SOCIAL SERVICES LAW

Workers’ Compensation • Statutory Employer Doctrine • Independent Contractor

Patton v. Worthington Assoc., Inc. , PICS Case No. 14-0447 (Pa. March 26, 2102) Saylor, J. (11 pages).

The lower courts erred in finding that a general contractor was not a statutory employer under the Workers’ Compensation Act and was not immune from civil liability for injuries sustained by an employee of a subcontractor on a construction work site. Reversed and remanded.

Worthington, the general contractor for a building project, contracted with Patton Construction to perform carpentry. Plaintiff is the sole shareholder and employee of Patton Construction. Plaintiff fell and injured his back while working at the construction site and sued Worthington, alleging a failure to maintain safe working conditions at the job site. Worthington argued it was immune from suit as plaintiff’s statutory employer.

Despite §302(b) which gives statutory employers a measure of immunity from liability in tort pertaining to work-related injuries for which they bear secondary liability, the trial court framed the issue as a question of whether an injured employee of a subcontractor should be treated as an independent contractor or an employee of the general contractor. Given that Worthington had no contract with the plaintiff himself, he could not be an “independent contractor” or even a contractor for purposes of §§203 or 302(b) of the act. Nor was the plaintiff a common-law employee of Worthington. Following the trial court’s instructions the jury found plaintiff was an independent contractor of Worthington. Worthington appealed and the superior court affirmed in a divided opinion.

In its appeal, Worthington argued that the trial and intermediate courts inappositely overlaid common-law conventions onto the statutory regime embodied in §§203 and 302(b) of the act and nullified the statutory employer concept. Worthington argued that employees of subcontractors are neither themselves independent contractors nor employees of general contractors. Plaintiff and amici argued the uniqueness of the facts since plaintiff was the principal of Patton Construction and criticized the application of immunity in favor of statutory employers who are not required to pay workers’ compensation benefits.

The Pennsylvania Supreme Court has long held that, by the terms of §302(b), a conventional relationship between a general contractor maintaining control of a job site and a subcontractor implicates the statutory employer concept relative to employees of subcontractors working there. The court has also long held that although statutory employment does not extend to employees of “independent contractors,” that phrase in connection with §§203 and 302(b) is unique and pertains to contractors having a relationship with the owner which is not a derivative one and, accordingly, excludes conventional subcontractors. As a matter of law, Patton Construction was a subcontractor, not an “independent contractor” relative to §§203 and 302(b) of the act, particularly since Patton’s contract was with the general contractor, Worthington, and not the owner of the building.

The court found that plaintiff’s status as the principal of Patton did not alter the situation because, having made the decision to conduct his affairs using a corporate form, plaintiff could not then blur the lines of the capacity in which he acted as it suited him. The act does not provide an exception to the statutory employment concept for subcontractors’ principal employees. Whether plaintiff acted in a personal or corporate capacity, his relationship with the owner of the building was a derivative one arising from the conventional subcontract with the general contractor. Neither Patton Construction nor plaintiff was an “independent contractor” relative to Worthington for purposes of §§203 and 302(b).

Plaintiff’s amicus argued that Fonner reflected poor public policy. However, Fonner has been a majority decision and controlling law on a matter of statutory construction for almost 15 years. Arguments about public policy should be expressed to the legislature. A concurring opinion urged the legislature to eliminate the statutory employer concept as obsolete and without any basis in policy or usefulness.