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TBJ OCTOBER 2021 [Opinion]

Meanwhile, Back at the Ranch

What’s your liability for injury caused by farm animals and can you protect yourself from liability?

Written by Gary Lawson


In 2017, Texas led the nation in number of farms and ranches, with 248,416 farms and ranches covering 127 million acres, and cattle was the largest commodity in Texas, accounting for some $12.3 billion in revenue, according to data from the Texas Department of Agriculture. Many Texas landowners ranch and raise animals as a business and others to protect the agricultural tax status of their land.

Most ranch and farm owners know and appreciate the dangers farm animals pose to humans; working with livestock can cause injures and even deaths. But many ranch and farm owners don’t understand the legal risks and potential financial liabilities that ranching and farming can pose and how they might be able to reduce that risk.

The 2021 Legislature amended Chapter 87 of the Texas Civil Practices and Remedy Code, renaming it Liability Arising From Farm Animals, and greatly expanded what is within the scope of engaging in a farm animal activity, who is protected from liability, and overturned the Texas Supreme Court decision in Waak v. Rodriguez, affording Texans substantial protection from liability for injuries caused to people by farm animals. Nonetheless, farmers, ranchers, and others engaged in farm animal activity still need to understand the parameters of the law and among other things must strictly adhere to the new contracts, signage posting, and exact wording requirements of Sections 87.005(a), (b), and (c), Civil Practice and Remedies Code, as amended. The required language reads:

“WARNING
UNDER TEXAS LAW (CHAPTER 87, CIVIL PRACTICE AND REMEDIES CODE), A FARM ANIMAL PROFESSIONAL OR FARM OWNER OR LESSEE IS NOT LIABLE FOR AN INJURY TO OR THE DEATH OF A PARTICIPANT IN FARM ANIMAL ACTIVITIES, INCLUDING AN EMPLOYEE OR INDEPENDENT CONTRACTOR, RESULTING FROM THE INHERENT RISKS OF FARM ANIMAL ACTIVITIES.”

No one wants to unduly risk an injury to anyone, and farmers, ranchers, and others within the scope of potential protection under Chapter 87 should of course take reasonable precautions to protect people from harm. In fact, the following may bar the wrongdoer from the protection of Chapter 87: the willful or wanton disregard for the safety of a participant where such act or omission caused the injury; providing faulty equipment; and not making a reasonable and prudent effort to determine the ability of the participant to engage safely in the farm animal activity, including a work activity or livestock show to determine the ability of the participant to safely manage the farm animal or livestock animal.

Is there anything else your clients can do to protect themselves and their ranch, farm, or other covered animal activity from financial ruin if an unforeseen serious injury or death does occur?

Farmers, ranchers and the others whose activities are now better protected by Chapter 87 and their lawyers need to understand that even after the amendment to Chapter 87 there are still limitations on the potential protections and areas of liability exposure when someone is injured or killed by farm animals.

Lawyers should carefully examine the interplay of the Texas Workers’ Compensation law and how these laws effect the outcome of any liability for a person injured or killed by a farm animal if the farmer, rancher, or other party covered by Chapter 87 is not exempted from liability under that chapter.

Under the precursor, the Farm Animal Liability Act, there had been disagreements in lower court regarding whether the old law’s protection applied when the injured person was an independent contractor and just who was an independent contractor.

Under the law as amended effective September 1, 2021, Section 87.001(9)(A)(iii) includes both independent contractors and employees in the definition of a “participant.” In the pre-amendment Supreme Court decision in Rodriguez v. Waak, where a worker was killed by a bull and the rancher defendant argued that the worker was an independent contractor, the court held he was not an independent contractor, expressly because of unique provisions in the Texas Workers’ Compensation Act, or TWCA, and the fact that the rancher had opted out of the TWCA. The TWCA expressly then and still does provide that some people you might think are independent contractors are in fact, not, as a matter of statute.

As a historical note, the Rodriguez v. Waak court held that the worker was an employee for purposes of the TWCA Labor Code Chapter 406 because to be considered an independent contractor of a farm or ranch, the person must be employed by another entity, one that is the employer of that worker, paying wages, directing activities, and performing similar functions, etc.1 The TWCA was not amended to change that rule and if your client is not shielded from liability under Chapter 87, and if there is no workers’ compensation insurance, you will need to dig further into the TWCA to see what might befall your clients.

A farm animal activity sponsor, farm animal professional, farm owner or lessee, livestock producer, livestock show participant, or livestock show sponsor, etc., operating one of the now very broadly defined farm animal activities at Section 87.001(3) may nonetheless be barred from claiming the exemption from liability if they: have not properly posted Section 87.005(c) warning sign(s), have written contracts as specified in Section 87.005(b) that do not contain the warning language of Section 87.005(c), or under Section 87.004, if they knowingly provided faulty equipment or tack, or did not make a reasonable and prudent effort to determine the ability of the participant to safely engage in the activity, or willfully and wantonly disregarded the safety of the participant, etc. And thus, if liability is not shielded by Chapter 87, then whether or not there was workers’ compensation insurance may still be very critical.

While the intricacies of the TWCA are well beyond the scope of this article, let me suggest the readers look at the TWCA provision and the distinction in treatment for ranchers and farmers.

For example, farmers and ranchers who have three or more workers or whose payroll exceeds a statutory amount described in the TWCA and who don’t have workers’ compensation insurance may have serious problems defending themselves. While the author thinks having workers’ compensation insurance is almost always worthwhile protection for both employers and employees, lawyers should study the potential consequences of not having workers’ compensation insurance.

Of course, we know that Texas law does not require that any employer purchase workers’ compensation insurance. But the TWCA provides that employers whose operations are covered by the TWCA and who do not provide workers’ compensation insurance, are barred from later asserting three critically important civil law defenses: contributory negligence, assumption of the risk, or the wrongful acts of another employee if an injured employee sues.

TWCA § 406.162(a)(3) contains special rules that only apply to farms and ranches and Section 406.162(a)(3)(B) provides that the TWCA applies to any farm or ranch that either has a gross annual payroll in an amount required for coverage of seasonal workers under Subdivision (a)(2)(B) (currently $25,000); or which employs three or more farm or ranch employees other than migrant or seasonal workers.2

In other words, if a ranch or farm falls below the payroll test and the less than three employee rule, that farm or ranch does not have to have workers’ compensation insurance to preserve common law defenses. But if that farm or ranch exceeds these limits and does not have workers’ compensation insurance, that farmer or rancher may be proceeding at great peril.

Assuming your client is not entitled to the Chapter 87 protection, but your client falls below the $25,000 and three-employee TWCA test described above, that of course does not mean they will automatically win. They might be able to win if you can prove the worker was contributorily negligent or knew enough and assumed the risk of the activity or the accident was caused by the action of another employee. The problem is that your client will have to spend a great deal of money and time away from their work or other activities to defend the case and they still might lose.

Despite the better protection afforded by Chapter 87, clients might still want to evaluate whether it is wiser to purchase a workers’ compensation policy and save themselves and those who might be working for them a ton or two of trouble.3 TBJ

 

Notes
1. TWCA § 406.165. (a) A farm or ranch employee who performs work or provides a service for a farm or ranch employer subject to this subchapter is an employee of that employer unless the employee is hired to perform the work or provide the service as an employee of an independent contractor; (b) In this section, “independent contractor” means a person, other than a labor agent, who contracts with a farm or ranch employer to perform work or provide a service for the benefit of the employer and who ordinarily: (1) acts as the employer of the employee by paying wages, directing activities, and performing other similar functions characteristic of an employer-employee relationship; (2) is free to determine the manner in which the work or service is performed, including the hours of labor or the method of payment; (3) is required to furnish necessary tools, supplies, or materials to perform the work or service; and (4) possesses skills required for the specific work or service. TWCA § 406.165(b).
2. TWCA § 406.162 contains other special rules for migrant and seasonal workers that would add additional complexity and, for brevity, are not discussed in this article.
3. TWCA § 406.164 also permits a purchaser of workers’ compensation insurance to cover themselves, officers, and family members specifically named in the policy.



Gary LawsonGARY LAWSON,
a business transactional, employee benefits, and employment lawyer who spent most of his career as a partner at three large Texas law firms, regularly represents businesses, business owners, and C-level executives and government entities and pension plans. He devotes most of his spare time to running a nonprofit called Independencecorps.org, providing high-tech mobility devices to wounded veterans & first responders.

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