GENERAL CONTRACTOR NOT LIABLE UNDER SECTION 48-116 FOR SUBCONTRACTOR’S WORK RELATED INJURY

Recently, the Court of Appeals of Nebraska was faced with compensability issues relative to multiple contractors.  Typically, under 48-116, Nebraska will hold a general contractor liable for workers’ compensation benefits for an injured worker of the subcontractor if the subcontractor failed to obtain workers’ compensation insurance.

However, in Wright v. H & S Contracting, the subcontractor was a self-employed independent contractor who personally failed to purchase workers’ compensation insurance. Given the same, the Court of Appeals had to decide if a general contractor was liable under section 48-116 to provide benefits to the employee who neglected to purchase a policy for himself despite getting repeatedly urged by his insurance agent to do so.

In this case, a lawsuit in the Workers’ Compensation Court was filed after the employee was installing siding on a roof, was injured, and later died from his injuries. His widow and the administrator of his estate filed suit for workers’ compensation benefits claiming that the general contractor who retained him was either his employer or his statutory employer, and thus owed him benefits.

Once it was determined that the injured/deceased employee was self-employed, the Court had to decide whether he was entitled to benefits by the general contractor under section 48-116. The purpose of this statute is to protect employees from a general contractor who attempts to escape all liability for workers’ compensation by requiring its subcontractors to buy their own policy without verifying that coverage exists.

In Wright, the employee was the subcontractor. So, the Court had to decide whether the general contractor should be liable for the employee’s own failure to buy a workers’ compensation policy. In other words, should an employee be allowed to profit from his own refusal to buy compensation insurance?

The Court ruled that the self-employed deceased subcontractor did not fall under the scope of section 48-116 and therefore did not qualify for workers’ compensation benefits through the general contractor. Allowing the subcontractor to use section 48-116 under this set of facts would have been inconsistent with the section’s purpose.

The Nebraska Supreme Court has stated under section 48-116 “when a contractor fails to require a subcontractor to carry workmen’s compensation insurance and an employee of the latter sustains a job-related injury, the contractor is a statutory employer, and with the immediate employer subcontractor, is jointly and severally liable to pay compensation under the Workmen’s Compensation Act.” Rogers v. Hansen, 211 Neb. 132, 136, 317 N.W.2d 905, 908 (1982).

However, here the employee was not an employee of the latter. Rather, he was self-employed and chose not to obtain workers’ compensation insurance; therefore, he did not fit within the purview of section 48-116.

For more information on the Court’s decision that the employee was neither an employee nor a statutory employee of the general contractor, please click HERE.

This post was drafted by Emily Fehringer, a law student and law clerk at Bayor Evnen. If you have further questions about section 48-116 or self-employed workers, please contact Micah C. Hawker-Boehnke or Paul Barta at 402-475-1075.