Subcontractor Employees Injured by Arcing

A recent personal injury case involved electrical arcing that hurt subcontractor employees. The US District Court for the District of Colorado issued an opinion in LEDBETTER et al. v. WAL-MART STORES, INC. et al., Civil Action No. 06-cv-01958-WYD-MJW. The opinion commented on when an injured worker’s claim will be defeated by the “statutory employer” doctrine. The Court considered both Colorado law and Oklahoma law. The analysis discussed when employees of a subcontractor can sue the contractor or other parties at fault.

The subcontractor employees were helping to perform infrared scanning in a Wal-Mart store. The scanning is intended to reveal overheating.

To perform the IR Imaging, the electrical equipment must be energized and exposed to the camera. Any face-plates covering the electrical conductors must be removed.

Defendant Eaton was performing an IR scan at a Wal-Mart store. An Eaton engineer was acting as the camera operator. The Plaintiffs, employees of a subcontractor, were the assistants pulling panel covers. The Plaintiffs were covered for workers’ compensation purposes by their direct employer, the subcontractor to Eaton.

Plaintiffs were replacing the covers on a piece of switchgear when an electrical arc occurred between the energized switchgear and the panel cover they were replacing. Plaintiffs were injured in the arc flash.

Eaton moved for summary judgment, and argued that the Worker’s Compensation Act bars a subcontractor’s employee from suing a general contractor for a work injury.

The parties disagreed about whether Colorado or Oklahoma law should be applied. However, the Judge found issues of fact that preclude summary judgment under either Colorado or Oklahoma law. He went on to comment on the workers comp defense of “statutory employer”.

Colorado Law

The Colorado Supreme Court has held that the primary purpose of the workers’ compensation act is to provide a remedy for job-related injuries, without regard to fault. The statutory scheme grants compensation from the employer without regard to negligence. In return, the responsible employer is granted immunity from common-law negligence liability.

For a third party, that is a general contractor, to be given this immunity even though the injured worker was on another company’s payroll, the general contractor must be a ‘”statutory employer” under the workers’ compensation act.

The test for whether an alleged employer is a “statutory employer” is whether the work contracted out is part of the employer’s ‘regular business’ as defined by its total business operation. In applying this test, courts consider the elements of routineness, regularity, and the importance of the contracted service to the regular business of the employer.
In applying the regular business test, Colorado courts have occasionally explored the degree of control the alleged statutory employer retains over the employee. Employer control may be probative of the importance of the contracted services to the alleged employer. However, the statutory employment relationship is not predicated on a finding of employer control; rather, a showing that the alleged statutory employer maintains control over the employee represents only one method of demonstrating the factor of importance.

Oklahoma Law

Under Oklahoma law, the principal for whom a contractor is performing work is immune from tort liability for injuries suffered by the contractor’s employees in the course of that work, if the work performed by the contractor was “necessary and integral” to the principal’s operations. Accordingly, the principal is the statutory employer of the injured employees and is liable to the injured employees only under the Oklahoma Workers’ Compensation Act. Tasks performed by a contractor are a “necessary and integral
‘ part of a principal’s operation when they (a) are directly associated with the day-to-day activity carried on by the [principal’s] line of trade, industry or business or (b) would customarily be done in that line of business.

The Court first inquires whether the contract work is specialized or non-specialized. This takes into consideration whether the level of skill, training, and experience required to perform the work at issue is not ordinarily possessed by workers outside the contract field.

If the contract work is specialized per se, it is not part of the principal’s trade, business, or occupation.

If the contract work is not specialized per se, the court then compares the contract work with the principal’s trade, business, or occupation to determine whether the contract work could be considered a part thereof. Finally, the court must inquire whether the principal was actually engaged at the time of the injury in the trade, business, or occupation of the hired contractor.

In the case at issue, there was no evidence that the contracted work was specialized per se. So the Court moved on to the second stage of the analysis. Several factors are: (a) Is the contract work routine and customary? That is, is it regular and predictable? Nonrecurring or extraordinary construction and repairs are usually held outside the scope of the statutory doctrine. (b) Does the principal have the equipment and/or manpower capable of performing the contract work? This sub-species of the specialty inquiry focuses on determining whether the contract work, as it relates to the hirer, is ordinarily handled through employees. (c) What is the industry practice relative to the contract work? The factors were developed by the case law to answer the overriding question of whether the contract work is, in that business, normally carried on through employees rather than independent contractors.

Finally, the third stage of the analysis is whether the principal hirer was engaged, at the time of the injury, in the trade, business or occupation of the hired contractor.

Statutory Employer Defense Does Not Necessarily Apply

The Judge held

” … I find that the Plaintiffs demonstrated through their response to Eaton’s motion for summary judgment that there are genuine issues of material fact regarding whether Eaton was a statutory employer under either Colorado or Oklahoma law.

First, there is a genuine issue of material fact as to whether Eaton always uses subcontractors as part of its regular business operation for necessary and integral tasks or whether this type of work was ordinarily handled by Eaton employees. This is unclear from the evidence presented, and this issue is central to the analysis of whether Eaton was a statutory employer under either Colorado or Oklahoma law.

Second, there is conflicting evidence as to what degree of control Eaton exercised over the contracted workers. At a minimum, I find that these factual disputes are open to different interpretations which impact Eaton’s argument in its motion. Thus, summary judgment is not appropriate. … there are genuine issues of material fact regarding whether Eaton is a statutory employer, and thus summary judgment is not proper.”

Since summary judgment was denied, the case will continue so that the jury can decide the case.

This website has a related post on liability beyond workers compensation.