SOUTH CAROLINA WORKERS’ COMPENSATION
Professor Lacy
I. History of Workers’ Compensation in South Carolina
A. Problems Before the Act
1. Injured employees bore the burden of proof and employers had control of all of the evidence.
2. Employers had no incentive to change and make working conditions safer.
3. If jury returned a huge verdict for injured worker, employer could go out of business and hundreds of people could lose their jobs—danger of excess and inconsistent verdicts.
4. Litigation between employers and employees tied up the courts, as it made up about one-third of all litigation.
5. Employees feared bringing suit for fear of being fired.
6. Time was a big factor. Litigation takes years, so what does the injured worker do in the meantime?
B. Solutions Provided by the Act
1. The Act eliminated negligence as a cause of action between employees and employers and established a no fault system. This eliminates all of the employer’s affirmative defenses (contributory negligence, assumption of risk, etc.). So, employee only has to prove that his injury arose during scope of employment, not that the employer was negligent.
2. Insurance premiums are based on accident history, providing an incentive for employers to offer safe working conditions.
3. Benefits awarded to injured workers are defined by statute, which solves the problem of excessive verdicts.
4. The Act created an agency to deal solely with these cases, which solved the problem of clogging up the courts. (First, the agency was known as the Industrial Commission, then the Workmen’s Compensation Commission, and now is the Workers’ Compensation Commission.)
5. Statute protects employees from being fired.
6. The Commission gets cases through much more quickly than if an action had been filed in the circuit courts, and employees receive quick payments.
C. Exclusive Remedy
1. Workers’ compensation is the exclusive remedy in South Carolina for injuries occurring in the workplace, as expressly held by the S.C. Supreme Court.
2. S.C. law mandates employers to have workers’ compensation insurance as of June 18, 1996. Originally, an employer could elect not to carry WC insurance. Only government entities had to be in WC, and for everyone else it was elective.
a. Employer or employee could elect not to be part of the Act. If no WC insurance, employee could sue if he was injured. Employer, if sued, was prohibited from asserting any of the common-law defenses, so there was an incentive built into the Act to encourage election of coverage.
b. On June 18, 1996, they did away with the elective provision in the law. Now, it’s mandatory to be part of the system—employers either have to have WC insurance or be self-insured. See S.C. Code Ann. §42-1-310 (“Every employer and employee . . . shall be presumed to have accepted the provisions of this title . . . and shall be bound thereby.”).
3. If there is a legal doubt as to whether the Act applies, there is a presumption in favor of inclusion.
D. Interpretation of the Act-Rules of Construction
1. What is legislative intent?
2. Liberally construed-err on the side of inclusion as opposed to exclusion.
3. Err on the side of inclusion for jurisdiction as well.
4. You cannot violate the language of the statute—if language is unambiguous, you must follow it
5. You cannot interpret the act against someone just because you don’t like them (no hardship).
II. Exemption Under the Act
A. §42-1-320: Public entities and their employees cannot exempt themselves. “The State, its municipal corporations and political subdivisions thereof, and [their] employees . . . are subject to this title.”
B. §42-1-350: The Act does not apply to railroad companies and their employees.
C. §42-1-360: The Act does not apply to:
1. Casual employees (will be on exam)
a. Casual employees are defined as “persons whose employment is both casual and not in the course of the trade, business, profession, or occupation of his employer” (§42-1-130).
b. Casual employees work sporadically. For example, a teenager that comes around the neighborhood every once in a while and cuts the grass would be considered a casual employee.
c. See Riden v. Kemet: Held that to determine if employee is a casual employee, there is a two-pronged test.
i. Whether employees work was casual. i.e. irregular; no consistency.
ii. Whether employee was performing work for employer that was not in the course of the employer’s trade, business, profession or occupation.
2. Federal employees
3. An employer who has less than four employees (always an exam question)
a. Generally speaking, in calculating this total, you do not count the employer to determine if individual gets benefits. (this includes sub-contractors who are technically employers of the workers-thus, they do not count.
b. Important diagram in my class notes dated 09/06/07/
4. Employers with a payroll which totals less than $3000 (has not been changed since 1935) regardless of the number of persons
5. Textile Hall Corporation
6. State and county fair associations
7. Agricultural employees
8. Elected officials and the individuals they appoint.
D. §42-1-370: Salespersons of agricultural products are exempt from the Act.
E. §42-1-375: Licensed real estate sales persons working for a licensed real estate broker are exempt, if working on commission, under no control of broker, and under a signed independent contract with broker.
F. §42-1-380: Exempt parties may waive their exemption and fall within the Act if they file written notice to the Commission; the Act applies thirty days after date of written notice. Most employers do waive the exemption.
G. §42-1-390: Once the exemption is waived, you can get it back by notifying the Commission in writing.
H. Number of Employees—How Do We Count?
1. General Rules:
a. Sole proprietor does not count as to number of employees. So a sole proprietor with 3 employees would not fall within the Act, because only the 3 employees count.
b. A corporation is an entity and its president counts as a person under the law. So a corporation with 3 employees and a president has 4 employees for purposes of the Act.
c. In a partnership, the partners are actually the employers and therefore do not count towards the number of employees.
d. In a professional corporation, the partners sign contracts so they would probably be considered employees under the Act.
e. Employers are generally not covered under the Act, but they may choose to opt-in for coverage. (See §42-1-130)
2. Nolan v. National Sales Co., Inc. (1988): Held out of state employees should not be counted in determining the number of employees for exemption purposes under the Act; only employees in South Carolina count
3. Ost v. Integrated Products, Inc. (1988):
a. Issue: Whether the employees of National Sales, a sister corporation of Integrated, are statutory employees of Integrated, and if so, whether the statutory employees can be included to meet the four employee requirement and establish jurisdiction under the Act.
b. Holding: Statutory employees can be included and counted as employees under the Act. Here, the four employees requirement is met and Integrated falls under the Act.
i. National was the subcontractor and Integrated was the general contractor, thus National employees are statutory employees of Integrated.
ii. Statutory employees can be included in the count of employees under the Act, as well as part-time employees.
1. Any reasonable doubts should be resolved in favor of the claimant by including him in coverage.
iii. National Sales is not a subsidiary of Integrated, but instead work under integrated. For purposes of coverage under the act, you count down not up. So National did not fall within responsibility under the Act, only Integrated.
III. Who Comes Within the Act?
A. §42-1-130: Definition of Employee
1. Very broad and inclusive
2. Includes aliens and minors
3. Elected or appointed positions are NOT covered, so WC Commissioners are not covered by the Act
4. Sole proprietors or partners of a business can elect to be covered under the Act by if they are actively engaged in business operations and they notify their insurer. When a sole proprietor elects to be covered, then essentially, he becomes an employee of himself.
a. If they elect to be covered by the act, then they count towards the 4 requirement.
5. Reg. 67-402: Allows a corporate officer to reject coverage under the Act; two reasons: 1) they are so highly paid, their salaries would be well over the maximum amount allowed for recovery under the Act, so they would recover more if they had just a general disability insurance policy; 2) their salaries count in on figuring the premium and if they were excluded, the overall premiums would go down for the company
B. §42-1-140: Gives very broad definition of employer
C. §42-1-150: Employment
1. Defines employment and includes/reiterates four person requirement
2. Chavis v. Watkins (1971): Held that when a business is sold, successive employees are still covered under old employer until the new employer/employee relationship is made known and accepted
D. Harding v. Plumley (Ct. App. 1998):
1. Facts: Harding was injured on his first day working for Plumley. Plumley, a residential homebuilder, employed around six men on and off and none permanently.
2. Issue: What is the meaning of “regularly employed” under §42-1-360(2) [statute for casual employee]?
3. Holding: Court held “regularly employed” referred to the employment of “the same number of person throughout the period with some constancy.” Court also held it must look to the number of employees at the time the injury took place.
a. No guidance on “regularly employed”, so turn to definition in N.C. which most of our Code provisions are based.
i. “Connotes employment of the same # of persons throughout the period w/some constancy.”
ii. Can’t just work by “chance or particular occasion, but according to a definite employment at hourly wages.
iii. A casual employee is not considered to be “regularly employed.”
E. Jurisdiction
1. The actual hiring creates jurisdiction, not the initiation of the work. (See Holland v. Georgia Lumber).
2. O’Briant v. Daniel Construction Co. (1983): Held that final act which rendered binding employment contract took place in SC by employee’s verbal acceptance over the phone; therefore, S.C.’s WC Act applies , even though employee signed the contract, worked, was paid, and was injured in Georgia.
a. Rule: “The existence of a contract, not the commencement of work, establishes
ds an employer from asking questions about employee’s specific health problems prior to offering them a job. Employers can show applicants a job description and ask if they are physically able to perform the duties, though. See Jones for a good analysis of why ADA does not affect the holding in this case.
d. Dissent: Argues because employee revealed that he had previously injured his back to his supervisors in Charleston that information should have been imputed to supervisors at the Columbia job site
2. Jones v. Georgia Pacific (2003):
a. Facts: Claimant failed to indicate on pre-employment health history form that she had back trouble, Bursitis, and leg pain. She also checked no on application question asking if she had any physical disability that might impair her work. She was hired and worked at GP for six years. She injured her back while picking up large pieces of cardboard and filed a comp claim.
b. Issue: Did lower court err in determining accidental injury and claimant’s back pain were not causally related? Did the court err in determining her claim was barred because she committed fraud in filling out her employment application? Does Oglesby apply?
c. Holding: The circuit court did not err in finding claimant’s claim for benefits was barred.
i. There was substantial evidence that the back pain and accidental injury were causally and directly related.
ii. Three prongs of test set forth in McDevitt Street were met, so her claim was barred.
iii. In Oglesby, the Commission panel held the McDevitt Street case isn’t overruled by the ADA. The ADA does not trump the determination in McDevitt Street as to when fraud in the application process bars an attempt to recover WC benefits. You still use the Cooper Test. If Cooper is met, no compensation.
1. The ADA permits employers to make pre-employment inquiries into an applicant’s ability to perform the job.
2. The ADA does not have a section protecting fraud in the employment application.
C. Statutory Employees and Employers (Get diagram from class notes.)
1. Defined as statutory employee because the relationship is created by statute
2. §42-1-400—Liability of Owner to Workmen of Subcontractor: When an owner contracts with another person to perform some part or the whole of the work undertaken by the owner, the owner shall be liable to pay any workman employed in the work any compensation that he would have had to pay if the workmen was employed directly by him.
a. Owner is liable to everyone down the line, just as he would be if any one of them were directly employed by him.
b. §42-1-410: When a contractor contracts to perform work for another person which is not a part of the trade, business, or occupation of the other person, and then contracts with a subcontractor for the execution or performance of the work (in whole or part), then the contractor is liable to pay any workman employed in the work any compensation that he would have had to pay if the workmen was employed directly by him.
c. §42-1-420: When a subcontractor contracts with another subcontractor to perform the work, the liability of the owner or contractor is the same as the liability imposed under §§ -400 and-410.
d. §42-1-440: When principal contractor is liable to pay compensation, he can seek indemnification from any person who would have been liable to pay compensation to the workmen independently.
e. §42-1-450: Worker is not prevented from recovering from a subcontractor instead of the principal contractor, but cannot recover from both.
f. If contractor has certificate of insurance, then owner is protected. So the owner usually will require this.
3. Riden v. Kemet Electronics Corp. (Ct. App. 1993):
a. Facts: Man injured by explosion sued Kemet. Kemet moved to dismiss based on grounds that he’s a statutory employee and thus the WC act is the exclusive remedy. Claimant argues he was only a casual employee, and thus can sue.
b. Issue: Did Trial Court err is denying Kemet’s motion to dismiss because Claimant was a statutory employee under the Act? Was Claimant a casual employee and thus exempt from the Act?
c. Holding: Riden can only be excluded from the Act if his work was both casual and not in the trade, business, or occupation of Kemet. His work was in the course of Kemet’s business, so he does fall within the Act.
