Yacht Management and Employment Disputes

As the size of the vessel increases, management structures get more complex with foreign ownership, documentation, registration and crew. Maintenance, repair, making sure proper insurance coverage is in place, and that the vessel is in compliance with governmental regulations is an ongoing and continual task. Taking a proactive rather than a reactive approach is often essential to the ability to use and enjoy the vessel. The attorneys at McLeod Brock have over 25 years of experience assisting vessel owners with issues involving:

  • Yacht Management
  • Crew Management
  • Crew Wage Claims
  • Risk Assessment & Avoidance
  • Shipowner Counseling
  • Employee/Employer Counseling
  • Insurance Coverage Review

Concurrent with an owner’s search for a new or additional vessel, he should be thinking about how the ownership structure will be set up, where the vessel will be registered and flagged, whether the vessel will be used commercially and where, and whether crew will be hired. Depending on the size and use of the vessel, the mandatory crew compliment may be determined by the United States Coast Guard. This is important as failure to comply with USCG requirements can void insurance coverage.

The proper vetting and selection of crew is vital. Even the largest yacht is a very small place at sea. The crew must “compliment” each other both in the work they do and their interpersonal interaction to avoid future dispute. When problems arise, handling them properly requires the shipowner to respond as a corporate human resources office would. Letting disputes fester, ignoring crew complaints, etc. can lead to disastrous results.

Larger vessels may have many different departments and levels of staff. The captain and first mate may navigate the vessel, engineers maintain the machinery and keep the vessel operational, deckhands are typically responsible for exterior maintenance, a housekeeping or steward department runs the interior of the ship, and a safety officer may be on continual “walk around” with an eye toward assessing risk and reducing hazard. With this many crew on board all interacting with each other and the passengers, proactive management is critical.

Failing to properly crew and manage a vessel could lead to procedural negligence or procedural unseaworthiness claims in the event of an incident resulting in property damage or personal injury. A good example of this would be where the U.S.C.G. requires the vessel to be crewed by a licensed captain, a first mate and a deckhand. For whatever reason, the vessel is operated without a deckhand on a certain day. There is trouble freeing an anchor line so the mate jumps in the water to assist. The mate injures himself while attempting to free the anchor leaving the captain with the decision of whether to leave the vessel completely unmanned, jump in the water and assist the mate, or leave the mate in distress to fend for himself? This is a no win situation.

The proper handling and payment of crew wages is one of the largest exposures to a vessel and her owners. Federal and sometimes state statutes require seaman to be paid promptly. Seaman are considered wards of the admiralty court and the payment of their wages is protected. Failure to pay wages on time can result in astronomical penalties and the award of attorney fees to the seaman. Seaman’s wages are also protected as preferred maritime liens against the vessel. These liens are often considered liens of first priority and cannot be ignored. Accordingly, there are occasions where the involved vessel may be seized via the process of maritime arrest to secure the seaman’s wage claim.

The placement of proper insurance coverage before the vessel is delivered is of utmost importance. A ship owner’s job is not done after the insurance certificate is received. The management of the vessel involves the continual review of coverage depending on the location where the vessel is operated, how the vessel is being used and maintained, and whether the vessel is being placed with a repair facility just to name a few. There are many express and implied warranties in marine insurance policies that do not exist in a land based policy that the owner needs to be educated on and mindful of during the period of ownership. The attorneys at McLeod Brock have over 25 years of experience assisting vessel owners with issues involving risk assessment and avoidance, management, employer/employee counseling and dispute, payment of wages, etc.

Schedule your FREE consultation today