Food can be hazardous. Thousands of Americans are hospitalized by food-borne illnesses every year. Others are harmed by food allergens or by impurities in food, such as tiny pieces of metal, glass, or plastic. Some people shop at farmers markets to find safer, more wholesome food. Customers appreciate the small number of production points, local sourcing, responsible growing practices, familiar faces, and fresh food. Yet, terrible things such as these incidents can still occur at farmers markets:
- Food sampling can lead to an outbreak of E. coli.
- A prepared food vendor could be shut down for unsafe practices.
- An animal could contaminate a berry field, leading to hospitalizations and even death. If these berries are sold at farm stands and farmers markets, the source can be difficult to pin down, leading to loss in sales for a national crop.
When talking about food safety incidents, everyone wants to know who is responsible. The answer can be quite simple: whoever caused the problem is responsible for the problem. It can get a little complex to determine who caused the problem, but it’s often quite straightforward. For example, if the farmers market is distributing donuts made by volunteers at the market’s info station as a market attraction, the market is responsible for the safety of the donuts. If a farmer sells spinach contaminated with bacteria that causes an illness, the farmer is responsible for that.How to manage this risk
As vendors are usually the ones handing the food, they generally bear most of the legal responsibility for food safety. But, even when an injury is caused by a vendor’s actions, the market may still bear some responsibility. For example, the farmers market’s rules can be so lenient that food safety incidents become more likely. Also, a farmers market may not adequately screen vendors for safe food practices before admitting vendors, or sufficiently enforce existing food safety rules. Each of these things can lead to legal liability for the farmers market, even though the vendor’s actions directly caused the problem. Of course, the vendor itself may hold most of the responsibility for the incident, but that doesn’t mean the market doesn’t share in a small part of the liability, legally. Even if the market doesn’t become legally liable, one bad incident can be enough to ruin the market’s reputation with vendors and customers alike.
A few practices in particular can create more risk for a farmers market:
Sampling is an important feature of many farmers markets, to get customers to try new products, but can create additional risks. Some counties and cities prohibit the practice; check with local or state health departments about sampling regulations. For a safe sampling checklist (provided by the Michigan Department of Agriculture and Rural Development), click here.
Preparing or processing foods off site
“Prepared” or “processed” in this case means anything that has been altered or added to, beyond basic trimming. For example, cutting a squash in half and seeding it would be preparing/processing food. The same is true for peeling, mixing (greens, for instance), canning, drying, juicing, and other basic treatment of food. “Prepared” or “processed” also refers to baked goods and hot meats. Prepared foods are also subject to particular laws and regulations. Preparing foods may require vendors to obtain state or local inspection and licensing. The regulations are often different depending upon the level of preparing or processing. Proper labeling is a common requirement.
On-site food preparation
Preparing foods on site may require vendors to obtain state or local inspection and licensing. Whether licenses are required often depends on who is doing the preparation, how often its done, and what is being served.
Especially with food safety, an ounce of prevention is worth a pound of cure.
Consider providing handwashing stations and hand sanitizers for your vendors, as well as customer access to clean bathrooms with good washing facilities. Even if it’s not required, this may help prevent some problems. Many prepared food vendors will already be required to set up handwashing stations for themselves as part of their permit obligations.
Farmers markets may consider requiring vendors to indemnify the farmers market. If a vendor indemnifies the farmers market, the vendor agrees to pay the farmers market back for any damage the vendor causes for the farmers market. A simple indemnification agreement is not hard to write, but it can be difficult to understand exactly what it does and does not do for both parties. As such, interested farmers markets should work with an attorney to write such a clause specific to their market. Many farmers markets use “boilerplate” agreements that they get from books, other markets, the internet, and other sources with the hope that these agreements will relieve them of liability. These agreements go by many names, including “hold harmless,” “indemnification,” or “waiver of liability” agreements. The bottom line is that if these agreements are not drafted by an attorney and specific to the individual market, the agreements may not be enforceable in court or may be very limited in their application. Again, farmers markets should work with an attorney who can examine exactly what the market does, who vends at the market, and which risks may be waived or indemnified in the state where the farmers market operates to ensure that the agreement will work in court in the way that the market expects. Attorney consultation is the only way to get a vendor agreement that will be enforceable in court in waiving any of the obligations a farmers market owes to vendors, customers, landowners, or others.
Risk Management Tools
Market Rules and Procedures
Market rules should state that the vendor is responsible for knowing and complying with all laws, regulations, permits, and license requirements, from federal to state to local. Some farmers markets go beyond that by learning the laws and applicable licenses and permits themselves. Then they make sure vendors who need licenses have them before allowing those vendors to sell. This is a labor-intensive approach, but it certainly creates more assurance that the rules are being followed. This can help the farmers market avoid liability for vendors’ actions. A farmers market may also choose to go above and beyond any legal requirements. For example, farmers markets can set up food safety teams of peer vendors to help train and/or inspect others in good food safety practices. Farmers markets can use their rules and procedures in many ways to protect the safety of the food available at the farmers market.
To learn more about Market Rules and Procedures as a risk management tool, click here.
Farmers markets can protect themselves from liability for injuries from food safety incidents by purchasing commercial general liability (CGL) policies. In many cases, this will cover the farmers market if someone claims the market is responsible for an incident. Of course, a CGL policy is not a product liability policy and may not cover all potential risks. The cost and availability of a good CGL policy may be improved if the market communicates clearly with its agent about the insurance requirements it has for vendors as well. There may be a price break if the market gets proof of insurance from all vendors. Markets may opt to accept only vendors selling products they grew themselves, or may opt to also accept resellers, with limitations. The latter adds risks, and often costs to an insurance policy. If the farmers market itself distributes or sells food, it should also consider a product liability policy.
To learn more about Insurance as a risk management tool, click here.
Collecting copies of vendor licenses and permits may be useful in showing the market didn’t negligently allow vendors to sell without required licenses, should an insurance claim and/or lawsuit arise. Some farmers markets like to collect other records such as proof of specific food safety trainings or receipt of information on food safety training. These records could be useful in the unlikely event someone claims the farmers market was negligent in its selection or vetting of vendors.
To learn more about Recordkeeping as a risk management tool, click here.
A business structure is one of the most basic tools to limit liability. An LLC, corporation, nonprofit, or cooperative can insulate market owners’ personal assets from business liabilities. Of course, business assets are always available to satisfy business liabilities, and food safety injuries are generally business liabilities. Read more about how business structures can limit a market’s liability here. Because only insurance protects business assets from business liabilities, insurance is just as important for the welfare of the farmers market.
In terms of internal governance, many bylaws or operating agreements require that the nonprofit or business provide the owners and directors with “directors and officers insurance.” These policies protect owners and directors in the unlikely event they are sued as personally responsible for the injury or damage (rather than responsible in their capacity as an owner, volunteer, or agent of the farmers market). Bylaws and operating agreements often also require that the business carry commercial general liability (CGL) insurance at all times.
To learn more about Governance as a risk management tool, click here.