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PE Liability When Doing Contract Work in Exempt Industries

PE Liability When Doing Contract Work in Exempt Industries

PE Liability When Doing Contract Work in Exempt Industries

I have PE license and considering doing contract design work in exempt industries. Do I have additional liability concerns as a contractor vs a direct employee in an exempt industry? Does not stamping drawings or documents eliminate the liability as PE?

Some of the product designs will be use by public as the end user/consumer. This may also require approval agency listings such as UL, and CSA , if the product contains a potential specific hazard to consumers. In this case, I would have to design to the approval agency specifications , but not responsible for the submission to the approval agency. Other designs may have no approval agency requirements.

RE: PE Liability When Doing Contract Work in Exempt Industries

According to my attorney 'not stamping' in no way eliminates your liability. If you are doing work that does require your engineering knowledge then you are liable.

RE: PE Liability When Doing Contract Work in Exempt Industries

Mechie10 - In the USA, the industrial exemption varies from state to state. Some states do not have an industrial exemption at all, in other states it applies only to certain industries, and in some, it covers just about any industry. The more or less common thread is that work performed has to be exclusively for a direct employee's employer. I worked as a direct employee in an exempt industry. I used my seal only for our company projects that affected either the public or another company. As a contract employee, working on products for use by the public, I suggest you obtain the appropriate insurance.

Here is a recent (2011) summary of industrial / manufacturing exemption laws for all states: Link

www.SlideRuleEra.net idea
www.VacuumTubeEra.net r2d2

RE: PE Liability When Doing Contract Work in Exempt Industries

Mechie10...as a licensed professional engineer, you will almost always be held to a higher standard, even if doing exempt work. Heed SRE's advice!

RE: PE Liability When Doing Contract Work in Exempt Industries

Thanks for the input everyone. I would think I need to look into the Error & Omissions (Professional Liability) insurance and General Liability to cover other aspect of the business as well.

If you work as a direct employee for an non-exempt industry, such as an Engineering Services Company, what is industry standard practice regarding insurance during and after your employment? I would think during your employment the company would have you on their E&O policy , but what about after your employment. Is it industry practice to cover you for a certain length of time, such the statute of limitations for a lawsuit ?

RE: PE Liability When Doing Contract Work in Exempt Industries

When I got my P.E. I was working for a major Oil & Gas company. I got a free trip to Houston to spend a day with the lawyers within a week of notifying the company I had passed the test. The lawyers told me some interesting things (I am relating what the lawyers told me, I have never had cause to determine if their interpretation is in line with the NM and CO Boards):
  • A non-Engineering company is legally prohibited from providing E&O or Liability coverage for a P.E. in their employ.
  • If a P.E. in their employ is brought up on charges related to the obligations of licenseure not only can they not provide legal advice/representation, they are required to dock his pay for any time spent defending the charge.
  • If there is work being done that requires a P.E. stamp, they will not thank me for stamping it instead of hiring a P.E., they will treat my stamp just like any other and will not defend it or me at all.
  • In summary, if you ever stamp a document or drawing for this company the Legal Department will be asked to determine if that act meets the company standards for immediate dismissal and it probably will.
All that the so-called "industrial exemption" does is allow employees to "hold themselves out" within the company as offering engineering services without a license. If something like an SPCC Plan or structural drawing has a federal/state/local requirement for a P.E. stamp, that stamp carries exactly the same obligations and liabilities for a P.E. employee as for a P.E. contractor. If I, as a consultant for a company in an exempt industry, design a pipeline there is no obligation for me to stamp the fabrication drawings, but if one of my designs is properly built to my design and it fails and injures someone then my liability is the same as if I had stamped it.

David Simpson, PE
MuleShoe Engineering

In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist

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