Under the Pennsylvania Workers’ Compensation Act (“Act”), employers are required to maintain workers’ compensation insurance coverage. Generally, the employer’s obligation extends only to maintaining coverage for its employees, as that term is defined by law. Independent contractors are not eligible for workers’ compensation benefits under the Act.
However, Section 302(a) of the Act provides that an entity may be deemed a “statutory employer” as to independent contractors of a subcontractor who fails to maintain workers’ compensation insurance. Specifically, an entity that engages a subcontractor to perform work regularly a part of the entity’s business is secondarily liable for the payment of workers’ compensation benefits to the subcontractor’s employees.
Earlier this year, the Pennsylvania Supreme Court issued an opinion expanding the scope of statutory employer liability under the Act. The case was Six L’s Packing Company v. Workers’ Compensation Appeal Board (Williamson) (opinion).
The employer in that case was Six L’s, a Pennsylvania company in the business of growing, processing, and distributing tomatoes. The Company’s tomatoes are grown on farms in Pennsylvania and processed at plants in Maryland. Six L’s contracts with F. Garcia and Sons to transport the tomatoes by truck from the Pennsylvania farms to the Maryland processing facilities. Claimant worked for Garcia as a truck driver. On a Pennsylvania highway during one such trip transporting tomatoes, Claimant was involved in a vehicle accident and sustained injuries. Claimant filed a workers’ compensation claim against both Garcia and Six L’s. After it was discovered that Garcia did not maintain workers’ compensation insurance for its employees, the question became whether Six L’s was liable for payment of benefits as Claimant’s statutory employer.
Six L’s argued that it was not Claimant’s employer for workers’ compensation purposes. Specifically, Six L’s put forth two arguments: (1) it did not own trucks or employ drivers, but rather used independent contractors to provide transportation services; and (2) while it owned the tomato fields and processing facility, it did not own or control the public highway where Claimant sustained his injuries.
Ultimately, though, the Supreme Court rejected these arguments. The Court held that Section 302(a) is not limited in application only to injuries occurring on premises occupied or controlled by the statutory employer. Instead, the statute extends the entity’s liability to any instance in which the entity subcontracts for services or work “of a kind which is a regular or recurrent part of the entity’s business.” Finding that transportation of tomatoes between the two facilities was a regular and recurrent part of the Company’s business, the Supreme Court concluded that Six L’s was Claimant’s statutory employer. Consequently, Six L’s was liable for payment of the workers’ compensation benefits to which Claimant was entitled.
In light of the Court’s decision in Six L’s, employers who use subcontractors must require the subcontractor to carry workers’ compensation insurance for all of its own workers and should obtain proof of such insurance coverage. If not, the employer may find itself to be viewed as a statutory employer and assume secondary liability for benefits to individuals over whom it has no authority and exercises no control.