ADR, Negligence, and Independent Contractor Law Explained

Introduction: Good Grocers and Its Legal Challenges

Good Grocers, Inc. is an expanding, up-and-coming company that needs to preserve its reputation in the competitive grocery industry. As an organization particularly committed to promoting itself as ethical — given its pro-organic and buy-local stance — it must be especially careful to safeguard its positive public image. Two distinct legal situations now require careful analysis: a customer slip-and-fall injury claim and a question of worker classification for a part-time cake decorator. In both cases, the company's best interests are served by informed legal decisions that minimize financial exposure and protect its brand.

Situation 1: Slip-and-Fall and Alternative Dispute Resolution

Given the company's need to avoid a costly lawsuit, alternative dispute resolution (ADR) is advised as the best way to address the angry customer who claims to have slipped on a banana peel and injured herself. ADR would be less publicly embarrassing and a more attractive option for both the company and the aggrieved customer. As Cornell Law School explains, "Alternative Dispute Resolution ('ADR') refers to any means of settling disputes outside of the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration. As burgeoning court queues, rising costs of litigation, and time delays continue to plague litigants, more states have begun experimenting with ADR programs" ("ADR," 2015).

ADR can involve mediation between the two parties with a mutually agreed-upon professional mediator. It is less costly and more efficient than litigation. Arbitration is a more formal process: "To comprise a panel, either both sides agree on one arbitrator, or each side selects one arbitrator and the two arbitrators elect the third. Arbitration hearings usually last between a few days to a week, and the panel only meets for a few hours per day. The panel then deliberates and issues a written decision, or arbitral award" ("ADR," 2015). Crucially, in both mediation and arbitration there is no public record of the dispute — a significant advantage for Good Grocers.

Negligence Analysis and the Case for Settlement

Several factors complicate the customer's potential claim. The attitude of the woman's husband — his reference to his wife's career as a news anchor and his immediate threat to sue — suggests he was intent on making trouble rather than genuinely concerned about a serious injury. Moreover, his wife was wearing five-inch heels, which clearly contributed to the fall. The banana peel was located on a ribbed mat, which indicates the store took reasonable precautions to protect customers from slip-and-falls.

Negligence is established by the presence of four elements: a duty to care for others, a breach of that duty, an injury to the aggrieved party, and monetary losses to the injured party, such as medical bills (Calisi, 2015). The store fulfilled its duty by using protective mats, and although an injury and loss occurred, these were likely linked to the woman's footwear rather than to the peel itself. The customer bears a responsibility to protect herself with respect to her choice of footwear; the store did not engage in negligent conduct as it would have, for example, by leaving an unmarked puddle of soapy water or failing to clear snow from a walkway.

Given the ambiguity of the situation, the couple would be ill-advised to bring the case to court. The weakness of their case means that, ideally through mediation, Good Grocers could offer a small settlement or even complimentary groceries as a goodwill gesture. If the case went to court, the couple would almost certainly lose; however, the reputational cost to Good Grocers and the time and expense of litigation are sufficient reasons for the company to make some conciliatory gesture. Defending a lawsuit would still require the company to establish the improbability that the mat caused the slip, potentially requiring expert witnesses and other costly elements of litigation — none of which would be necessary under ADR.

Situation 2: Independent Contractor or Employee?

A number of factors are ambiguous regarding the legal status of an independent contractor. According to the IRS, there are three general common law factors that determine whether an individual is an independent contractor. The first is behavioral: "Does the company control or have the right to control what the worker does and how the worker does his or her job?" ("Independent contractor," 2015). In the case of Ms. Greene, she is decorating cakes for the bakery. Unlike in her own bakery business, she is presumably decorating the cakes according to the company's specifications — not by direct customer order and not according to her own artistic discretion. This suggests that, although she functions as an independent contractor in her own business context, she is also technically performing part-time work for the bakery.

Conclusion and Recommended Actions

Overall, although the case is not clear-cut, Ms. Greene's argument — in the absence of a previously established business contract specifying that she is a part-time employee — seems to suggest that she is functioning as an independent contractor. The fact that she owns her own business is not a decisive factor, but it could be viewed as a contributing consideration when evaluating her claim to part-time employee status as overstated. Nevertheless, certain aspects of the relationship could prove problematic for the company in the future, including the fact that she is paid by the hour rather than by the piece, and the fact that her duties during the Mother's Day shift appeared to be broader than simply decorating cakes.

Even the IRS acknowledges that the situation is often murky: "There is no 'magic' or set number of factors that 'makes' the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another" ("Independent contractor," 2015). To avoid future tax or legal problems, the company should establish a clear contractual relationship with Ms. Greene that explicitly identifies her status as an independent contractor, and should cease to employ her if she does not agree to these terms. Alternatively, if her services are sufficiently valuable, the company should formally employ her as a part-time worker with the appropriate documentation and benefits.

Alternative Dispute Resolution (ADR). (2015). Cornell University Law School. Retrieved from https://www.law.cornell.edu/wex/alternative_dispute_resolution

Calisi, A. (2015). Using the elements of negligence to build a strong personal injury claim. Injury Claim Coach. Retrieved from http://www.injuryclaimcoach.com/elements-of-negligence.html

Independent contractor (self-employed) or employee? (2015). IRS. Retrieved from