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indemnifation 3

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5747hazel

5747hazel

Structural
Dec 28, 2019
43
I am currently working for a shop that is not registered to provide engineering services to public. and I am the only PE in the shop. and the employer does not carry any E&O policies and refuses to purchase one for me. I am debating if I should let the shop hire my LLC or me personally. below is an interesting thread I just read.
here are some concerns I have if anyone can give me some advice.

1)if I work as an employee. a lot of times EOR would require the shop to have the shop drawings stamped by a PE. I am the person who is going to do it in that case. I have been shopping for an E&O policy for a while and I thought the policy should cover everything that the insured does when the policy is active. say I stamp something this year and ten years later when I do not pay the policy anymore and the project I stamped happens to take some bad actions. since I did the project when i had the policy the policy should cover me. but the agent told me that the policy only works when the claim is filed when I paying it. I have to pay the policy forever then which is kind of unreasonable. that makes having a policy almost infeasible. if i know i would not be able to carry it forever there is no point to pay it now.

2) as an employee if I am lucky to never seal any drawings. can the employer or the clients still sue me since I am the one who engineers the products which the employer has record of? I think I can get an indemnification from the employer which i learnt from the thread above. but somehow i still dont feel safe especially considering the employer has a tendency to not follow my engineering instruction. and the clients if they know I am the one who engineers it could still come to sue me personally i guess. you will never get sued if you just simply do not seal the documents as someone says in the thread? I doubt that.

3)if i let the shop hire my firm i think my firm can get a policy but still i have to carry that policy forever to get covered for whatever i ever did or do. that is kind of insane.

4) even the employer to purchase the policy but they can cancel anytime and i am not in control. I would rather purchase it myself and try to let the shop pay for it.

any good advice in terms of how to safely practice in my situation would be highly appreciated.

thanks in advance.
 
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Consult a lawyer would be my suggestion. Others may give anecdotal understandings from their own practice which may or may not be useful or helpful to your situation.
 
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I agree with moltenmetal. Hire an attorney. I am not a lawyer, nor have I ever played one on TV but I see several red flag issues.
[ul]
[li]If you stamp the drawings as an employee, it looks like the company is providing engineering services. Doesn't that require a Certification of Authorization (COA) ? There are a lot of legal requirements for that.[/li]
[li]If they won't provide the necessary insurance and other typical company expense items associated with the stamping of plans, I sure would not stamp them without something involving money for me and my exposure.[/li]
[li]A good lawyer can find a way to drag anyone into court. You may win the case, but will still be out thousands of dollars. Even if they can't get you into the final court room, they can make you get yourself out of the legal hassle by hiring another lawyer.[/li]
[/ul]
 
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what type of lawyer is dealing this kind of issue? how much does it cost to hire a lawyer? any idea. first of all thanks for all advices.
 
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Who does what with the drawings you stamp? Are you in Texas? It has an industrial exemption, so if the drawings are for internal use, there is no licensure required.

As for insurance, there are "tail" coverage policies or riders that deal with that sort of thing:

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert! faq731-376 forum1529 Entire Forum list
 
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For one thing, you may not need to carry the policy forever. This is a good question for the lawyer: what is the statute of limitations for suits arising out of design errors and omissions? It varies - I've heard some states as low as 5 years, some as high as 10, but 7 seems to be a common number. That means that after that period of time, a civil suit cannot be brought against you for an issue with a design. That's why insurance companies sell "tailing" insurance for firms that shut down. It tapers off over a certain period of time to cover you into retirement - just in case. Criminal law (if your mistake kills somebody) can vary from that, but again it depends on where you are and you should talk to a lawyer.

Cost of a lawyer - depends on where you are and how good they are. Some can be had for as cheap as $180/hr, some for $400+/hr. There are some online freelance outfits offering legal services now (think AirBnB, but lawyers instead of vacation rentals), so you may find cheaper advice there. Buyer beware, though.

Based on your comment about the EOR requiring shop drawings, I'm going to assume this is not for internal use. Therefore, your company probably needs to be registered with the state to provide professional engineering services. There are a handful of states that don't require it - Maine comes to mind - but most require the legal business entity to be registered as well as the individual professionals. If they aren't, then you technically can't do it as their employee. If they refuse to go that route, you need to refuse to do the work. It may mean finding another job - that sounds preferable to working for people who would try to bully you into doing work in manner that is ethically questionable at best and illegal at worst.

Talk to a lawyer specializing in construction law and professional practice regulations.
 
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thanks IRstuff. I know there is exemption. still the question is even i dont need to seal anything, if the employer does not follow my drawing say a drawing for a simple shed or anything. or if anything goes wrong the client might come to sue the employer or even the engineer. also i know a lot of times the EOR put a note on the drawing asking the shop drawings to be stamped.

Regardless, the repeating question is, even i do not need to stamp anything, can the client or employer go after me since i am the one who does the engineering. also as i said the employer or management might direct the installation not following the drawings just to save couple of bucks or for whatever reasons just because he she "feels" it will be OK although he or she does not understand it.
 
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hazel - welcome to engineering? That's a risk every time a drawing is sent out. I used to work with a guy who would (half jokingly, half dejectedly) say that his drawings were just suggestions by the time they got to the job site.

Of course that doesn't mean your company shouldn't shield you from it. If they are making the profit from your work, they need to accept the risk. If they won't, they need to pay you the profit commensurate with the risk you're taking.
 
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Many answers will be per project you are involved in. Here are some examples of what "might" be in a given project.
[ul]
[li]Fabricator is responsible for all engineering related to their product.[/li]
[li]No mention of engineering at all in the project documents.[/li]
[li]All work must be stamped by a registered engineer in the State of xxx.[/li]
[li]Fabricator to design all connections.[/li]
[li]Fabricator to address connections. (my personal favorite)[/li]
[/ul]
Be careful about using the word engineer versus design. Slight difference in expectations. If you are not stamping it or providing engineering documentation, I would refer to myself as the designer. In that same conversation or document, I would not refer to myself as a engineer. Once I say I engineered it, I get closer to court.

 
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if you are in responsible charge of the project, you may be legally required to stamp and sign. in other words, it is not optional. weasel words like "design" or "address" may not help you avoid this requirement. suggest reading the rules from your state
 
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My comment about "address" is what I see in contract documents, not what I put in a set of documents. It is my personal favorite because when questioned about what it means, the authors think it "covers all the bases" while based on the definition of address it covers very little. I do agree it is a weasel word but the world of weasels is a major component at the heart of this thread.

What to do when you may be held legally responsible while someone else is actually controlling most of the dynamic? When things go bad, watch how much weaseling the company does in response.
 
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