Statutory Employers Liable for Workers’ Compensation

People who are hired by one company to perform specific duties for a second company may wonder which business will be held responsible if they are injured on the job. Recently, the Supreme Court of Pennsylvania tackled the complicated question of whether the second company can be liable for workers’ compensation benefits paid to a worker hired by another company.

The Supreme Court came to the same conclusion as the lower courts and administrative judges involved in the case, explaining the decision on the grounds of legislative intent. The high court held that “the Legislature meant to require persons (including entities) contracting with others to perform work which is a regular or recurrent part of their businesses to assure that the employees of those others are covered by workers’ compensation insurance, on pain of assuming secondary liability for benefits payment upon a default.”

In short, the Supreme Court ruled that those second companies may be liable for workers’ compensation benefits paid to workers hired by the first company.

Six L’s Packing Co. v. Workers’ Compensation Appeal Board

In this case, it is best to begin with an examination of the facts to better understand the court’s ruling.

In April 2002, Kevin Williamson, a truck driver, was hired by F. Garcia & Sons. Garcia, in turn, had a contract with Six L’s Packing Co. Six L’s owns farms throughout North America. Six L’s hired Garcia to support some of its transportation needs, including moving tomatoes from Pennsylvania to Maryland.

Consequently, Williamson was assigned by Garcia to transport the tomatoes for Six L’s. While performing his duties, Williamson was involved in a motor vehicle accident in Pennsylvania. Thereafter, he applied for workers’ compensation benefits and discovered Garcia did not have workers’ compensation insurance.

Williamson then sought benefits through Six L’s workers’ compensation insurance.

Six L’s Arguments

Six L’s asserted many arguments, most of which involved a five-part test set out by the Supreme Court in a case from 1930.

In McDonald v. Levinson Steel Co., the court ruled that general contractors may be considered the “statutory employer” of a subcontractor’s employee if each element of a five-part test is met. The second factor in the test is that “the entity occupies or is in control of the premises [where the injury occurred].” Six L’s argued it was not in control of the premises where Williamson was injured, as the accident occurred on a public Pennsylvania highway.

Under McDonald, if a general contractor was deemed a statutory employer, it was on the hook for the employee’s workers’ compensation benefits, but was also immune from civil liability. In other words, the employee could not file a lawsuit against the statutory employer for civil damages while also receiving workers’ compensation benefits through its insurer.

Section 302(a)

In this case, the Supreme Court found that the relevant provision in the Workers’ Compensation Act, section 302(a), was not governed by the McDonald test. Consequently, all of the arguments put forth by Six L’s on that basis failed. Most notably, the court found that section 302(a) was “not limited to injuries occurring on premises occupied or controlled by the putative statutory employer.”

The court held that section 302(a) applied to “activities involving regular or recurrent aspects of an alleged statutory employer’s business.” In other words, the section applied to Six L’s because transporting tomatoes was a regular part of its business.

If you have been injured on the job and your immediate employer does not carry workers’ compensation insurance, you may still be able to recover benefits from a so-called statutory employer. As these issues can be complex, it is wise to consult with an experienced workers’ compensation attorney to ensure your rights are protected.

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