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Statutory Employment Rears Its Ugly Head In Two States – Part I

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Statutory Employment Shocker – Part I

Statutory Employment rears its ugly head in two states this week.

 Statutory employees were really one of those under the radar subjects in Workers Compensation. South Carolina deemed a contractor as a statutory employee a few years ago. The subject seemed to not come up again until two recent cases.

Picture of Business Man with effects Employment Rears Statutory
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Pennsylvania’s statutory employment law was considered one of the most conservative when determining the employment status of a subcontractor. That stance changed this week as PA’s Supreme Court stretched the boundaries of the employee/employer relationship further than most states.

According to a very well written article, the PA Supreme Court ruled that for Workers Comp “non-premises-based contractors may be viewed as statutory employers for the purpose of claiming benefits.” The basic premise is the claimant (trucker) was an employee of another company. One of the stark parts of the ruling is what I have been warning employers about for years.  

The Ladder of Insurance (c) was applied in this case as the claimant’s direct employer had no WC insurance. The court went up the ladder to the company that had no idea the injured employee’s employer had no WC insurance. I cannot imagine the response of their WC carrier. Would they possibly deny the claim for non-coverage? That would likely initiate another lawsuit.

I have written many articles on this subject as I have seen so many employers pay claims for unknown employees. This is why certificates of insurance are golden for risk transfer between contractors and subcontractors. Ask for them or be ready to get out the checkbook.

I will cover the Missouri statutory employment case next time.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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