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Immune From Liability As A Statutory Employer? Guess Again!

Volume 20, No. 117 May 2008

Douglas K. Burrell
dburrell@deflaw.com

O.C.G.A. § 34-9-11, the exclusive remedy provision of the Georgia Workers’ Compensation Act provides that an employees rights and remedies under the act exclude all other rights an employee may have as a result of a work place accident that causes injury, loss of service, or death to an employee except the right to bring an action against the third party tortfeasor.  However, O.C.G.A. § 34-9-11creates three situations where an injured employee cannot recover from a third-party tortfeasor.  O.C.G.A. § 34-9-11 grants immunity from tort liability to:  (1) the employees of the same employer, (2) persons who provide workers compensation benefits under a contract with the employer, and (3) construction design professionals. 

In Wright Associates v. Rieder, the Georgia Supreme Court created a fourth exception to the exclusive remedy provision when it held that the injured employee of a subcontractor could not maintain a tort action against the principle contractor, even when the principle contractor did not pay workers compensation benefits.  The Court reasoned that the principle contractor should receive the benefit of tort immunity under O.C.G.A. § 34-9-11 because it was liable to pay workers compensation benefits under O.C.G.A. § 34-9-8.  The Court stated “the quid pro quo for the statutory employers potential liability is immunity from tort liability.  If tort liability depended on the principle contractors actual payment of workers compensation benefits, then the general contractor who requires subcontractors to carry insurance would be liable in tort whereas the general contractor who did not require insurance would escape tort liability.  The result would undercut the purpose of O.C.G.A. § 34-9-8 to insure that employees are covered by workers compensation.”

The Georgia Supreme Court and the Georgia Court of Appeals have consistently followed Rieder by holding that a general contractor, who is a statutory employer, is immune from tort liability despite never having paid benefits to the injured worker.  Therefore, on its face it appears that the statutory employer, and its insurer, have ironclad protection from injured workers seeking to recover against them.

Unfortunately, that belief is inaccurate because an injured worker can still recover from the statutory employer and, therefore, its insurance policy if the injured worker files suit alleging an independent act of negligence against an employee of the statutory employer.  Long v. Marvin M. Blackcoe, 250 Ga. 621, 300 S.E.2d 150 (1983) and Paz v. Marvin Black Company, 200 Ga. App. 607, 408 S.E.2d 807 (1991), hold that an employee of a general contractor does not share in the general contractor’s statutory immunity and the employee can be sued as a result of their individual negligence.  For instance, in Long v. Marvin M. Blackcoe, the court found that the general contractor’s employee breached a “general” duty of care when he negligently discharged a nail gun and injured Plaintiff.  The court explained that the reason why the statutory employer immunity does not extend to the employee of a general contractor is because the employee of the general contractor does not have any potential liability for workers compensation payments.  In other words, because the general contractor’s employee does not have a responsibility to pay workers compensation benefits to an injured worker, he does not get immunity.  Without a quid pro quo, there is no reason to relieve the general contractor’s employee of liability for his negligence and ample reason to hold him accountable.  Therefore, if an employee of a general contractor is independently negligent, an injured worker can sue them and potentially recover under the general contractor’s general liability policy.

            While this situation is a disturbing end run around the immunity given to a statutory employer, there are two instances where the statutory employer’s immunity will extend to its allegedly negligent employee.  The first instance is when the employee is considered to be an “alter ego” of the statutory employer.  An employee is considered to be an “alter ego” if he acts in a representative capacity for the employer.  For instance, In Pardue v. Ruiz, 263 Ga. 146 (1993), a worker was injured on a construction site when scaffolding he was standing on collapsed.  The injured worker filed suit against Pardue, the vice-president and safety officer of the general contractor.  The injured worker alleged that Pardue negligently failed to inspect the job site and eliminate dangerous conditions.  In the contract with the subcontractor, Marvin M. Black Company assumed the duty of making safety inspections and supervising safety procedures; and the contract designated Pardue as the safety officer.

            On appeal, the Georgia Supreme Court noted that Pardue's duty to supervise and inspect only arose in his capacity as the employer's representative.  The court then explained that Pardue was not a party to the contract; he did not sign the contract, and his name was typed in by Marvin M. Black Company.  Further, Pardue did not accept the duty to inspect the job site and eliminate dangerous conditions as an individual.  The court held that "where negligence is based on a general non-delegable duty of the employer (such as supervision and safety), the supervisory employee shares in the immunity of the employer."

            The second instance when an employee of a statutory employee shares in his/her employer’s immunity is when the injured worker is considered to be a “loaned employee/borrowed servant” of the statutory employer.  For instance, In Underwood v. Burt, 185 Ga. App. 381, 364 S.E.2d 100 (1987), a worker was injured when the scaffolding from which he was working fell.  Although the injured worker was on the payroll of the prime contractor at the time of his injury, he was working under the direction of the subcontractor's job supervisor and there was no supervisor of the prime contractor on the job site.  Further, at other times during the construction, the injured worker was carried on the payroll of the subcontractor.  The injured worker sued the subcontractor and the subcontractor's supervisor, who was the person alleged to have overseen the erection of the scaffolding.  Summary judgment was granted to the subcontractor under the "loaned employee/borrowed servant" doctrine.

            On appeal, the question before the court was: if the injured worker is considered a "loaned employee" to the subcontractor, then shouldn't the supervisor of the subcontractor be considered an "employee of the same employer" within the meaning of the Georgia Workers Compensation statute?"  If so, then the exclusive remedy provision of the Georgia's Workers Compensation statute which prevents employees from suing fellow employees would apply.   

            The Court of Appeals answered the question by holding that both the injured worker and the supervisor were working under the direct control and supervision of the same employer when the injury occurred because the job supervisor was providing direction to the injured worker.  The court further stated "by definition, a borrowed servant is, at least temporarily, the actual employee of the 'borrowing employer'...A borrowed servant is, then, even though temporarily, 'an employee of the same employer' of any regular employee of the borrowing employer."  Thus, the subcontractor's employee (the supervisor) was protected by the exclusive remedy provision of the Georgia Workers Compensation statute.

            Consequently, whenever an injured worker sues the employee of a statutory employer, please remember that the immunity granted to the statutory employer may not protect the employee and the injured worker may be able to recover from the statutory employer’s insurance policy.