What is a Statutory Employee in Pennsylvania?

Under Pennsylvania’s Workers’ Comp Act, employers are required to carry insurance and pay for their employee’s injuries in the event of a work-related accident.  However, there may be more companies and businesses that are deemed “employers” under the statute, especially in complex employment situations.

Under the Act, a “statutory employer” is a company that is deemed to be a worker’s employer for purposes of Workers’ Comp benefits even when that company might not directly hire the injured worker.  This usually comes up in cases involving one company hiring another company to do regular work for them, but that middleman company fails to carry Workers’ Comp to cover their injured employees.

For help filing your injury claim against the proper employer, call Cardamone Law’s Certified Pennsylvania Workers’ Compensation Lawyers at (267) 651-7945.

What Employers Have to Have Workers’ Compensation for Their Employees in Pennsylvania?

Most employers must have Workers’ Compensation coverage to take care of their employees in the event of an injury.  More specifically, any company that has even one employee who could need coverage must have insurance to cover that employee.

This means that the company must have Workers’ Comp coverage if they have even one worker who works within Pennsylvania, if the company is Pennsylvania-based and has workers in other states, or if they set up the contract for hire in Pennsylvania but have the employee working elsewhere.

What it Means to Be a “Statutory Employer” for Pennsylvania Workers’ Compensation

If an employer has employees, then they usually must have Workers’ Comp insurance.  If they only have independent contractors, then they might not need Workers’ Comp because those workers are not covered like “employees” are.  As such, an employer might hire a contractor who has its own employees.  However, if it is discovered later that those workers should actually be covered by Workers’ Compensation, and their direct employer has no coverage, it might be up to the employer’s employer to provide coverage.  These employers are known as “statutory employers” because the statutes require them to be deemed “employers.”

An example might help explain this better: Imagine a tomato farm that contracts with a trucking company to deliver its tomatoes.  If that trucking company’s driver is injured in a crash, they would usually file with the trucking company for their Workers’ Comp claim.  If the trucking company does not have Workers’ Comp like they are supposed to, then the tomato farm is deemed the driver’s “statutory employer,” and the driver can file through the farm’s Workers’ Comp carrier for coverage.

These are essentially the facts of the controlling Pennsylvania Supreme Court case on this matter, Six L’s Packing Co. v. Workers’ Comp. Appeal Bd. (2012).  That case held that under § 302 of the Workers’ Comp Act, the tomato farm had to pay the driver’s Work Comp benefits even though he worked directly for the trucking company, and the trucking company had a contractor (not employee) relationship with the farm.

More broadly, the rule says that under § 302, the top-level employer (e.g., the farm) is a “contractor,” and the company they hired (e.g., the trucking company) is deemed a “subcontractor,” and their employee files against the top-level employer as their “statutory employer” for Workers’ Comp benefits.

How Statutory Employers Affect Workers’ Comp Claims in Pennsylvania

This system of deeming certain employers “statutory employers” of injured workers helps ensure that injured workers get the benefits they need, even if their direct employer doesn’t have the insurance they are supposed to have.  Essentially, the injured employee can reach beyond their direct employer to their “statutory employer” to get these benefits that their direct employer should have paid them.

On the ground, this might make your claim more confusing because you might actually need to file your case against multiple employers (i.e., your employer and the client they work for), to get your benefits paid.  Our lawyers can take care of the legal arguments; this is not something you need to concern yourself with.

At the end of the day, the statutory employer is often allowed to sue the middleman who should have had coverage so they can get reimbursed for the benefits they paid, according to § 302(a).

When is an Employer a “Statutory Employer” for Pennsylvania Workers’ Comp Claims

This statutory employer situation can come up in a few different situations, but there are usually three things to consider:

Right Employment Setup

First, the setup needs to be right: the top-level “statutory employer” (what the Act calls a “contractor”) needs to hire a company/independent contractor (what the Act calls a “subcontractor”) who directly employs the injured worker.  This setup does not work if the injured worker at the bottom of the chain is an independent contractor, as independent contractors are not entitled to Workers’ Comp coverage from the middleman in the first place.  Only “employees” get Workers’ Comp benefits in Pennsylvania.

However, this setup can also work when there is an employer who hires an employee who hires an “assistant” (also an “employee”) and fails to get their own Worker’s Comp insurance for that assistant.  In this case, the chain is an employer-employee relationship at each step instead of having any independent contractors in the middle.

Property Ownership Not a Factor

Before the Six L’s case, McDonald v. Levinson Steel Co. (1930) was the controlling case.  In that case, the court focused on language in § 302(b) about the worker getting hurt on the employer’s property, but that is not always a factor to consider today, given the more recent ruling in Six L’s.

Type of Work Performed

One important factor that makes the top-level employer ultimately responsible for the injured worker’s benefits is that the middleman is taking over part of the statutory employer’s regular business, not some different kind of work.  In Six L’s, the court found it important that the trucking company was handling the tomato farm’s regular business of delivering tomatoes.  If the subcontractor in the middle was doing different work – e.g., repairing a door for an office or catering a holiday party for a business – the type of work is not part of the employer’s “regular business,” and the top-level employer might not be responsible.

Call Our Workers’ Comp Lawyers in Pennsylvania Today

Call (267) 651-7945 for a free case review with the Philadelphia Workers’ Compensation attorneys at Cardamone Law.