| 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.
Story
continues below ↓
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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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