Master/Servant Agency Relationship
- A type of agency relationship most commonly found in a straight-forward employment relationship where the employer has the power to control the physical conduct of the employee’s functions.
- Other types of agency relationships might rise to the level of master/servant without being technically employment relationships.
- a servant may be a corporation or other business organization.
- master/servant relationships can be several layers deep- corp employs another corp with employees.
Master- Definition
§ 2. MASTER
(1) A master is a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.
[The ammount of control a P has is huge in determining whether that person is a servant or IC, but not exclusive.]
Servant/Independent Contractor- Definitions
§ 2 SERVANT; INDEPENDENT CONTRACTOR
(2) A servant is an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master.
[All servants are agents.]
(3) An independent contractor is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking. He may or may not be an agent.
[An IC may be an agent.]
Why does it matter?
The legal consequences of the various arrangements differ significantly. The most important legal consequences:
- Taxes/Regulations- tax consequences are different for employees than for IC’s & employment laws that don’t apply to IC’s.
- Liability- A servant can create vicarious liability in the principal for physical harms caused to third persons by the torts of the servant. Ordinarily, torts committed by an IC do not create vicarious liability for the other contracting party.
- Duties & Immunities- A master/servant relationship also creates special duties and immunities that an employer/master might owe to the employee/servant. Both master and servant owe duties to each other.
Duties Masters Owe
§ 492 General Rules.
A master is subject to a duty that care be used either to provide working conditions which are reasonably safe for his servants and subservants [not IC’s], considering the nature of the employment, or to warn them of risks of unsafe conditions which he should realize they may not discover by the exercise of due care.
Caveat: No opinion is expressed as to whether or not the master is subject to liability to a servant harmed by the intentional failure of a person to whom the master has entrusted the duty of making working conditions safe, if the failure to make safe results from the intention of such person to cause harm.
This duty is non-delegable.
Determining a Servant Factors
- DEFINITION OF SERVANT
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant; and
(j) whether the principal is or is not in business.
Questions in Determining Master’s Liability
The master is not liable for everything the servant does under all conditions and in all circumstances. Instead, the master is liable for the torts of his servant, but only when the servant commits those torts while “acting in the scope of his employment.” [thus no liability for servant acting outside the scope of employment, with some exceptions]
Questions to ask:
- Is the agent a servant or merely an IC?
- If a servant, was the servant acting within the scope of the employment?
Exceptions to Servant Tort Liability ‘Outisde Scope of Employment’
The exceptions to the general rule, i.e., situations where the master will be subject to liability for torts committed outside of the scope of employment, are:
(a) where the master intended the conduct or the consequences, or
(b) where the master was negligent or reckless, or
(c) where the conduct violated a non-delegable duty of the master, or
(d) when the servant purported to act or to speak on behalf of the principal and there was reliance upon apparent authority, or he was aided in accomplishing the tort by the existence of the agency relation.
Servant Scope of Employment
§ 228. GENERAL STATEMENT
- Conduct of a servant is within the scope of employment if, but only if:
- it is of the kind he is employed to perform;
- it occurs substantially within the authorized time and space limits;
- it is actuated, at least in part, by a purpose to serve the master, and
- if force is intentionally used by the servant against another, the use of force is not unexpectable by the master.
- Conduct of a servant is not within the scope of employment if it is different in kind from that authorized, far beyond the authorized time or space limits, or too little actuated by a purpose to serve the master.
Factors of Conduct w/in Scope of Employment
§ 229. KIND OF CONDUCT WITHIN SCOPE OF EMPLOYMENT
(1) To be within the scope of the employment, conduct must be of the same general nature as that authorized, or incidental to the conduct authorized.
(2) In determining whether or not the conduct, although not authorized, is nevertheless so similar to or incidental to the conduct authorized as to be within the scope of employment, the following matters of fact are to be considered:
(a) whether or not the act is one commonly done by such servants;
(b) the time, place and purpose of the act;
(c) the previous relations between the master and the servant;
(d) the extent to which the business of the master is apportioned between different servants;
(e) whether or not the act is outside the enterprise of the master or, if within the enterprise, has not been entrusted to any servant;
(f) whether or not the master has reason to expect that such an act will be done;
(g) the similarity in quality of the act done to the act authorized;
(h) whether or not the instrumentality by which the harm is done has been furnished by the master to the servant;
(i) the extent of departure from the normal method of accomplishing an authorized result; and
(j) whether or not the act is seriously criminal.
