|April 4, 2014|
Previously published on March 31, 2014
In a move sure to relieve general liability insurers and anger personal injury attorneys, the Supreme Court last week reaffirmed a long-standing immunity for contractors that hire subcontractors to perform part of their work. In Patton v. Worthington Associates, Inc., the Court held that such contractors are entitled to a statutory employer defense under the Workers’ Compensation Act—the same immunity the subcontractor has if its employee is injured.
Worthington Associates was the general contractor for a church construction project. Worthington subcontracted with Patton Construction, Inc. to perform carpentry work. Earl Patton, the sole owner and employee Patton Construction, Inc., was injured while performing work on the church, and he sued Worthington for alleged failure to maintain safe conditions at the worksite. Patton argued that, since he was Worthington’s “independent contractor,” he was not an employee and, therefore, was not barred by the workers’ compensation act from bring a tort claim. At his trial, the jury awarded Patton and his wife over $1.5 million in damages; the intermediate court affirmed.
In reversing the lower courts, the Supreme Court emphasized the “longstanding jurisprudence maintaining that conventional subcontract scenarios serve as paradigm instances in which the statutory-employment concept applies.” The Court reiterated that, while two contractors who each contract with an owner to perform different portions of the work are truly “independent” from one another, a subcontract is subordinate to and dependent on the general contract. Accordingly, a general contractor is a “statutory employer” of a subcontractor’s employees and is immune from suit.
Businesses should keep in mind two corollaries to this case. First, the case does not necessarily protect owners, who may or may not be deemed to be “statutory employers” of a third-party company’s employees. Second, as statutory employers, general contractors may be liable for workers’ compensation benefits due to injured employees of subcontractors, if the subcontractors fail to carry workers’ compensation insurance. Accordingly, general contractors should generally obtain proof of such insurance from subcontractors before permitting employees on the jobsite.