Workers’ Compensation
Fall 2006
Workers’ Compensation:
– Limited to the extent that injured worker would want to assert claim against employer or fellow employee
– If worker is injured by a 3rd party, then he can sue that party under tort law, not WC
– “Arising out of and in the course of employment” is the essence of whether the injury is a work injury
o Work injuries come in many forms
– WC law is designed to provide benefits to the injured worker (or his family, in case of death) at the expense of the employer
– WC is a product of the last century in the US
o It was not available before then
o MS adopted WC laws in 1949 – it was the last state to do so
Why WC?
– State has obligation to help those who can not help themselves
– Anytime there is an injury that interrupts the person’s ability to work, and thus his ability to provide for his family, then money must be provided for them
– Economy needed a better way to provide for injured workers than tort law
– Compensation objective is to alleviate the economic consequences of injury to individual worker
Tort law defenses:
– Fellow-servant rule
o Found in Priestley v. Fowler
o Principle of respondeat superior subjecting the master to liability for the torts of the servant does NOT apply where the suit is by one servant against the master for negligence of a fellow servant
o Courts developed a rule that employers owed a non-delegable duty to provide a safe working environment to employees – negates the fellow servant doctrine
– Assumption of risk
o A worker, by accepting employment, assumes the risk that he may be injured or killed by reason of dangerous working conditions that he could discover for himself if he were alert
§ § 11-7-19: MS statute that eliminates assumption of risk as a defense
– Contributory negligence
o MS has comparative negligence
*** These defenses worked against the worker and his family
Employer has a non-delegable duty to provide a reasonably safe working environment
Problems with tort system:
– Worker must prove fault
– Delay
o The longer the worker is out of employment, the more willing he will be to settle for a smaller sum of money
– Friction
o If a worker sues his employer, the suit may cause hard feeling between the worker and the employer (as well as any co-workers who are called as witnesses either for or against the employer)
WC as a cost of doing business:
– Proposition that when a company is doing business, company has overhead (i.e. – lights, water) that are costs of doing business
– WC is another cost of doing business
– Goal of WC is accomplished through insurance
Features of WC:
– Limits
o WC is the exclusive remedy for most workers – they can’t sue under tort law
§ Employer has tort immunity for injuries covered under WC
– Liability without fault
o Does not matter if employee or employer was negligent or used reasonable care, still compensated
Constitutionality of WC:
– Ives (1911)
o RR argues that to make them pay would deprive them of property without due process of law
o Court ruled that compulsory WC system was unconstitutional because it denied substantive due process
o Following this decision, states changed law so that the WC system was optional for employers
– White (1917)
o Supreme Court was deciding constitutionality of a “no-fault” system of WC and the relevant New York WC laws
§ Employer’s argument: to take my property without fault on my part is denial of due process
§ Employee’s argument: to take away my tort remedy and put cap on my damages is denial of due process
o Court held that WC law is constitutional
All states have caps on the amount of money an employer has to pay
How does the law address work injuries:
– Every state (plus D.C., Puerto Rico, etc.) has WC laws
o No two are identical
– LHWCA (Longshore and Harbor Workers’ Compensation Act)
o Deals with maritime/land workers
– Admiralty has its own body of laws
o Jones Act: federal statute; provides benefits within maritime
o Death on the High Seas Act
– FELA (Federal Employers Liability Act)
o Deals with interstate railroads and their employees
§ NOT a no-fault system
§ A “tweaking” of tort law
§ There is NO cap in compensation
– Tort law
o Applies to 3rd parties in WC cases
§ In MS, WC is mandatory if employer has 5 or more employees
WC process:
– Administrative judge hears the case initially
– Then, in MS, WC commission (3 people) can review and make its own decision, if it wants
– If appealed, then Circuit Court hears – cannot decide facts, only questions of law
– If appealed, then to MS Court of Appeals
– If appealed, then MS Supreme Court
** Problem: not expedient; one of early goals was to have expedient process; criticism that not speedy thus leads to more expense
WC and the Social Security System:
– What happens to a worker (or his family) when he is injured in a non-work injury?
o SS takes care of disabled workers
§ Workers must qualify for benefits, though
§ SS requires employee to have paid into SS for 40 quarters in order to be vested
o SS applies to illness and non-work injuries whereas WC is only work injuries
§ Sometimes, both can apply to work injuries, but one or both are reduced
§ SS is for a disability that is likely to last at least 1 year, so there is more waiting than with WC
o Medicare and Medicaid may also apply
§ They are used for medical services
– WC helps workers with disability benefits and medical services
– It would be more efficient to have only one system, but these systems began at different times
– Private income disability insurance policies can do a whole lot more than WC due to WC’s caps on payments
o WC was designed to provide benefits speedily and inexpensively
“Without regard to fault” shows up in all WC systems
WHO IS AN EMPLOYEE? (WAS THERE A CONTRACT OF HIRE?)
**MS WC law: “under a contract of employment, written or oral, express or implied”
** § 71-3-5 is the definition of employer: if have in service 5 or more workers regularly in the same business or in or about the same establishment…under any contract for hire, express or implied
General rules for employment:
– If not an employee, then not covered – may be able to argue contract for hire in emergency situations
o Example case: Johnson v. City of Albia
§ Johnson quit on November 15
§ Johnson went back to the plant to get his personal tools on November 16 and was injured while helping the new employee on the premises; doing work for the benefit of the employer
§ Court ruled that Johnson was no longer an employee
– Compensation does NOT have to be wages; if getting some kind of benefit in return for services, then most likely going to be enough for contract for hire
o Example case: Aspen Highlands Skiing Corp. v. Apostolou
§ Apostolou was a member of the ski patrol
§ Apostolou received no cash wages for his services, but he did receive a free ski pass for his girlfriend
§ Court ruled that Apostolou was an employee because he did receive benefits
EMPLOYEE OR INDEPENDENT CONTRACTOR?
Definitions:
– Employee: “any person, including a minor whether lawfully or unlawfully employed, in the service of an employer under any contract of hire or apprenticeship, written or oral, express or implied, provided that there shall be excluded therefrom all independent contractors” [§ 71-3-3(d)]
o Other exclusions: newspaper boy or student in training if not getting wages
– Independent contractor: “any individual, firm, or corporation who contracts to do a piece of work according to his own methods without being subject to the control of his employer except as to the results of the work, and who has the right to employ and direct the outcome of the workers independen
ime contract); Jackson contracts with Beach (sub) to build; Fly works for Beach)
o Whites à Jackson à Beach à Fly
– Example case: Oakwood Hebrew Cemetery Association v. Spurlock (defendant has 4 elected officers; plaintiff was a subcontractor of Lineberry, who was hired by defendant; statute makes Oakwood the employer of Spurlock, thus, he is covered under WC law)
o Oakwood à Lineberry à Spurlock
o Owner à sub à employee
§ RULE: owner/Oakwood must have WC for sub/Lineberry’s employees when doing work related to the contract between owner and sub
· Policy: closing loopholes; making sure owner cannot dodge liability by hiring sub
– In MS, coverage of subcontracting trumps independent contractor exclusion
More subcontracting cases:
– Boyd v. Crosby Lumber and Mfg. Co.
o Watershed case in MS for WC in logging cases
§ Crosby had a contract with Durham to pick up and haul logs
§ Boyd was employee of Durham
o Crosby à Durham à Boyd
o Court regards Crosby and Durham’s relationship as employment, not independent contracting, by using both tests (relative nature of work and right to control)
o RULE: if subcontractor is employee rather than independent contractor, then employees of subcontractor are covered by owner/general contractor’s WC or owner/general contractor has obligation to provide coverage/payment
– Empire Home Builders v. Guthrie
o Court held Guthrie was an employee, not an independent contractor, by using both tests (relative nature of work and right to control)
TORT IMMUNITY: WC as exclusive remedy
Rules:
– Statutory employer gets tort immunity
– If employee recovers in tort suit from anyone, then must reimburse employer who has paid WC benefits
o No double recovery
Non-traditional Employment as a test for tort immunity
Clark v. Luther McGill:
– This case is a tort suit, not a WC suit
o Clark was employed by Hurst, who had WC insurance
o Hurst had contract with McGill for McGill to move heavy machinery
o Clark was injured while helping out McGill employees; MGill claims lent-servant doctrine
o McGill à Hurst à Clark
– Court sets high standard for lent-servant
o Must prove a contract of hire
o Must prove consent
– Court ruled that McGill did not have tort immunity
MS is one of majority of states where tort immunity is granted to the employer only
Index Drilling Co. v. Williams:
– Index à Dapsco à Prod. Serv. à Williams
o Index, Dapsco, and Production were 3 of 5 corporations under the same ownership
o Williams received WC benefits from Dapsco and filed a tort suit against Index under the lent-servant doctrine
o Court ruled that Williams did not fall under the lent-servant doctrine
– RULE: In third party actions, worker can sue third party, not employer, for tort damages
Ray v. Babcock & Wilcox Co. Inc.:
– Ray was on payroll of Bechtel, a subcontractor
– Babcock was the general contractor
– Bechtel loaned Ray to Babcock
– Ray had received WC benefits from Bechtel & sued Babcock for negligence
– Court ruled that this was dual employment – both have tort immunity
o Factors:
