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Pennsylvania Supreme Court Maintains Traditional ‘Statutory Employer’ Defense

Apr 10, 2014 - Industry News by

(Philadelphia, PA – April 10, 2014)  A unanimous decision by the Pennsylvania Supreme Court makes clear that the traditional ‘statutory employer’ doctrine remains alive and well in Pennsylvania, while clarifying the analysis and limiting its use.

According to the Court, the statutory employer analysis should remain a simple one: employees of subcontractors (an employer with a direct contractual relationship with the general contractor) are limited to bringing workers’ compensation claims against  general contractors, while employees of independent contractors (an employer with a direct relationship with the property owner) may bring civil liability suits against general contractors (assuming the other necessary factors for liability, such as control of the worksite, are present).

The case, Patton v. Worthington Associates Inc., was brought on Appeal by Worthington Associates, Inc., a general contractor hired to construct an addition to a local church.Worthington had entered into a standard-form subcontract with Patton Construction, Inc., whose sole shareholder and employee, Earl Patton, was a carpenter. Mr. Patton fell and injured his back during construction and brought a civil suit againstWorthington, alleging failure to maintain a safe worksite.

Worthingtonmoved for summary judgment, arguing that it was immune from civil suit as a ‘statutory employer.’ Mr. Patton argued that, as the employee of an independent contractor, he was entitled to bring his civil suit.

Under the Pennsylvania’s Worker’s Compensation Act (WCA), general contractors are secondarily liable for workers’ compensation to the employees of any subcontractors which they hire. A statutory employee’s exclusive remedy against his statutory employer arises under the WCA, and an injured employee may not bring a traditional civil tort action against his statutory employer. To put it plainly, general contractors inPennsylvania enjoy immunity from civil claims made by injured employees of their subcontractors.

In Patton, however, the Trial Court held that whether Mr. Patton was “an independent contractor or an employee with respect toWorthington” was a fact issue for the jury to decide.  The jury thereafter returned a $1.5 million dollar verdict againstWorthington, which was upheld on appeal by the Superior Court and effectively nullified the traditional statutory employer doctrine.

On appeal, the Supreme Court overruled, and pointed out the trial court’s jury instruction created confusion, because Mr. Patton, as an employee of Patton Construction Inc., could be neither the independent contractor nor the direct employee ofWorthington. In contrast, the Supreme Court, stated definitively that the statutory employer defense continues to exist, but applies only to employees of subcontractors, not employees of independent contractors (who have direct contracts with property owners).