POWER OF WORKERS COMPENSATION IMMUNITY ON CONSTRUCTION PROJECT

shutterstock_104939294On construction projects, workers compensation immunity is real and it is powerful.  (See also this article.)  Workers compensation immunity is why all general contractors should have workers compensation insurance and they should ensure the subcontractors they hire have workers compensation insurance.  Workers compensation insurance becomes the exclusive form of liability for an injured worker thereby immunizing an employer (absent an intentional tort, which is very hard to prove as a means to circumvent workers compensation immunity).

 

If a general contractor, with workers compensation insurance, hires a subcontractor without workers compensation insurance, the general contractor’s workers compensation insurance will be responsible in the event an injury occurs to a subcontractor’s employee.  The general contractor becomes the statutory employer. 

 

If a general contractor, with or without workers compensation insurance, hires a subcontractor with workers compensation insurance, the subcontractor’s workers compensation insurance will be responsible in the event of an injury to that subcontractor’s employee (including any sub-subcontractor’s employees). This is a main reason why the general contractor wants to ensure the subcontractors it hires has workers compensation insurance.

 

An example of the benefit of workers compensation immunity can be found in the recent case of Gladden v. Fisher Thomas, Inc., 42 Fla. L. Weekly D2441a (Fla. 1st DCA 2017), dealing with a statutorily exempt corporate officer of a sub-subcontractor.  In this case, a general contractor hired two applicable subcontractors.  One of the subcontractors was a flooring subcontractor that subcontracted out a portion of its flooring work to an entity whose owner was statutorily exempt from workers compensation insurance.  This owner claimed he was injured through the actions of the other subcontractor and filed a lawsuit against the general contractor and the other subcontractor for negligence.  He claimed that workers compensation immunity should not apply because he was statutorily exempt from workers compensation.  Both the trial court and appellate court did not buy the owner’s argument.  The owner’s exemption from workers compensation insurance does not equate to an exemption from workers compensation immunity.  He is still bound by workers compensation immunity even if he is statutorily exempt.  His only recourse is confined to a claim against his company that did not procure workers compensation coverage.  That’s it.  “Since the corporate employer reaps the benefit of reduced workers’ compensation premiums for the exempt officer, it makes sense that there is a risk associated with the benefit.” Gladden, supra.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

NEED TO BE A “CONTRACTOR” TO BE PROTECTED BY WORKERS COMPENSATION IMMUNITY

imagesPreviously, I discussed the concept of “statutory employer” in the framework of workers compensation. Again, this concept is based on language in Florida Statute s. 440.10(1)(b) that provides:

 

 

In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.

 

 

The recent case of Slora v. Sun ‘N Fun Fly-In, Inc., 40 Fla. L. Weekly D 1966a (Fla.2d DCA 2015) discussed the meanings of the term “contractor” and “contract work” as used in this section:

 

The statutory terms “contractor” and “contract work” plainly and unambiguously posit a party performing work pursuant to a contract with another. Thus, to be immune from tort liability as a contractor, a defendant’s primary obligation in performing a job or providing a service must arise out of a contract.

Slora, supra (quotation and citation omitted).

 

In this case, a company operated airshows for the general public.  To put on these airshows, the company had to fill out various forms and get approval from the Federal Aviation Authority. The Federal Aviation Authority required security to be provided at airshow events.  The company put on an airshow and hired a security company to provide the security services for the event.  During the airshow, however, an employee of the security company got hurt.  This employee sued the company that put on the airshow for her injuries.  The company argued it should be immune from such claim under workers compensation immunity that provides that contractors that comply with Florida Statute 440.10 are immune from tort liability (absent an intentional tort). 

 

The trial court agreed with the company and granted summary judgment in its favor finding it was immune from liability and could not be properly sued by the injured employee of the security company. The appellate court reversed based on the meanings of “contractor” and “contract” as used in Florida Statute s. 440.10.  Particularly, the appellate court held that there was no evidence that the Federal Aviation Authority contracted the company to put on the airshow event (or that the company undertook an implied obligation to the Federal Aviation Authority).  Thus, if the company was not contracted by the Federal Aviation Authority, it could not be a “contractor” as used in the statute since it was not performing work pursuant to a contract with another.  And, if the company was not a contractor per the statute, the company could not be immune from tort liability under workers compensation law.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

RENTAL EQUIPMENT SUPPLIER NOT PROTECTED BY WORKERS COMPENSATION (HORIZONTAL) IMMUNITY

imagesOh boy! When it comes to workers compensation immunity, suppliers, particularly rental equipment suppliers, better watch out as they are not entitled to the same safeguards as subcontractors when it comes to injuries on a construction project!

 

The Fourth District Court of Appeals in Ciceron v. Sunbelt Rentals, Inc., 40 Fla. L. Weekly D897a (Fla. 4th DCA 2015) rendered an opinion that is not favorable to suppliers when it comes to the protection of workers compensation immunity on a construction project.   In this case, an employee of the demolition subcontractor was injured from a scissor list that was utilized and rented by other subcontractors at the project. The employee sued the rental equipment supplier of the scissor list for negligence.  The supplier moved for summary judgment arguing that it has immunity from such tort claims.  The ultimate issue was whether workers compensation horizontal immunity barred the injured employee’s claim against the rental equipment supplier.

 

Horizontal Workers Compensation Immunity

 

I have previously written about workers compensation immunity on a construction project. Regarding what is commonly referred to as horizontal immunity: “Workers’ compensation immunity has been broadly expanded by the legislature to include subcontractors and sub-subcontractors working at a construction site, precluding an employee of one contracting entity injured on the job from suing another contracting entity working at the same construction site in tort.”  Ciceron, supra

 

To this point, Florida Statute s. 440.10(1)(e) states:

  

A subcontractor providing services in conjunction with a contractor on the same project or contract work is not liable for the payment of compensation to the employees of another subcontractor or the contractor on such contract work and is protected by the exclusiveness-of-liability provisions of s. 440.11 from any action at law or in admiralty on account of injury to an employee of another subcontractor, or of the contractor, provided that:

1. The subcontractor has secured workers’ compensation insurance for its employees or the contractor has secured such insurance on behalf of the subcontractor and its employees in accordance with paragraph (b); and

2. The subcontractor’s own gross negligence was not the major contributing cause of the injury.

 

This is referred to as horizontal immunity because one subcontractor is entitled to immunity for injuries caused to employees of another subcontractor.

 

In this case, however, because the supplier of the scissor list was not a “subcontractor,” the supplier was NOT entitled to immunity.  This meant that the injured demolition subcontractor’s employee was entitled to pursue its negligence claim against the supplier of the scissor lift and the supplier did not have immunity under the law.   If, on the other hand, the supplier was a “subcontractor,” then more than likely workers compensation horizontal immunity would have applied to bar the injured employee’s tort claim.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

 

 

 

WORKERS COMPENSATION (PART TWO) — STATUTORY EMPLOYER AND CONTRACTORS

imagesTo follow-up on the article Workers Compensation—Tidbits on Construction Projects, the recent opinion in Roof Painting By Hartzell, Inc./Summit Holdings-Claims Center v. Hernandez, 2015 WL 641199 (Fla. 1st DCA 2015) touches upon the application of a statutory employer in the construction context.

 

Here, a contractor was hired to provide pressure cleaning and related services.  The contractor, in turn, subcontracted the labor to perform the services through another company (e.g., subcontractor).   Both the contractor and subcontractor that provided the labor had workers compensation insurance.  A laborer (retained by the subcontractor) was injured in performing the pressure cleaning services.   The issue was which workers compensation carrier should be responsible: the subcontractor’s carrier or the contractor’s carrier.

 

Florida Statute s. 440.10(1)(b) provides:

 

In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.

 

Since the injured laborer was hired by the subcontractor, the subcontractor’s workers compensation carrier should cover the injured laborer’s claim.

 

Section 440.10 forms what is referred to as the “statutory employer” concept.  For instance, if the subcontractor does not obtain applicable workers compensation insurance, then under this section, the general contractor is liable (as the general contractor is the statutory employer). It is this reason that contractors that subcontract a portion of their services to others need workers compensation coverage!

 

Importantly, contractors that comply with the requirements of section 440.10 are protected by the exclusiveness of liability provisions in Florida Statute s. 440.11. This means the contractor is immune from lawsuits (such as tort-related lawsuits) from injured workers with workers compensation being the exclusive form of liability absent any intentional tort committed by the contractorSee Fla.Stat. s. 440.11.  “Because section 440.11(1) of the Florida Statutes makes the liability to secure [workers] compensation imposed by section 440.10(1) the exclusive form of liability imposed by Chapter 440 on an employer, once an employer acquires and maintains workers’ compensation insurance for the benefit of its employees, it becomes immune from suit.” VMS, Inc. v. Alfonso, 147 So.3d 1071, 1073 (Fla. 3d DCA 2014).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.