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

Posted on October 29, 2022October 29, 2022 by Edward Garber

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.

YOU NEED TO BE A CONTRACTOR FOR WORKERS’ COMPENSATION IMMUNITY TO APPLY

Posted on October 18, 2020October 18, 2020 by Edward Garber

If you are a contractor, you are aware of workers’ compensation immunity when it comes to injuries on the site; and, if not, you should be. It is this workers’ compensation immunity (where workers compensation is the exclusive form of liability for an injured employee) which is why a contractor should generally always want to ensure its subcontractors have workers’ compensation insurance. Workers’ compensation immunity would protect a contractor that is being sued by a subcontractor’s employees that are injured on the job. For more information on workers’ compensation immunity, please check out this article and this article.

In this regard, 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.

(If the subcontractor does not have workers’ compensation insurance, the contractor is deemed the statutory employer and its workers’ compensation insurance would apply. Otherwise, the subcontractor’s workers compensation insurance would apply.)

However, it is important to understand that workers’ compensation immunity applies to contractors, and not to owners. For example, in Tampa Electric Co. v. Gansner, 45 Fla. L. Weekly D2358a (Fla. 2d DCA 2020), a public utility company hired an electrician to perform maintenance work at its generating facility. Two of the electrician’s employees were injured when an access door at the generating facility blew open. The injured employees and their families filed a personal injury lawsuit (negligence lawsuit) against the public utility company. The public utility company asserted workers’ compensation immunity as an affirmative defense and moved for summary judgment on this defense. The trial court denied the summary judgment finding that the public utility company “is not entitled to workers’ compensation immunity because it is not the statutory employer of either [of the injured employees of the electrician].” Gansner, supra.

On appeal, the Second District agreed with the trial court. The public utility company would be entitled to the protection of workers’ compensation immunity as the statutory employee of the injured employees of the electrician only if it was a contractor that sublet a portion of its work to the electrician. The Second District reviewed authority that found that to be considered a contractor, the party’s “primary obligation in performing a job or providing a service must arise out of a contract [with a third party].” Gansner, supra, (quotation and citation omitted). Although the public utility company tried to come up with a creative argument based on the utility company’s work for its customers, the appellate court was not persuaded:

We therefore conclude that [the public utility company] is not the statutory employer of either [of the electrician’s injured employees]. Although [the public utility company] promises to exercise reasonable diligence to provide power to its customers pursuant to its tariff, nothing in the tariff — or in any other source that it has identified — imposes upon it a contractual obligation to its customers to maintain its electrical generating equipment. Instead, its obligation to maintain its equipment arises purely out of an administrative regulation and thus is not an obligation that it can “sublet” to a third party for purposes of section 440.10(1)(b) absent a concomitant contractual obligation. The trial court, therefore, correctly denied [the public utility company’s] motion for summary judgment based on workers’ compensation immunity.

DOES HORIZONTAL WORKERS COMPENSATION IMMUNITY APPLY?

Posted on August 5, 2019August 5, 2019 by Edward Garber

The Second District Court of Appeals in Heredia v. John Beach & Associates, Inc., 44 Fla. L. Weekly D1892a (Fla. 2d DCA 2019) found that horizontal workers compensation immunity did not apply when the subcontractors were hired by a developer and not a contractor. In this case, a developer (really, a homebuilder) of a subdivision hired an earthwork subcontractor and a surveyor. An employee of the surveyor injured an employee of the earthwork subcontractor prompting the earthwork subcontractor to sue the surveying company. The issue was whether horizontal workers compensation immunity applied.

Section 440.10(1)(b) provides the contours of horizontal immunity:

Heredia, supra.

The Court explained that to be considered a contractor:

its “ ‘primary obligation in performing a job or providing a service must arise out of a contract.’ This “ ‘primary obligation’ . . . is ‘an obligation under the prime contract between the contractor and a third party.’ ” “Stated another way, the rule is that the entity alleged to be the contractor must have ‘incurred a contractual obligation to a third party, a part of which obligation the entity has delegated or sublet to a subcontractor whose employee is injured.’ ”

Heredia, supra (internal quotations omitted).

The reality is that the homebuilder / developer was likely a licensed general contractor that hired the subcontractors. But, based on the definition of contractor under the workers compensation immunity context, this would not have been good enough because the developer would not have been performing work pursuant to a contract with another. See Heredia, supra (finding that record evidence showed that developer was performing work on property it owned for its own property and was not performing any work under a contract with another). The developer would have needed to hire itself, or a related entity, as the general contractor to best preserve arguments with respect to workers compensation immunities.