Workers’ Compensation Insurance for CW | DCR Workforce Blog

Workers’ Compensation Insurance for CW

The final verdict in the recent lawsuit Port Elevator Brownsville v. Casados has excited a lot of thought and consideration. In this case, an accident at the workplace resulted in the death of the worker, and the worker’s family received benefits under the staffing provider’s policy but went on to sue Port Elevator.  The award of $2.7 million to the plaintiffs by the trial court was upheld even by the court of appeals. This award was recently reversed by the Supreme Court, which considered in detail the liability of the company and that of the staffing provider, in such instances of injuries to a contingent worker.

Companies have always been under the impression that they are not liable for workers’ compensation claims from temporary workers. The temporary workers were expected to be covered by the staffing provider’s policy. But, in this instance the workplace employer’s insurance coverage listed only the permanent staff. It was possible because the state of Texas allows an employer to opt out of the workers’ compensation insurance coverage. However such a move denies the employer’s right to protection from the exclusive remedy rule. This state of affairs encouraged the family to sue the workplace employer.

The ‘Exclusive Remedy’ Trade-off:

For anyone employing workers, insuring them against accident or injury at work is compulsory. Most states do not provide the option to opt out of workers’ compensation. The insurance will cover illness, injuries or death at work, which protect an employer from hefty claims from workers and their families.

Many states provide for specific and guaranteed benefits to workers in exchange for relinquishing the right to sue; known as the ‘exclusive remedy’ rule. This applies to every worker in a state which has adopted workers’ compensation law and protects every employer who opts for workers’ compensation insurance. However, gross negligence to the workers’ safety is not protected under this rule. In spite of this provision of exclusive remedy, some families go to court seeking compensation from the staffing provider as well as the client who engaged the worker. In the Port Elevator case, the family carried its argument against the employer who did not pay workers’ compensation insurance for contingent workers, and was also not covered under the staffing provider’s policy as an insured party.

The award of $2.7 million was set aside by the Supreme Court which held that the employer is protected by obtaining workers’ compensation insurance, which was taken to cover all the employees by Port Elevator without specifying whether they are permanent or contingent. Law in Texas prohibits split insurance and requires full coverage for all workers. Had the staffing provider’s policy failed to provide the coverage, the client company’s insurer would have had to pay these benefits.

Insuring against Liability

Employers’ liability insurance protects an organization from claims brought by its employees where as public liability insurance protects from claims by a third party.  A business with even one employee needs to obtain employers’ liability insurance or be legally liable and attract punishment which could shut the business down.

When a person receives both workers compensation benefits and settlement from a third party, workers compensation can seek reimbursement of benefits paid. The extraordinary benefit with this compensation comes from the fact that a worker need not sue anyone to claim the benefits of the program and also need not pin the blame for the injury on any person and could have caused the injury to oneself due to carelessness or other reasons.

It is advantageous for an employer to obtain the protection offered by this insurance, which has been considered by some as a violation of the civil rights of workers, who relinquish their right to sue the employer for injuries sustained at the workplace in exchange for medical care and compensation.

Include Temporary Workers

Negotiating to include the temporary employees in one’s workers’ compensation policy is not very difficult. The temporary workers’ data can be submitted to the insurer as additional employees or extra persons affecting the payroll as well as the risk modification rating. For the staffing company, it would be a difficult matter to assign a proper job classification to the worker, and state the risk history of the company and the risks being faced by the worker on the job. When a staffing provider takes this insurance, the same is added to its overhead costs and charged to the customer. Since protection from liability is enjoyed by whoever procured the workers’ compensation coverage, unless in exceptional cases, it is necessary for organizations to weigh the possibility of risk to a temporary worker and choose to include them in their policy.

Prevention Always Better

Accidents occur due to faulty conditions and these can be managed better to avoid the possibility of claims being required. Investing in employee wellness programs, establishing ergonomic workspaces and other such solutions to ensure the health of employees could form a strong and long term foundation for effectively managing the employers’ liability under the workers’ compensation system.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.