Supreme Court of PA Loosens Requirement of Statutory Employer Definition in PA Workers’ Comp

Though it is somewhat less critical since the advent of the Uninsured Employers’ Guaranty Fund (UEGF), the concept of “statutory employer” still has an important place in the Pennsylvania workers’ compensation system. Basically, the theory of statutory employer is used when a subcontractor is the employer of an injured worker, and the subcontractor fails to carry PA workers’ compensation coverage (which, by the way, is against the law in PA). Under this theory, the injured worker may be able to recover against the workers’ compensation insurance held by the general contractor.

For many years, the ability for an injured worker to use the statutory employer concept was greatly limited by a restrictive “test” established in the 1930 Pennsylvania Supreme Court decision in McDonald v. Levinson Steel Co. (for many years, simply known as the “McDonald Test”). Recently, the PA Supreme Court took another look at the requirements to meet statutory employer in Six L’s Packing Co. v. Workers’ Compensation Appeal Board (Williamson).

Thanks to the efforts of the injured worker’s attorney in Williamson, and the fine assistance from the Pennsylvania Association for Justice, the Supreme Court eased the situations when the narrow McDonald Test is now required. Specifically, the Court held that, “Viewing the statutory scheme as a whole, however, and employing the principle of liberal construction in furtherance of the Act’s remedial purposes . . . we find it to be plain enough that the Legislature meant to require persons (including entities)
contracting with others to perform work which is a regular or recurrent part of their businesses to assure that the employees of those others are covered by workers’
compensation insurance, on pain of assuming secondary liability for benefits payment upon a default.” The Court also made clear that, unlike in situations involving the McDonald Test, the fact that the “general contractor” may be the actual owner of the land does not preclude the finding of a statutory employer.

We applaud the PA Supreme Court, the injured worker, and the Pennsylvania Association for Justice for giving us this much needed refinement to the concept of statutory employer.