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.

WORKERS COMPENSATION IMMUNITY AND THE INTENTIONAL TORT EXCEPTION

Posted on June 16, 2018April 27, 2020 by Edward Garber

In prior articles, I discussed the benefit of workers compensation immunity for contractors. Arguing around workers compensation immunity under the “intentional tort exception” is really hard – borderline impossible, in my opinion. Nevertheless, injured workers still make an attempt to sue a contractor under the intentional tort exception to workers compensation immunity. Most fail based on the seemingly impossible standard the injured worker must prove to establish the intentional tort exception. A less onerous standard (although certainly onerous), as a recent case suggests, appears to be an injured worker suing a co-employee for the injury.

Florida Statute s. 440.11 discusses the intentional tort exception to workers compensation immunity. Workers compensation shall be the exclusive remedy to an injured worker UNLESS the injured worker can establish a claim against the contractor or fellow-employee under the intentional tort exception as statutorily set forth below:

440.11 Exclusiveness of liability. —

(1) The liability of an employer prescribed in s. 440.10 shall be exclusive and in place of all other liability . . . except as follows:

. . . .

(b) When an employer commits an intentional tort that causes the injury or death of the employee. For purposes of this paragraph, an employer’s actions shall be deemed to constitute an intentional tort and not an accident only when the employee proves, by clear and convincing evidence, that:

1. The employer deliberately intended to injure the employee; or

2. The employer engaged in conduct that the employer knew, based on prior similar accidents or on explicit warnings specifically identifying a known danger, was virtually certain to result in injury or death to the employee, and the employee was not aware of the risk because the danger was not apparent and the employer deliberately concealed or misrepresented the danger so as to prevent the employee from exercising informed judgment about whether to perform the work.

The same immunities from liability enjoyed by an employer shall extend as well to each employee of the employer when the employee is acting in furtherance of the employer’s business and the injured employee is entitled to receive benefits under this statute. Such fellow-employee immunities shall not be applicable to an employee who acts, with respect to a fellow employee, with willful and wanton disregard or . . . with gross negligence when such acts result in injury or death or such acts proximately cause such injury or death . . . .

In Ramsey v. Dewitt Excavating, Inc., 43 Fla. L. Weekly D1366a (Fla. 5^th DCA 2018), an employee was cleaning a cement-mixing pugmill with a fellow employee. An accident happened while the employee was inside the mixing box causing his death. While he was inside, his fellow-employee turned on the mixing box causing his death. The employee’s estate sued both the employer and the fellow-employee for the wrongful death and argued under the intentional tort exception to get around workers compensation immunity.

The trial court granted summary judgment on the issue of workers compensation immunity finding that the immunity barred the estate’s claims against the employer and the fellow-employee.

Intentional Tort Exception as to Employer

The appellate court affirmed the summary judgment as to the employer because the employee could NOT prove the virtually impossible burden in establishing the applicability of the intentional tort exception.

Three elements must be proved to establish the intentional tort exception to worker’s compensation immunity, and the failure to prove any one of the elements will prevent the exception from applying. The elements are:

1) employer knowledge of a known danger . . . based upon prior similar accidents or explicit warnings specifically identifying the danger that was virtually certain to cause injury or death to the employee;

2) the employee was not aware of the danger . . . because it was not apparent; and

3) deliberate concealment or misrepresentation by the employer . . . preventing employee from exercising informed judgment as to whether to perform the work.

Ramsey, supra (internal citation omitted).

There was no evidence to suggest that the employee was not aware of the danger involved in cleaning the inside of the cement mixing box and that he had to be aware based on working on the machine in the past, which was inherently dangerous in of itself. This alone supported the application of the workers compensation immunity and there likely would have been a lot more facts (or facts the employee’s estate would not be able to prove) supporting the immunity.

Intentional Tort Exception as to Fellow-Employee

The appellate court, however, reversed the summary judgment as to the fellow-employee finding that a jury could find that the fellow-employee acted with gross negligence causing the death of the employee.

In order to establish that Gubbins [fellow-employee] acted with gross negligence when he turned on the pug mill while Ramsey [employee] was still inside, the parents [representatives of estate] were required to present evidence as to each of the following three elements:

1) circumstances constituting an imminent or clear and present danger amounting to a more than normal or usual peril [;]

2) knowledge or awareness of the imminent danger on the part of . . . [Gubbins;] and

3) an act or omission [on the part of Gubbins] that evinces a conscious disregard of the consequences.

Ramsey, supra.

The estate had evidence that the fellow-employee directed the decedent-employee inside the cement mixing box and then activated the box without utilizing any safety system or checking to see if the decedent-employee was still inside. Based on this evidence, a jury could conclude that the fellow-employee was grossly negligent in activating the mixing box.

HIRING SUBCONTRACTORS WITH WORKERS COMPENSATION INSURANCE

Posted on December 30, 2017December 30, 2017 by Edward Garber

You want to hear more on the POWER of statutory workers compensation immunity? Well, here it is, because as I have mentioned in the past, workers compensation immunity is powerful reinforcing the importance for contractors to ensure the subcontractors they hire absolutely have workers compensation insurance. Likewise, subcontractors want to ensure the subcontractors they hire also have workers compensation insurance.

In the case of Fisk Construction, Inc., v. Obando, 42 Fla. L. Weekly D2501b (Fla. 3d DCA 2017), a general contractor hired a roofer. The roofer subcontracted a portion of its work to a sub-subcontractor. A foreman of the sub-subcontractor than orally hired a laborer to perform a portion of the work the sub-subcontractor was responsible for performing. The laborer got hurt and a lawsuit was filed. The trial court ruled that the sub-subcontractor could not rely on workers compensation immunity as an affirmative defense finding that the sub-subcontractor waived and/or was estopped from asserting this defense. There appeared to be an initial denial of workers compensation benefits that was later remedied by the sub-subcontractor’s workers compensation insurer agreeing to pay the laborer’s hospital bills and medical visits. (Since the laborer was hired in an oral, handshake-type of deal, it could have been that executives of the sub-subcontractor had to investigate the laborer’s involvement at the project since he was not an employee of the company.)

On appeal, the Third District reversed holding that the sub-subcontractor could rely on workers compensation immunity as an affirmative defense. “[A]n initial denial of liability or [workers compensation] benefits does not automatically estop an employer from asserting workers’ compensation immunity [as an affirmative defense].” Fisk Construction, supra.

POWER OF WORKERS COMPENSATION IMMUNITY ON CONSTRUCTION PROJECT

Posted on November 17, 2017November 17, 2017 by Edward Garber

On 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. 1^st 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.

NEED TO BE A “CONTRACTOR” TO BE PROTECTED BY WORKERS COMPENSATION IMMUNITY

Posted on August 31, 2015November 8, 2024 by Edward Garber

Previously, I discussed the concept of “statutory employer” in the framework of workers compensation. Again, this concept is based on language in Florida Statute s. 440.10(1)(b) that 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.

The recent case of Slora v. Sun ‘N Fun Fly-In, Inc., 40 Fla. L. Weekly D 1966a (Fla.2d DCA 2015) discussed the meanings of the term “contractor” and “contract work” as used in this section:

The statutory terms “contractor” and “contract work” plainly and unambiguously posit a party performing work pursuant to a contract with another. Thus, to be immune from tort liability as a contractor, a defendant’s primary obligation in performing a job or providing a service must arise out of a contract.

Slora, supra (quotation and citation omitted).

In this case, a company operated airshows for the general public. To put on these airshows, the company had to fill out various forms and get approval from the Federal Aviation Authority. The Federal Aviation Authority required security to be provided at airshow events. The company put on an airshow and hired a security company to provide the security services for the event. During the airshow, however, an employee of the security company got hurt. This employee sued the company that put on the airshow for her injuries. The company argued it should be immune from such claim under workers compensation immunity that provides that contractors that comply with Florida Statute 440.10 are immune from tort liability (absent an intentional tort).

The trial court agreed with the company and granted summary judgment in its favor finding it was immune from liability and could not be properly sued by the injured employee of the security company. The appellate court reversed based on the meanings of “contractor” and “contract” as used in Florida Statute s. 440.10. Particularly, the appellate court held that there was no evidence that the Federal Aviation Authority contracted the company to put on the airshow event (or that the company undertook an implied obligation to the Federal Aviation Authority). Thus, if the company was not contracted by the Federal Aviation Authority, it could not be a “contractor” as used in the statute since it was not performing work pursuant to a contract with another. And, if the company was not a contractor per the statute, the company could not be immune from tort liability under workers compensation law.

RENTAL EQUIPMENT SUPPLIER NOT PROTECTED BY WORKERS COMPENSATION (HORIZONTAL) IMMUNITY

Posted on April 19, 2015November 8, 2024 by Edward Garber

Oh boy! When it comes to workers compensation immunity, suppliers, particularly rental equipment suppliers, better watch out as they are not entitled to the same safeguards as subcontractors when it comes to injuries on a construction project!

The Fourth District Court of Appeals in Ciceron v. Sunbelt Rentals, Inc., 40 Fla. L. Weekly D897a (Fla. 4^th DCA 2015) rendered an opinion that is not favorable to suppliers when it comes to the protection of workers compensation immunity on a construction project. In this case, an employee of the demolition subcontractor was injured from a scissor list that was utilized and rented by other subcontractors at the project. The employee sued the rental equipment supplier of the scissor list for negligence. The supplier moved for summary judgment arguing that it has immunity from such tort claims. The ultimate issue was whether workers compensation horizontal immunity barred the injured employee’s claim against the rental equipment supplier.

Horizontal Workers Compensation Immunity

I have previously written about workers compensation immunity on a construction project. Regarding what is commonly referred to as horizontal immunity: “Workers’ compensation immunity has been broadly expanded by the legislature to include subcontractors and sub-subcontractors working at a construction site, precluding an employee of one contracting entity injured on the job from suing another contracting entity working at the same construction site in tort.” Ciceron, supra.

To this point, Florida Statute s. 440.10(1)(e) states:

A subcontractor providing services in conjunction with a contractor on the same project or contract work is not liable for the payment of compensation to the employees of another subcontractor or the contractor on such contract work and is protected by the exclusiveness-of-liability provisions of s. 440.11 from any action at law or in admiralty on account of injury to an employee of another subcontractor, or of the contractor, provided that:

1. The subcontractor has secured workers’ compensation insurance for its employees or the contractor has secured such insurance on behalf of the subcontractor and its employees in accordance with paragraph (b); and

2. The subcontractor’s own gross negligence was not the major contributing cause of the injury.

This is referred to as horizontal immunity because one subcontractor is entitled to immunity for injuries caused to employees of another subcontractor.

In this case, however, because the supplier of the scissor list was not a “subcontractor,” the supplier was NOT entitled to immunity. This meant that the injured demolition subcontractor’s employee was entitled to pursue its negligence claim against the supplier of the scissor lift and the supplier did not have immunity under the law. If, on the other hand, the supplier was a “subcontractor,” then more than likely workers compensation horizontal immunity would have applied to bar the injured employee’s tort claim.

WORKERS COMPENSATION (PART TWO) — STATUTORY EMPLOYER AND CONTRACTORS

Posted on March 14, 2015November 8, 2024 by Edward Garber

To follow-up on the article Workers Compensation—Tidbits on Construction Projects, the recent opinion in Roof Painting By Hartzell, Inc./Summit Holdings-Claims Center v. Hernandez, 2015 WL 641199 (Fla. 1^st DCA 2015) touches upon the application of a statutory employer in the construction context.

Here, a contractor was hired to provide pressure cleaning and related services. The contractor, in turn, subcontracted the labor to perform the services through another company (e.g., subcontractor). Both the contractor and subcontractor that provided the labor had workers compensation insurance. A laborer (retained by the subcontractor) was injured in performing the pressure cleaning services. The issue was which workers compensation carrier should be responsible: the subcontractor’s carrier or the contractor’s carrier.

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.

Since the injured laborer was hired by the subcontractor, the subcontractor’s workers compensation carrier should cover the injured laborer’s claim.

Section 440.10 forms what is referred to as the “statutory employer” concept. For instance, if the subcontractor does not obtain applicable workers compensation insurance, then under this section, the general contractor is liable (as the general contractor is the statutory employer). It is this reason that contractors that subcontract a portion of their services to others need workers compensation coverage!

Importantly, contractors that comply with the requirements of section 440.10 are protected by the exclusiveness of liability provisions in Florida Statute s. 440.11. This means the contractor is immune from lawsuits (such as tort-related lawsuits) from injured workers with workers compensation being the exclusive form of liability absent any intentional tort committed by the contractor. See Fla.Stat. s. 440.11. “Because section 440.11(1) of the Florida Statutes makes the liability to secure [workers] compensation imposed by section 440.10(1) the exclusive form of liability imposed by Chapter 440 on an employer, once an employer acquires and maintains workers’ compensation insurance for the benefit of its employees, it becomes immune from suit.” VMS, Inc. v. Alfonso, 147 So.3d 1071, 1073 (Fla. 3d DCA 2014).