Equine Law Blog

Are Your Barn Helpers Excluded “Employees” Under Your Liability Insurance?

Farms and stables often bring on “casual” labor, especially during times when hay is being loaded or other occasional labor-intensive chores are in progress.  What happens if one of these occasional helpers is hurt and you have no workers' compensation insurance.  Will your business liability policy protect you?

That was the issue in a Pennsylvania case last year, Nationwide Mutual Insurance Co. v. Shaw, No, 3:10cv374 (U.S. Dist, Ct. M.D. Pa. 8/22/2011).  There, the insured stable had a "Donkey Ball" entertainment business.  With a stable of hungry donkeys, he needed plenty of hay on site.  One day a friend, a retired farmer, came to help load hay in the barn, but he was injured when he fell from a second-floor loft.

The injured barn helper sought compensation, and a claim was made with the stable’s insurer under its commercial liability policy.  The insurer, Nationwide, raised several grounds to support denial of the claim and filed a lawsuit (called a declaratory judgment action”).  A key issue was the policy's employee exclusion.  The Court focused on facts demonstrating that the worker had no set work schedule, no salary, and received merely some cash and hay in exchange for his occasional help.  It found that the work arrangement was of a social nature and lacked formalities typically associated with an employer-employee relationship.  Ultimately, the Court ruled against Nationwide and in favor of coverage for the defendant/insured party.

Many liability policies have "employee exclusions,” that can generate disputes.  Plan ahead and make sure that you are properly covered.

If you have any questions or need assistance reviewing your coverage, please let me know.

Categories: Insurance, Liability