Worker’s Compensation and Premises Owners

In general, workers’ compensation is a kind of insurance that employers are required to purchase to provide benefits for employees who are injured while at work.  In exchange, the injured worker is not permitted to sue the employer for additional compensation even if the worker believes the employer was negligent in a way that caused the injury.  This is what is known as the “exclusive remedy” of workers’ compensation insurance.  But where the employer is a contractor who is working for the owner of the property where the work is being done, exactly who is considered the “employer” can become blurred.  

When a property or plant owner hires a contractor to provide workers on the property, they may agree with the contractor to pay for the required workers’ compensation insurance on the contractor’s employees in exchange for a reduced contract price.  Then question arises – does the property owner now become the “employer” for workers’ compensation purposes?  In other words, is the property owner now shielded from lawsuits from an injured worker who receives workers’ compensation benefits that the property owner paid for?

The Controversy in Texas – Premises Owner as General Contractor

A recent Texas Supreme Court opinion saying that it did has caused such concern among advocates of employers and employees alike, that the court is considering rehearing the case.  The main issue in the case is whether the refinery plant owner falls under the definition of “general contractor” in the Texas workers’ compensation statute.  If so, then it is shielded from the injured worker’s lawsuit alleging negligence on the part of the refinery.  If not, the injured worker would be allowed to sue the refinery for negligence which means he could be awarded not only compensation for his injuries and medical bills but also punitive damages which could be millions of dollars.  

The decision, handed down in August of 2007, has sparked a storm of controversy. Four legislators involved in making changes to the Texas statute filed a friend of the court brief stating that extending the immunity from lawsuit protection to property owners was never the intention of the legislature.  They cited several changes to other statutes that demonstrate the legislatures unwillingness to give property owners this protection.

Several law professors also filed a friend of the court brief stating that the court had incorrectly applied the Texas Code Construction Act which requires the court to strictly construe statutory provisions that tend to deny a common law cause of action such as suing a property owner for negligence.

On the other side are tort reform group Texans for Lawsuit Reform and construction industry association ABC of Texas, Inc. Both groups believe that the court came to the correct decision by applying the plain meaning of the statutory language.  The language of the statute does not specifically state that the property owner cannot also be the employer for workers’ compensation purposes.  In its brief, ABC of Texas, Inc. cited the Texas statute provision that does allow for survivors of a worker who killed on the job to sue the property or others for egregious actions.

The Texas Supreme Court should decide whether or not to rehear the Entergy case in mid-November.