wrote back two days later, demanding a response by Feb. 18th. Fischer did not make any further replies until the 19th, when the Heymanns attempted to cancel the contract, and the lawsuit ensued, with Fischer claiming total damages of more than $94,000, including $75,000 in direct damages (which represented the difference between the agreed price of $315,000 and the best offer Fischer later received, $240,000.)

The Decision
The Court of Appeals applied two standard contract principles but to reach a result that may seem surprising. First, the buyers committed an “anticipatory breach”.or “breach by repudiation,” which occurs when one party declares its intent to breach the contract. Here, the Heymanns’ refused to buy the condo unless Fischer made repairs, which the Court of Appeals held was an anticipatory breach. (The Heymanns would have had the right to cancel the contract if the defects in the condo were serious, but they weren’t.) An anticipatory breach is treated the same as an actual breach. Fischer did not need to wait until Heymanns failed to show up at the closing.

Second, once a breach has occurred (anticipatory or otherwise), the other side has an obligation to mitigate damages, or to take reasonable steps to avoid ‘piling up’ additional damages. One way of mitigating damages when a buyer backs out of a real estate purchase is to attempt to find another buyer. Here, the agreed price was $315,000. If the best price Fischer could get from another buyer was $300,000, the Heymanns would have owed her only $15,000. However, if Fischer passed up the $300,000 offer and later sold it for only $240,000, the Heymanns would still owe only $15,000 because that’s what the damages would have been if Fischer had mitigated.

Although the Court of Appeals did not describe its analysis quite this way, it essentially treated the Heymanns demand for repairs as a breach of the original purchase agreement and a new offer to buy the condo for the same price after the repairs were made, repairs which cost only $117 — the price for an electrician to make a service call to reset the ground fault interruptors and change a light bulb. Certainly, if, immediately after the Heymanns breached, a third person had offered to buy the property for the same price, less $117, mitigation of damages would have required Fischer to accept it. The Court of Appeals held that mitigation of damages required Fischer to make the repairs requested by the Heymanns. Result: The Heymanns owed Fischer $117, not $94,000!

Note that these principles apply to contracts in general, not just to real estate purchase agreements. Does it surprise you that one party can make the other party choose between accepting an amendment to the contract or collecting damages that are worth no more than the amendment? That’s effectively what happened in this case, and it surprised the Court of Appeals judge who dissented from the decision. I don’t know if Fischer’s lawyer has petitioned to transfer the case to the Indiana Supreme Court. If so, it will be interesting to see if the Supreme Court accepts the case. And if the decision stands, it will be interesting to see how later Indiana court decisions apply Fischer to other situations.
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[Note: The Department of Labor guidance relevant to this article, Fact Sheet #71, has been superseded.  See the discussion of the revised policy here.]

Two years ago we discussed whether nonprofit organizations and businesses can lawfully use unpaid interns. One of the key questions is whether the intern is actually an employee subject to the Fair Labor Standards Act. If so, the intern must be paid at least minimum wage and overtime pay if the intern works more than 40 hours in a week. The answer?

• Businesses may use unpaid interns only if the intern qualifies as a trainee by satisfying six specific criteria.
• Nonprofit organizations may also use unpaid interns who qualify as trainees. In addition, they may use unpaid interns who qualify as volunteers.

I don’t know very much about the fashion industry, but apparently it makes wide use of interns. And according to a class action lawsuit recently filed against a New York modeling agency in U.S. District Court for the Southern District of New York, many of them are unpaid.

The case is Davenport vs. Elite Model Management Corp. The plaintiff, a former unpaid intern, alleges that the agency uses interns as a source of free labor, which is precisely what the Fair Labor Standards Act forbids. According to the complaint, “Without the free labor of its interns like Ms. Davenport, Elite would be forced to do what every other reputable employer in this country does: pay an honest day’s wage for an honest day’s work.”

The complaint steps through the six criteria for determining whether Ms. Davenport and the other interns at Elite qualify as trainees and argues that they do not. Whether that’s correct remains to be seen, but the stakes are significant: The complaint alleges that Elite owes damages of at least $50 million for unpaid wages, overtime, and benefits for a class of plaintiffs that includes at least 100 interns.
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The “Indiana Smoke Free Air Law,” which was passed last year by the Indiana General Assembly and took effect on July 1, 2012, bans smoking in most Indiana businesses and nonprofit organizations. We thought the General Assembly might reconsider some of the details this year, but that hasn’t happened. Based on our non-scientific observations, it seems that Indiana businesses and nonprofits have not been very diligent about implementing the law, particularly those regarding signs. So we think it’s a good time to review the requirements, or at least some of them.

“Does the smoking ban affect my business?”

Smoking is now prohibited by law in “public places” and “places of employment,” as well as the area within 8 feet of public entrances to either of them. “Public places” and “places of employment” sound as if they encompass a lot, and they do. A public place includes any enclosed area of a structure in which the public is permitted or invited, and a place of employment includes any enclosed area of a structure (excluding a private vehicle) that is a place of employment. Lest we forget, there’s one other category — smoking is also banned in government vehicles being used for governmental purposes.

There are some exceptions, but the bottom line is that the smoking ban affects most businesses and nonprofit organizations in Indiana.

“Okay, my office is covered. What do I have to do?”

• Not surprisingly, you must inform your employees and prospective employees that smoking is prohibited.
• You must post conspicuous signs that read “Smoking is Prohibited by State Law,” or something to that effect. The law has a specific requirement that restaurants must have a conspicuous sign at each entrance informing the public that smoking is prohibited in the restaurant.
• You must also post signs at each entrance (logically, the sign should be outside or at least visible from the outside) stating “State Law Prohibits Smoking Within 8 Feet of this Entrance” or something similar.
• If someone smokes on the premises anyway, you must ask him or her to refrain, and if he or she refuses to stop, you must have him or her removed from the premises. (Note: Don’t try to do it yourself! In the unlikely event it becomes necessary, call the police.)

“I own a bar. Does the smoking ban REALLY apply to my business?”

It depends. There are some exceptions to the smoking ban, and one of them is for bars and taverns, but you have to meet certain requirements. For example, you may not have any employees under 18, and you must exclude anyone else under 21. There are more exceptions for several other types of places of employment and public places, each subject to particular qualifications or additional requirements.

“Does the law apply to our nonprofit organization?”

Probably. There is an exception that covers some social clubs and fraternal organizations or lodges that are tax exempt under Internal Revenue Code Sections 501(c)(7), (c)(8), or (c)(10), and it’s possible that some other types of nonprofits fit into an exception, but most nonprofits are subject to the smoking ban.

“I have a home office. Is smoking banned there, too?”

Again, it depends. The ban does not apply to a business located in the business owner’s residence, but only if all the people who work there live in the residence. Let’s assume that only you (the owner) and your spouse work in your office. In that case, you’re allowed to smoke, but if you have any employees who don’t live in your home, smoking is prohibited.

“Are there other exceptions?”

Yes. For a complete list see Ind. Code 7.1-5-1-5.

“My facility falls within an exception to the smoking ban, so I’m home free. Right?”

Well, not entirely. There are some other requirements that apply to public places and places of employment in which smoking is permitted. Here’s an interesting one — you have to post signs that state “WARNING: Smoking is allowed in this establishment.” You must also certify to the Indiana Alcohol and Tobacco Commission that your bar qualifies for the exception.

Moreover, even if most of your facility or building is exempted from the ban, smoking is prohibited in halls, elevators, and common areas where people under 18 are permitted or in rooms intended for use by people under 18.

And don’t forget that even if the state law does not ban smoking in your business, it may be prohibited by local no-smoking laws — such as the Indianapolis Ordinance — which are allowed to be more restrictive than the state law.

Other resources

NOTE: This is not a comprehensive analysis of the Indiana Smoke Free Air Law. There are other exceptions and other requirements that may apply to your business or nonprofit (even if it is exempt from the ban itself) that we have not discussed. Here are some other resources:

• The full text of the statute can be found at Ind. Code 7.1-5-1.
• Signs that comply with the state law are readily available from a number of suppliers.

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UPDATE, February 19, 2013.
Yesterday, the House Judiciary Committee amended HB1394 to remove the language discussed in this blog post — the changes to IC 23-18-6-7 that would have expressly provided that a charging order is the only right that the creditor of an LLC member has with respect to the LLC. It appears that Indiana will remain in the fourth category of states listed in the article — those in which there is no reverse veil piercing for multi-member LLCs, with the issue remaining unsettled with respect to single member LLCs. The most recent version of the bill is available here.

In my last post, I discussed HB 1394, a bill pending in the Indiana General Assembly that would make several amendments to the statute that governs Indiana limited liability companies. One of the most important changes is to strengthen the so-called “charging order” protection, which I’ll describe shortly after a brief review of some attributes of LLCs and corporations.

Recall that corporations and LLCs both have liability shields that protect the owners of the company (for a corporation, the shareholders; for a limited liability company, the members) from being personally liable for the company’s obligations. That liability shield (whether it’s for a corporation or LLC) is sometimes called a corporate veil, and in some circumstances courts will ignore the shield, or pierce the corporate veil, to allow creditors of the business to reach the personal assets of the owners. I’ve previously discussed precautions that LLC members can take to keep that from happening.

When a court allows a creditor of the business to reach the personal assets of the owners, it’s sometimes called “inside-out veil piercing,” which implies there might be something else called “outside-in veil piercing.” And there is.

Consider what happens when a shareholder of a corporation owes money to a creditor. The shareholder’s stock is just like any other asset, like a bank account, a house, or a car. And just like any other asset (well, most other assets), the stock is subject to foreclosure, which effectively means the creditor takes over ownership. The creditor, now the new shareholder, receives all the rights associated with the stock, including the economic rights (i.e., the right to receive dividends, if there are any) and the non-economic rights (including the right to vote in elections of the board of directors). That’s called “outside-in veil piercing” or sometimes “reverse veil piercing.” If the creditor takes over enough shares of stock, he or she can gain control of the company. Even if the creditor does not gain control of the company, the other shareholders may suddenly find themselves co-owners with someone they don’t even know, maybe even with someone they despise. For large, publicly traded companies with millions of shareholders, that’s no big deal. For family businesses or other businesses with only a few shareholders, it can be a very big deal.

The area of reverse veil piercing is one in which LLCs differ tremendously from corporations, at least in some states, and it is one of the reasons that I advise clients to set up LLC’s far more often than I advise them to set up corporations. When it comes to the rights of a member’s creditors, many states, including Indiana, treat the member’s economic rights and non-economic rights separately. For example, IC 23-18-6-7 allows a court to issue an order requiring a limited liability company to pay to a member’s creditors anything that the LLC would otherwise be required to pay to the member. That’s called a charging order, and it’s something like an order for the garnishment of wages, applied to a member’s right to receive LLC distributions.

The question is whether a charging order is the only remedy a creditor has against the member’s rights. If so, there is no reverse veil piercing, and a member’s creditors cannot take over control of the business or gain a seat at the table with the other members. I believe there are currently five categories of states:

1. Those in which reverse veil piercing is not allowed for LLCs.
2. Those in which reverse veil piercing is allowed for single-member LLCs but not for multi-member LLCs.
3. Those in which reverse veil piercing is allowed for both single-member LLCs and multi-member LLCs (essentially treating LLCs the same as corporations).
4. Those in which there is no reverse veil piercing for multi-member LLCs but for which the law is unresolved for single-member LLCs.
5. Those in which the law is unresolved for reverse veil piercing both single-member and multi-member LLCs.

Until fairly recently, Indiana was in the fourth group of states. As I’ve discussed elsewhere, a 2005 decision of the Indiana Court of Appeals, Brant v. Krilich, held that there is no reverse veil-piercing for multi-member LLCs, but apparently leaving the question open for single-member LLCs.

HB 1394 would add a provision to IC 23-18-6-7 expressly stating that a charging order is the exclusive remedy for a judgment creditor of a member and that the creditor has no right to foreclose on the member’s interest. Because the bill makes no distinction between single-member and multi-member LLCs, it appears that HB 1394 would place Indiana in the first category of states — those for which reverse veil piercing is not allowed for either single-member or multi-member LLCs.
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Statutes governing limited liability companies, or LLCs, vary considerably from state to state. In our opinion, Indiana’s statute is already among the best in the country, and a bill introduced in the 2013 session of the Indiana General Assembly proposes several changes that would make it even better for small business owners, particularly family-owned businesses. Among other things, HB 1394, introduced by Rep. Greg Steuerwald (R Avon) would:

• Eliminate the possibility that a creditor of a member can take over the member’s voting rights
• Allow a membership interest to be held in joint tenancy with the right of survivorship
• Allow a membership interest to be designated as “transfer on death” property
• Expressly provide for LLC officers

Later posts will discuss these proposed changes in more detail, including a few suggestions for possible revisions to the bill that would make it even better. In the meantime, however, small business owners in Indiana may want to contact their state representatives and senators urging them to support HB 1394.
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The Internal Revenue Service has announced the following standard mileage rates used to calculate income tax deductions for business travel expenses and for travel expenses incurred while serving charitable organizations.

• Business, $0.565 per mile
• Charitable service, $0.14 per mile

I explained in my last two posts how construction managers can be subject to liability when a construction contractor’s employee is injured. Ordinarily, the construction manager has no duty to provide a safe workplace for the employees of a construction contractor and, therefore, is generally not liable for injuries to those employees. However, a construction manager can assume a duty to those employees in one of two ways — either by contract or by actions — and end up with liability for injuries.

For that reason, some construction managers have been reluctant to have any involvement with safety programs. By drafting contracts carefully, a construction manager can be fairly certain of not assuming a duty contractually, but it is difficult to know exactly what actions a construction manager can or cannot take without incurring liability. The Plan-Tec and Hunt cases discussed in our last post create some certainty. Specifically, a construction manager may take on contractual commitments to perform certain actions without assuming a duty to the employees of construction contractors and, consequentially, without incurring liability it would not otherwise have.

However, the construction management must avoid contractually undertaking to be the “insurer of safety for everyone on the project.” Here are some examples of what a construction manager should include in the construction management contract:

(a) To “make certain its avoidance of liability” the court in Hunt said a construction manager can include a provision with language expressly disavowing responsibility for job-site safety (EX: “in no case shall…the Construction Manager…have either direct or indirect responsibility for matters relative to Project safety.”).

(b) In Plan-Tec, the court held that the construction manager had not assumed a duty because the construction management contract “unequivocally state[d] that the contractors were to have the responsibility for project safety and the safety of their employees.” This language demonstrates that the responsibility for project safety belonged to the construction contractors, not the construction manager.

(c) Hunt’s contract stated that the construction manager’s services were “rendered solely for the benefit of the [Project Owner] and not for the benefit of the Contractors, the Architect, or other parties performing Work or services with respect to the Project.” This confirmed that no one but the Project Owner, not even a subcontractor’s injured employee, could expect to “benefit” from Hunt’s contract with the Project Owner or claim the contract obligated Hunt to assure their safety.

(d) Hunt’s contract provided that Hunt was not “assuming the safety obligations and responsibilities of the individual Contractors,” and that Hunt was not to have “control over or charge of or be responsible for…safety precautions and programs in connection with the Work of each of the Contractors, since these are the Contractor’s responsibilities.” In addition, it said that the construction contractor was the “controlling employer responsible for its own safety programs and precautions,” and Hunt’s responsibility to review, monitor, and coordinate those programs did “not extend to direct control over or charge of the acts or omissions of the Contractors, Subcontractors, their agents or employees or any other persons performing portions of the Work and not directly employed by Hunt.” This proved that Hunt was not vicariously liable for a subcontractor’s negligence in executing its own safety precautions.

Given the above contract provisions which help construction managers to avoid contractually assuming responsibility for job-site safety, consider one related reminder about avoiding liability as a result of actions. Remember how construction managers can become liable when they voluntarily perform safety obligations beyond what they previously agreed to in the construction management contract? For this reason, one last contract provision which would benefit construction managers could require that, if the project owner demands that construction manager begin to perform additional safety obligations, such new obligations would first be incorporated into the original contract via an amendment. This would serve as a contractual way to manage the risk of that other means of incurring liability – the construction manager’s actions.

Now, here are some examples of what a construction manager seeking to avoid liability should not include in a construction management contract:

(a) Provisions by which the construction manager accepts the “duty to maintain safety on the project.”

(b) Provisions providing that the construction manager is responsible for the contractors’ compliance with state and federal regulations. A provision like that could show that the construction manager was undertaking legal oversight of the subcontractors. As recounted in point (d) above, construction managers can safely contract to review, monitor, and coordinate safety programs and precautions, but not to be responsible for those programs as the “controlling employer.” The important inquiry is whether the construction manager has agreed to ensure contractors’ compliance with the law or whether the construction manager has only agreed to monitor contractors’ compliance for the project owner.

(c) Language such as: the construction manager “shall take reasonable precautions for safety of…employees on the Work.”

(d) Language such as: The construction manager “shall take all necessary precautions for the safety of employees on the work.”

(e) Language such as: The construction manager “shall take all necessary precautions for the safety of all employees on the project.”

Ultimately, the Indiana Supreme Court held that even though Hunt had agreed to some safety-related responsibilities in the original contract, those responsibilities didn’t invoke “vicarious liability.” In doing so, the court chose to further the policy of providing “a way of promoting safety without exposing contract managers to suits like this one,” rather than encourage construction managers to avoid taking on any responsibility for promoting job-site safety for fear of incurring liability.
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As discussed in my last post, general contractors and construction managers have very different roles in a construction project. General contractors are sometimes sued when their subcontractor’s employees are injured on the job, but that’s not as often the case for construction managers. In addition, the liability analysis is quite different for construction managers because, unlike general contractors, construction managers do not have overall responsibility to perform the construction and they generally only contract with project owners, not with other subcontractors. A recent Indiana Supreme Court opinion, (“Hunt Construction Group, Inc. v. Garrett“) (“Hunt“)sheds light on the analysis of construction manager liability.

The opinion concluded litigation which had arisen out an accident which occurred during the construction of the Lucas Oil Stadium. In Hunt, a subcontractor’s employee was injured and subsequently sued the construction manager (“Hunt”). The Hunt court based its analysis on Plan-Tec, Inc. v. Wiggins (“Plan-Tec“), the first reported case in Indiana where the employee of a subcontractor sued a construction manager. Indiana courts use Plan-Tec as a “template” to evaluate claims of negligence against construction managers for injuries suffered by subcontractors’ employees, and the central test of the template specifically says that “a construction manager owes a legal duty of care for job-site employee safety in two circumstances: (1) when such a duty is imposed upon the construction manager by a contract to which it is a party, or (2) when the construction manager assumes such a duty, either gratuitously or voluntarily.'” Thus, a court will determine whether a construction manager is liable for the employee’s injury based on the construction manager’s contracts and actions, and only one of these is necessary to prove liability.

Three things in Plan-Tec led the court to find no contractual liability for the construction manager: (1) The construction manager’s contract did not specify that the construction manager had any safety responsibilities, (2) the subcontractor’s contracts clearly indicated they had responsibility for project safety and the safety of their employees, and (3) the subcontractor’s contracts expressly disclaimed that the construction manager had any direct or indirect responsibility for project safety.

Unlike in Plan-Tec, in Hunt, the construction manager’s contract did impose some general safety-related responsibilities on the construction manager. For example, Hunt was responsible for approving contractors’ safety programs, monitoring compliance with safety regulations, performing inspections, and addressing safety violations. Hunt also had the ability to remove any employee or piece of equipment deemed unsafe. However, the court determined that none of the safety-related provisions imposed on Hunt a specific legal duty to or responsibility for the safety of all employees at the construction site. Instead, the contract included “clear language limiting [Hunt’s] liability” which persuaded the court that the construction manager did not have a legal duty of care to subcontractor’s employees for job-site safety. We will explore that specific contractual language which limited Hunt’s liability in the next post.

But even if construction managers are not liable because of their contracts, they can still, by their actions or conduct, assume “a legal duty for job-site employee safety.” In Plan-Tec, it was Plan-Tec’s assuming of new supervisory duties beyond those required by the initial construction documents and after the project had already begun which raised the issue of whether it had assumed by its actions such a legal duty of care. For example, Plan-Tec took on extra responsibility by appointing a safety director, initiating weekly safety meetings, directing that certain safety precautions be taken by the subcontractors, and daily inspecting the scaffolding (which scaffolding ultimately injured the employee in that case). However, in Hunt, the court affirmed that the Plan-Tec ruling does not mean that a construction manager must avoid all such responsibilities in order to avoid liability for workplace injuries. In fact, Hunt had equally undertaken each of the previously mentioned actions taken by Plan-Tec. The difference was that, in Hunt’s situation, none of these actions were beyond those required by the original construction documents, and (as discussed above) those documents limited Hunt’s liability. This simple fact indicated to the court that Hunt did not by its actions assume a legal duty for the employee’s safety. Because Hunt neither assumed a duty by its contracts nor its actions, Hunt prevailed.
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