VALUE IN BEING DEEMED “STATUTORY EMPLOYER” UNDER WORKERS COMPENSATION LAW

When it comes to workers compensation law, as a contractor, there are a couple of important considerations.  One, you will be deemed a statutory employer.  And two, you want your subcontractors (and, of course, yourself) to have workers compensation insurance so that you can enjoy the protection of workers compensation immunity.  Workers compensation immunity provides immunity to an employer (i.e., a statutory employer) by workers compensation insurance becoming the exclusive form of liability. 

A recent non-construction case, Bar-Harbour Tower Condominium Association, Inc. v. Bellorin, 47 Fla.L.Weekly D2114a (Fla. 3d DCA 2022), illustrates the importance of these considerations.  Here, a condominium association per its governing documents (i.e., declaration of condominium) was authorized to contract for valet parking services for its unit owners.  An employee of the valet company (hired by the association) got hurt and sued the association. The association argued it should be deemed a statutory employer under workers compensation law and, as such, entitled to workers compensation immunity.  The trial court disagreed, and the association appealed.  The Third District Court of Appeal held the association was the statutory employer and, thus, workers compensation immunity did apply.

When it comes to the determination of a statutory employer, 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.”

“For the association to be a contractor (and thus [injured employee’s] statutory employer) under section 440.10, it must show that it has a contractual obligation to provide [valet] services to the unit owners,”  and that it “sublet[ ] any part or parts of [the] contract work to a subcontractor,” “To be considered a contractor under section 440.10, [the association’s] ‘primary obligation in performing a job or providing a service must arise out of a contract.‘ ”  “Furthermore, the ‘primary obligation’ refers to an obligation under the prime contract between the contractor and a third party, not to any agreement between the contractor and subcontractor.”  Notably, “[t]he contractual obligation may be either express or implied-in-fact; however, it cannot be based on a duty purely imposed by statutory or common law.” 

Bar Harbour Tower Condominium Association, supra (internal citations omitted).

The association’s declaration of condominium is a contract with unit owners.  The declaration of condominium authorized the association to provide valet services so “the association’s primary obligation to provide valet services to the unit owners arose under a contract, the declaration of condominium, and not from its general statutory duty to manage and maintain the condominium property.”  Bar Harbour Tower Condominium Association, supra.  (This authorization does not derive from Florida’s Condominium Act as there is no statutory duty for associations to provide valet services.) The association, per the declaration of condominium, sublet the valet services to another company, which was the injured employee’s employer.  Therefore, the association was a statutory employer and entitled to the protection of workers compensation immunity.

Being deemed a statutory employer is important in the construction framework.  This reinforces why workers compensation insurance is important – to immunize tort liability from injured employees and become the exclusive form of liability.

 

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.

 

Spread the love
Posted in workers compensation and tagged , , .