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Maryland Workers’ Compensation: Statutory employers

| Nov 21, 2017 | Workers' Compensation

We represent injured Maryland construction workers in their Workers’ Compensation claims and in third-party lawsuits, where appropriate. Last month, the Court of Special Appeals of Maryland decided an unpublished case that sheds light on issues that can arise in construction injury claims involving subcontractor employees. 

Exclusive remedy 

The premise of the Workers’ Compensation system is that when an employee injury arises out of and in the course of employment, the exclusive, only legal remedy for the injured worker is a Workers’ Compensation claim, regardless of who was at fault. (The only exceptions in Maryland allowing the employee to sue the employer directly are if the employer failed to carry required Workers’ Compensation insurance or willfully injured the worker.) 

In other words, if the worker sues the employer for injury based on negligence, the employer would be immune from suit and it would normally be dismissed because the only legal remedy is Workers’ Compensation. 

Statutory employers 

In the October 18 decision of Shannon v. KG Industries, LLC, a construction-subcontractor employee was injured while working and awarded Workers’ Compensation benefits through his subcontractor employer’s insurance. He also sued the general contractor that had contracted with the subcontractor, alleging negligent installation of a ladder from which he had fallen. 

Even though normally Workers’ Compensation is the exclusive remedy for a work injury, sometimes a lawsuit can be filed against a nonemployer third party such as a manufacturer of defective construction equipment that contributed to the injury. For example, a defective engine could explode and burn or maim a worker. 

In Shannon, the plaintiff alleged in his lawsuit that the primary contractor had contributed to the injury because of negligent installation of the ladder. However, instead of being a valid third-party claim, the court said the case was appropriately dismissed because KG was immune as a “statutory employer.” 

Maryland law deems the general contractor to be a “statutory employer” of people employed by subcontractors, like Shannon. A statutory employer must pay Workers’ Compensation benefits just as the direct employer, the subcontractor, must do. (If Shannon had filed for Workers’ Compensation against KG Industries, it could have sought reimbursement from the subcontractor.) 

A statutory employer also receives the same immunity from suit for work injury that the direct subcontractor employer has. 

Talk to a lawyer about this complex area of law if you are a construction worker injured while employed by a subcontractor. 

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