A Pennsylvania tomato grower is secondarily liable to pay the workers’ compensation benefits of a truck driver it hired to deliver its produce, the state Supreme Court has unanimously ruled, in a case that settles what the court called “ambiguity” regarding statutory employer status in Pennsylvania’s Workers’ Compensation Act.
The court’s decision, which came down last week, essentially means that non-premises-based contractors may be viewed as statutory employers for the purpose of claiming benefits.
Justice Thomas G. Saylor, joined by the rest of the court, declined to endorse the grower’s theory that factors derived from the high court’s seminal McDonald test applied to Section 302(a) of the act, defining which contractors are liable to pay benefits of certain subcontractors.
In Six L’s Packing Co. v. WCAB (Williamson), claimant Kevin Williamson argued that Section 302(a) showed the Pennsylvania General Assembly’s intent to, in the words of his appellate brief, “create a class of statutory employers” broader than the typical contractor/subcontractor relationship — which traditionally involves a premises-based employment, such as a construction site.
Six L’s Packing Co., on the other hand, invoked a stare decisis argument, suggesting the decisional law has conveyed “‘mixed signals’” as to whether McDonald factors — derived from Section 203 of the act (on tort immunity) — applied to Section 302(a).
While Saylor agreed there was some confusion in the legal landscape, he noted the “vast majority” of decisions cited by Six L’s were those from intermediate appellate courts and the sole Supreme Court decision tying McDonald to Section 302(a) involved the “‘classic’ statutory employer scenario” between a construction contractor and its subcontractor. That “classic” on-premises scenario is defined in Section 302(b), extending statutory employer status to an employer contracting out premises-based work.
“We do recognize a degree of ambiguity inherent in the overall scheme for statutory employer liability, arising out of differences in the definitions for ‘contractor’ as used in various provisions of the WCA; the idiosyncratic conception of subcontracting fashioned in Section 302(a); the substantial overlap between Sections 302(a) and (b); and the apparent differences in the depiction of the concept of statutory employment as between the act’s liability and immunity provisions,” Saylor said in an 18-page opinion.
But, in viewing the statutory scheme as a whole and employing liberal construction, the court found that any person or businesses contracting out work that is a “regular or recurrent part of their businesses,” must guarantee those who claim that work the benefit of workers’ compensation insurance.
Saylor’s language was readily available from Section 302(a).
The act defines a contractor as someone who contracts with another for work consisting of “removal, excavation or drilling of soil, rock or minerals” or “the cutting or removal of timber from lands.”
More significant to the Six L’s case, though, was that the statute extends contractor status to anyone having “work performed of a kind which is a regular or recurrent part of the business, occupation, profession or trade” they practice.
In the case, Six L’s employed F. Garcia & Sons to transport tomatoes between its Pennsylvania warehouse and a processing facility in Maryland. Williamson was a Garcia truck driver who was hurt in a vehicle accident while transporting a shipment of the produce.
He filed claims against both Garcia and Six L’s and, after it was determined Garcia didn’t carry workers’ compensation insurance, Williamson worked his case up the appellate ladder on the theory that Six L’s was his statutory employer, secondarily liable to pay him benefits.
Every tribunal to hear the matter has extended benefits to Williamson, starting with a workers’ compensation judge and seemingly culminating with the justices’ unanimous May 29 decision.
Both the Workers’ Compensation Appeal Board and the Commonwealth Court agreed that Pennsylvania case law has established that where an entity is deemed statutory employer under Section 302(a), claimants need not concern themselves with the factors in Section 302(b) nor the McDonald test.
However, Six L’s had advanced the theory before the justices that the high court’s McDonald test — established in the Supreme Court’s 1930 decision McDonald v. Levinson Steel — applied. They argued that Williamson, injured on a public highway, did not clear its five elements.
McDonald established that a claimant asserting liability proves an entity is his or her statutory employer when: the entity is under contract with an owner, the entity occupies or is in control of the premises where the injury occurred, the entity entered into a subcontract, the entity entrusted part of its business to the subcontractor, and the injured party is an employee of the subcontractor.
Six L’s attorney said courts have been looking to the test for years in determining liability issues, such as workers’ compensation exposure.
Calling the court’s decision a “game-changer,” Ottsville, Pa., attorney Sharolyn L. Murphy of Doman & Murphy said the ruling means a significant amount of “unsuspecting employers” that traditionally not have been viewed as statutory employers now will be.
Jeffrey L. Zeitz of Sand and Saidel represented Williamson.
Zeitz said the decision means employers have to make sure all their subcontractors are carrying workers’ compensation insurance or, as he put it, “they’ll find themselves in a statutory employer situation.”
“Section 302(a) is not going to be limited to timber and minerals,” Zeitz said. “If [a] subcontractor is not insured, you can throw in the statutory employer process.”
The Pennsylvania Association for Justice and the Department of Labor and Industry filed amicus briefs on behalf of the appeal board and Williamson.
(Copies of the 18-page opinion in Six L’s Packing Co.v. WCAB (Williamson), PICS No. 12-1047, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •