Tag Archives: statutorily exempt

QUICK NOTE: PROCURE WORKER’S COMPENSATION IN THE NAME OF YOUR COMPANY IF YOU ARE A GENERAL CONTRACTOR

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If you are a general contractor (or the contractor responsible for hiring subcontractors), please make sure to procure a worker’s compensation and employer’s liability insurance policy.  Also, don’t think you are “fully covered” if you have worker’s compensation through a professional employer’s organization, otherwise known as a PEO. If you go with a PEO, or are statutorily exempt from worker’s compensation, then you need to make sure ALL of the subcontractors you hire have worker’s compensation and employer’s liability insurance. No exception. Ever. The risk is much greater than any reward.

In construction under Florida law, the general contractor is deemed the “statutory employer” for purposes of worker’s compensation.  This means that if a subcontractor does not have worker’s compensation, then the general contractor’s worker’s compensation policy is required to cover injuries.  So, if a person under a subcontractor gets hurt, and the subcontractor does not have worker’s compensation insurance, then the general contractor is deemed the statutory employer for purposes of worker’s compensation.

What if the general contractor has worker’s compensation through a PEO? This does not matter as the general contractor is still deemed the statutory employer. But, unlike traditional worker’s compensation insurance, the general contractor won’t have insurance to cover the risk.  The reason being is that with a PEO, your employees get leased back to you so the leasing company is the company with worker’s compensation insurance, not the contractor. If a non-employee gets hurt, or someone not enrolled through the leasing company, there is NO worker’s compensation insurance for that hurt person. This means the general contractor, or the statutory employer, has liability for the injury risk but does not have insurance to cover the risk. To avoid this dynamic, consider two crucial things:

First, procure a worker’s compensation and employer’s liability policy. Not through a PEO, but in your company’s name.

Second, if you feel like the PEO is the most prudent option regardless of the risk, or don’t have employees and are otherwise statutorily exempt, then you need to make sure everyone you hire has worker’s compensation and employer’s liability insurance. Don’t make exceptions.

 

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.

POWER OF WORKERS COMPENSATION IMMUNITY ON CONSTRUCTION PROJECT

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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.