Texas 2013 Legislative Update: Limitations on Liability for General Contractors and Subcontractors

General contractors and subcontractors have long been wary of hiring individuals with criminal backgrounds, and rightfully so. A cornerstone of many suits against general contractors and subcontractors include causes of action for negligent hiring, retention, and/or supervision of its employees.

However, newly enacted House Bill 1188, now Title 6, Chapter 142, of the Texas Civil Practices and Remedies Code, effectively limits at least some of the liability general contractors and subcontractors once faced for hiring individuals with criminal backgrounds.

Specifically, Chapter 142 states that “a cause of action may not be brought against [a] … general contractor … solely for negligently hiring or failing to adequately supervise an employee, based on evidence that the employee has been convicted of an offense.” While this affords some limitation of liability, the use of the phrase “solely for” clearly indicates that this limitation is not without exceptions.

A general contractor or subcontractor may still be liable if it knew or should have known of the conviction and the employee was convicted of one of the following offenses:

  • an offense that was committed while performing duties substantially similar to those reasonably expected to be performed in the employment, or under conditions substantially similar to those reasonably expected to be encountered in the employment, taking into consideration the factors listed in Sections 53.022 and 53.023(a), Occupations Code, without regard to whether the occupation requires a license;
  • an offense listed in Section 3g, Article 42.12, Code of Criminal Procedure; or
  • a sexually violent offense, as defined by Article 62.001, Code of Criminal Procedure.

Further, Chapter 142 does not apply in a suit concerning the misuse of funds or property of a person other than the general contractor or subcontractor by an employee if, on the date the employee was hired, the employee had been convicted of a crime that includes fraud or the misuse of funds or property as an element of the offense, and it was foreseeable that the position for which the employee was hired would involve discharging a fiduciary responsibility in the management of funds or property.

It is important to note that Chapter 142 applies only to a cause of action that accrues on or after the effective date of September 1, 2013. For the complete text of the Bill please navigate to the following link:

http://www.legis.state.tx.us/tlodocs/83R/billtext/html/HB01188I.htm

As always, please contact Patout & Shaw, PLLC should you have any questions or concerns regarding current or potential liability.

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