• Pennsylvania Supreme Court Expands Scope of Workers' Compensation Liability for “Statutory Employers”
  • September 19, 2012 | Author: Joshua L. Schwartz
  • Law Firm: Barley Snyder - Lancaster Office
  • In a landmark decision that effectively overrules approximately thirty years of precedent, the Supreme Court of Pennsylvania recently expanded “statutory employer” status to any company that subcontracts for services or work “of a kind which is a regular or recurrent part of the entity’s business.” Under the new caselaw, contractors may be held secondarily liable for injuries incurred by their subcontractors’ employees, even if they have no control or authority over those employees.

    It is well-established that, where a subcontractor’s employee is injured on premises generally controlled by a contractor, the contractor is responsible for workers compensation coverage if the subcontractor lacks insurance. This has been the case since the Supreme Court’s 1930 opinion in McDonald v. Levinson Steel Co. The new case, called Six L’s Packing Co. v. Workers’ Compensation Appeal Board (Williamson), extends this liability beyond the worksite.
    Six L’s Packing Company harvests, processes, and distributes tomatoes and other produce. The company contracts with other companies for transport of tomatoes between its facilities and various other services. In April 2002, a employee for one of these contractors, F. Garcia & Sons, was injured in a motor vehicle accident while transporting tomatoes between a warehouse in Pennsylvania and processing facility in Maryland. Garcia did not have workers compensation coverage, and Six L’s was deemed the responsible statutory employer.

    In awarding benefits, the Court rejected Six L’s arguments that it did not own trucks or employ drivers and that it was not in control of the public highway where the employee was injured, as required under the McDonald test. The Court noted that the “premises” language from McDonald did not appear in the section of the Act imposing statutory employer status on “contractors,” effectively limiting McDonald to circumstances in which employers control the worksite where an injury occurs. Since the Court further held that transport of tomatoes was a “regular or recurrent part of” Six L’s business, it was liable for the subcontractor’s injuries.

    This case highlights the importance of ensuring that contractors carry workers compensation coverage for all their workers. Any company using contractors should obtain proof of such coverage and, further, may want to include indemnity clauses in its contracts to insulate itself from workers’ compensation liability.