Each school day presents the possibility of a district finding themselves liable for incidents that happen on school grounds or at school-sponsored events. In fact, school districts throughout the state are encountering liability issues. But through third-party contracts, districts can gain protection and peace of mind for their students and employees.
When working with vendors, whether it be for transportation services, substitute teacher placement and management, or any other service, third-party contracts should provide protection to school districts utilizing personnel for those services. It is important to read third-party contracts thoroughly before entering into any agreements to make sure language and responsibilities are clear. Ensure the district’s legal counsel reviews the contract before signing.
For example, when a district uses a vendor for transportation services, the vendor handles hiring and personnel issues, as well as bus and fleet risks for the districts. The third-party contract is what holds the transportation vendor’s insurance as primary for all fleet, commercial general liability, and workers’ compensation risks. The contract also holds the vendor responsible for risks, causing the vendor’s insurance carrier to handle the claim.
We have identified three areas within a contract where a district can protect itself.
- Insurance: In this clause, the third party should agree to have primary insurance in force and specify the limits.
- Indemnification: In this clause, the third party should agree to indemnify and hold harmless the district from claims arising out of the contractor’s negligence. Require hold harmless and indemnification language – make sure the third party does not transfer the risk to the district.
- Claims and Disputes: This clause should not contain a Waiver of Subrogation. A Waiver of Subrogation allows contractors to perform substandard work. Eliminate any Waiver of Subrogation language within a contract – never waive your ability to subrogate for improper workmanship or failure to deliver on a promise.
By taking the appropriate steps today in reviewing your contracts, you can help protect your district from potential future issues.
SET SEG is a MSBO Leadership Institute Vision Sponsor. Vision Sponsors have the opportunity to submit an educational article to be published in MSBO’s eNews & Views. For additonal information or resources, visit setseg.org.