Statutory Employment in Workers Compensation Law in Virginia

 

We Explain How Virginia’s “Statutory Employer Law” Affects Workers Compensation and Personal Injury Claims Involving Contractors, Sub-Contractors, and Statutory Employees

 

If you’re hurt on the job and file a claim for benefits with the Workers Compensation Commission, you may see and hear many terms that you’ve never heard of before. This is frustrating and confusing.

 

Those of you who are injured on a construction site, such as electricians, painters, forklift drivers, welders, and laborer, may hear the term “statutory employer” thrown around. This article explains the statutory employer law in Virginia workers compensation and how it may affect your right to benefits under the Workers Compensation Act or damages through a personal injury lawsuit.

 

Keep reading to learn more. Then contact Virginia workers compensation lawyer and personal injury attorney Corey Pollard for a free consultation. We’ve helped many construction workers obtain wage loss, permanent partial disability, and medical benefits and have negotiated hundreds of top-dollar Virginia workers compensation settlements. Call us at 804-251-1620 or 757-810-5614.

 

What is a Statutory Employer?

 

Virginia Code Section 65.2-302 is the statutory employer provision of the Virginia Workers Compensation Act.

 

Va. Code Section 65.2-302(a) directs that a person who hires a contractor to perform work that is part of the person’s trade, business, or occupation is liable for workers comp benefits to any worker injured in the performance of that work. It states:

 

When any person (referred to in this section as “owner”) undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (referred to in this section as “subcontractor”) for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him.

 

Potentially a property or building owner may be liable for compensation payments to an employee hurt on the job site.

 

Va. Code Section 65.2-302(b) directs that a general contractor that hires subcontractors to complete a job is liable for compensation payments to employees of the subcontractors who are hurt while performing work under the contract between the contractor and the subcontractor.

 

When any person (referred to in this section as “contractor”) contracts to perform or execute any work for another person which work or undertaking is not a part of the trade, business or occupation of such other person and contracts with any other person (referred to in this section as “subcontractor”) for the execution or performance by or under the subcontractor of the whole or any part of the work undertaken by such contractor, then the contractor shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if that worker had been immediately employed by him.

 

Va. Code Section 65.2-302(c) extends the statutory employer law to subcontractors that hire other subcontractors to perform the work. A subcontractor that hires other subcontractors is liable for workmans comp payments if an employee of the sub-sub-contractor is injured. It states:

 

When the subcontractor in turn contracts with still another person (also referred to as “subcontractor”) for the performance or execution by or under such last subcontractor of the whole or any part of the work undertaken by the first subcontractor, then the liability of the owner or contractor shall be the same as the liability imposed by subsections A and B of this section.

 

What is the Importance of the Statutory Employer Law in Virginia?

 

Virginia’s statutory employer law is used as both a sword and shield in workers compensation and personal injury litigation.

 

The first situation where the statutory employer law is litigated is when an employee suffers an injury by accident arising out of and in the course of the employment but his actual employer does not have workers compensation insurance. The injured worker may use the statutory employer law to find workers compensation coverage through the project owner or the general contractor. In this context the statutory employer law acts as a sword to obtain medical and cash benefits for an injured employee.

 

The second situation where the statutory employer law is litigated is when an employer or business uses the law to prevent an injured worker from bringing a personal injury claim in civil court. Because an accident victim may seek additional damages in civil court, such as compensation for pain and suffering, a potential defendant may prefer to pay workers compensation benefits instead of risking a large personal injury verdict or settlement. In this situation the statutory employer law may shield a defendant.

 

How to Decide if an Owner or Contractor is a Statutory Employer: The Four Statutory Employer Tests in Virginia

 

When determining whether a person or company is a statutory employer, the question is whether the injured employee is engaged in the “trade, business, or occupation” of the owner or contractor. The Virginia Supreme Court has said:

 

The test is not one of whether the subcontractor’s activity is useful, necessary, or even absolutely indispensable to the statutory employer’s business, since, after all, this could be said of practically any repair, construction or transportation service. The test (except in cases where the work is obviously a subcontracted fraction of a main contract) is whether this indispensable activity is, in that business, normally carried on through employees rather than independent contractors.

 

Shell Oil Co. v. Leftwich, 212 Va. 715, 722 (1972).

 

The Shell Oil test has two parts: the normal work test and the subcontracted fraction test.

 

Normal Work Test

 

When determining whether an employee was hurt while performing work that was normally done by the owner’s employees rather than independent contractors, the Commission will look at:

 

  • How important the work performed is to the employer’s business
  • Whether the employer had contracted out this type of work in the past
  • The size of the employer’s maintenance staff
  • Routine work performed by the employer
  • How often the employer performed this type of work
  • If the employer would have used its own employees if the subcontractor was not available

 

Subcontracted Fraction Test

 

If the work out of which the work-related accident arose was a subcontracted fraction of a contract, but not part of the trade, business, or occupation of the owner, then the general contractor who hired the subcontractor to perform that fraction is the statutory employer. This is true regardless of whether the injured employee works for the subcontractor or a subcontractor of the primary subcontractor.

 

Stranger to the Work Test

 

When an injured employee who works for the owner or general contractor files a workers comp claim against a subcontractor, the Commission must use a “stranger to the work” test instead of the “normal work” test. The Workers Compensation Act will not extend to work-related accidents caused by third parties who are strangers to the trade, occupation, or business of the employer for whom the injured employee worked.

 

Cases Involving Statutory Employer Law in Virginia

 

Princess Anne Builders, Inc. v. Faucette, 37 Va. App. 102 (2001): In this case a general contractor in the home-building business was found to be the statutory employer of an employee of a tree service company because the general contractor’s contract called for the trimming of trees.

 

Carmody v. F.W. Woolworth Co., 234 Va. 198 (1987): In this case a portrait photographer who had a licensing agreement to operate a photography department in a retail department store  was a statutory employee because the retail aspect of the photographer’s job was part of the department store’s trade or business.

 

Bergen v. Fourth Skyline Corp., 501 F.2d 1174 (4th Cir. 1974): In this case a construction worker who was hurt by a person delivering mixed concrete to the job site could bring a personal injury lawsuit against the delivery person. The court found that the delivery person was a stranger to the business of constructing a building.

 

Practical Considerations in Statutory Employer Claims

 

Many injured employees do not find out that their employer has failed to purchase workers compensation insurance coverage until after they’re hurt on the job. Fortunately you may have remedies. But you’ll need an experienced attorney to conduct discovery and help you determine whether you have a workers comp claim, a third party lawsuit, or both.

 

Call, text, or email Corey Pollard for a free consultation. We’re here to help you recover after a work related accident. Come see how we’ve helped hundreds of workers obtain benefits and top-dollar workers compensation settlements.

 

Corey Pollard
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