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Southeast HVAC News Guest Column

Labor Law Claim

by Stuart S. Zisholtz, Esq.
In the past I have written several articles with respect to liability insurance coverage, indemnification and similar issues. It appears that the insurance industry together with various liability decisions is putting together situations where exposure for accidents might ultimately fall back on the employer.

You must consult with your insurance experts to make sure that you have full coverage and that your exposure to indemnification is eliminated. If one of your employees gets hurt on the job, he has the right to bring what they call a Labor Law claim. A Labor Law claim means that the owner and general contractor are absolutely responsible to pay damages if your employee gets hurt on the job. 

Your employee cannot sue you because you are his employer and his sole remedy is what he can collect under workers’ compensation. If the case is worth one million dollars there is no way that he will ever get that type of money out of workers’ compensation. As a result, he brings a claim under the Labor Law against the owner and the contractor. 

To turn this whole situation around, once the employee brings his claim against the owner and the contractor, they may “implead” you as his employer so that now the claim is not being made by your employee but the claim is being made by the owner and the contractor who are seeking “indemnification”. This means they want to be reimbursed for whatever they pay your employee. Thus, the circle is complete.

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The employee gets his million dollars and you, who are only responsible for workers’ compensation benefits, wind up paying one million dollars directly to your employee by paying the owner and the contractor. That was changed by an amendment to the workers’ compensation law that said that the only time that situation would apply is if the employee suffered a “grave injury”. 

The definition of a grave injury means death, loss of use or amputation of an arm, leg, hand or foot, total blindness, loss of a nose, ear, index finger, facial disfiurement and certain brain damage. Anything less than that prohibits the owner and the contractor from turning the tables around and seeking indemnification from you. Moreover, the statute specifically says that an employer cannot waive the prohibition against indemnification for a grave injury. In other words, you cannot agree to reimburse the owner and the contractor and waive your rights under the workers’ compensation law as far as grave injury is concerned. What do the owners and contractors try to do? 

To get around that statue they are trying to insert clauses into contracts where you waive all the benefits that you have under the workers’ compensation laws. You are not confining yourself to grave injury but to any aspects of the workers’ compensation law. If you confine your waiver to a grave injury, it will be void. If you give a general waiver or whatever benefits you have under workers’ compensation, you might be charged the obligation of indemnifying the owner and contractor for any claims that your employee makes under workers compensation whether they be grave injury or not. The law is not clearly settled on that. 

The purpose of this notice is to advise you that those clauses are going to creep into the contract that you sign with the owners or general contractors and you may very well be stuck holding the bag. I stress that you have to get hold of your workers’ compensation carriers and your general insurance carriers and make sure that you have no waivers and there is no feedback against you where you are violating either the law or the terms of your insurance policy by signing contracts containing waivers. Never let your lien time run out!! For a free copy of a pamphlet pertaining to mechanic’s liens and payment bond claims, kindly contact me or the association.




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