Safety and OSHA News

Subcontractor didn’t have workers’ comp insurance: Is general contractor responsible?

Six employees were injured at a construction site. The general contractor found out the subcontractor that employed the injured workers didn’t have workers’ comp insurance. Did the injured workers get benefits from the general contractor’s policy? 

Harte’s Contracting Services agreed to be the general contractor for construction of a church in Arizona. Harte’s hired about 20 subcontractors for the job. For framing work, Harte’s hired Vasquez Construction.

On Oct. 3, 2016, a truss collapsed and six Vasquez crew members fell to the ground suffering non-life-threatening injuries.

After the collapse, Harte’s found out Vasquez was unlicensed and uninsured. The owner of the company disappeared after the incident.

The injured workers applied for workers’ comp benefits from Harte’s and their requests were denied.

An administrative law judge said Harte’s insurance should provide benefits for the injured workers. The ALJ found that although Vasquez was the injured workers’ direct employer, Harte’s was their statutory employer. Reason: The ALJ found Harte’s exercised control over the tasks performed by Vasquez’s workers.

Harte’s appealed to a state court, arguing it wasn’t the injured employees’ statutory employer.

To be a statutory employer, courts have found two conditions must be met:

  1. The employer procuring the work to be done for it by a subcontractor must retain supervision or control over the work, and
  2. The work entrusted to the subcontractor must be a part or process in the employer’s regular trade or business.

Harte’s testified it wasn’t a framing company and didn’t have employees who could perform framing. The contractor said its control over the subcontractor’s work was limited to ensuring it was up to code, the job site was safe and the work was done on time.

The injured workers testified the owner of Vasquez Construction was their boss.

The court found the evidence didn’t show Harte’s retained the necessary control over the subcontractor’s work to be considered a statutory employer.

On top of that, the court also found that, even though framing is a necessary part of constructing a new building, there was no evidence Harte’s ever performed framing work with its own employees or had the necessary expertise to do so. Therefore framing wasn’t a part or process of Harte’s regular business.

For those reasons, the appeals court overturned the ALJ’s decision. Harte’s wasn’t the injured employees’ statutory employer, and the contractor’s workers’ comp insurance wouldn’t cover their injuries.

(Harte’s Contracting Services v. The Industrial Commission of Arizona et alArizona Court of Appeals Div. One, No. 1 CA-IC 18-0013, 2/7/19)

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