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Defense Base Act – Coverage For Overseas Subcontractors

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Overseas Subcontractors And The Defense Base Act

For Overseas Subcontractors, The Defense Base Act  (DBA) is a very important part of the Workers Compensation system.  The Defense Base Act provides compensation for disability or death to persons employed at the military, air, and naval bases outside the United States.   

Army In Battlefield defense base act Overseas Subcontractors Vector
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The Act was passed in 1941.  The DBA is very short compared to much of the Federal Laws, Rules, and Regulations.  I had always assumed the DBA also covered any subcontractor employees.  That was not correct.   Then again, I am not a DBA expert.  

Part 1(c) of the DBA covers subcontracted employees.  A memo in 2003 – Explaining the Defense Base Act DBA – explains this in detail. 

Coverage under the Defense Base Act

The Defense Base Act covers the following employment activities:

  • Working for private employers on U.S. military bases or on any lands used by the U.S. for military purposes
    War defense base act in iraq
    Wikimedia commons – Spc. Ronald Shaw Jr

    outside of the United States, including those in U.S. Territories and possessions;

  • Working on public work contracts with any U.S. government agency, including construction and service contracts in connection with national defense or with war activities outside the United States;
  • Working on contracts approved and funded by the U.S. under the Foreign Assistance Act, generally providing for cash sale of military equipment, materials, and services to its allies, if the contract is performed outside of the United States;
  • Working for American employers providing welfare or similar services outside of the United States for the benefit of the Armed Forces, e.g. the USO.

If any one of the above criteria is met, all employees engaged in such employment, regardless of nationality, are covered under the Act.  

The 2003 Memo  points out the requirement of the subcontractors to cover their employees with WC.  Section 4(a) of the Act requires every employer to be liable for, and to secure the payment of, disability, medical, and death benefits to its employees in the event of injury or death. If a subcontractor fails to secure the payment of compensation, the contractor will be liable for and be required to secure the payment of such benefits.

The memo then covers a very important point with non-covered employees that are injured while working for the subcontractor.  

The injured employee may elect to sue the employer for tort damages on account of such injury or death.

An unusual clause  in the DBA  is the  uninsured defendant may not plead as a defense that the injury was caused by the negligence of a fellow servant, or that the employee assumed the risk of his employment, or that the injury was due to the contributory negligence of the employee.

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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:

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  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
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  • Various trade publications

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