Tuesday, December 22, 2009

Statutory Employers in Pennsylvania

Did you know that an employee can have more than one employer while working on the same job? It happens all the time, although you might not realize it. We commonly expect that an employee can come to be in the employment relationship due to an oral or written contract, or as a result of common law. But most people may not realize that the Workers’ Compensation Act also can impose an employer-employee relationship (at least for workers’ compensation purposes) on parties who have never met.


The Workers’ Compensation Act provides that an employer, such as a general contractor on a job, can be liable to a laborer hired by another employer, such as a subcontractor. Specifically, the Act provides:


An employer who permits the entry upon premises occupied by him or under his control of a laborer or an assistant hired by an employe or contractor, for the performance upon such premises of a part of the employer’s regular business entrusted to such employee or contractor, shall be liable to such laborer or assistant in the same manner and to the same extent as to his own employee.


77 P.S. § 52. The effect of this statute is two-fold: it allows workers’ compensation coverage for an injured worker when his direct employer – typically a subcontractor to a general contractor – failed to maintain appropriate workers’ compensation coverage, and it also allows the general contractor to enjoy immunity from the personal injury lawsuits of an injured worker just like a “regular” employer of an injured worker.


As far back as 1930, the Pennsylvania Supreme Court set out a five prong test for whether an employer is a statutory employer:

(1) an employer who is under contract with an owner or one in the position of an owner

(2) premises occupied by or under the control of such employer

(3) a subcontract made by such employer

(4) part of the employer’s regular business entrusted to such subcontractor

(5) an employee of such subcontractor

McDonald v. Levinson Steel Co., 302 Pa. 287 at 294-295, 153 A. 424 at 426 (1930).



Under the second prong of McDonald, an employer’s occupancy or control must be actual, but need not be exclusive. An employer satisfies the second prong by proving either occupancy or control and it is not required to prove both. Regarding the fourth prong, this statutory requirement is met when the subcontracted work is an obligation assumed by a principal contractor under its contract with the owner, or one in the position of an owner. Braun v. Target Corp., --- A.2d ----, 2009 Pa.Super 206 (October 23, 2009).


In this day and age, it is thankfully rare for a subcontractor to fail to carry workers’ compensation insurance, so the statutory employer provision is rarely invoked for purposes of covering injured workers. Therefore, this statute is more frequently utilized as a shield when a worker who is injured while working for a subcontractor attempts to bring a civil personal injury lawsuit against the general contractor on the job. The general contractor, under the statute, is immune from suit even if it does not actually have to pay workers’ compensation to the injured worker.


Construction of the statutory employer provisions of the Pennsylvania Workers’ Compensation Act is complex for both workers’ comp lawyers and personal injury lawyers. Persons with questions about the application of this Act should contact experienced counsel to determine their rights.


Our attorneys at Wolf, Baldwin & Associates are able to answer your questions regarding Pennsylvania's Workers' Compensation and all issues regarding Statutory Employers in Pennsylvania. Our lawyers are experienced in workers' compensation cases, representing both employees and employers. Please click here to contact us.