Good News for Employers- An Overview of Patton v. Worthington Associates Inc.
Good news for Employers: on March 26, 2014, the Supreme Court reaffirmed the longstanding principle that a statutory employer is not liable in tort for the injuries of its employees. In Patton v. Worthington Assoc. Inc., Patton was a subcontractor hired by Worthington to perform carpentry work at a church. Mr. Patton was the employee and sole owner of Patton Construction. He sustained an injury while working on the church, and sued Worthington in tort for his injuries. The trial court found that Patton was an independent contractor, and awarded him 1.5 million dollars in damages. The Superior Court affirmed.
A statutory employer is a statutory regime created by the Pennsylvania Workers’ Compensation Act. In order to qualify as a statutory employer the five part McDonald standard is applied. The following criteria must be met:
1. Contract with owner of land or one in the position of an owner;
2. Premises occupied or under the control of the contractor seeking statutory employer status;
3. Subcontract made by the general contractor;
4. Part of the contractors regular business must be entrusted to the subcontractor under the contract and;
5. Employee of subcontractor is injured on the premises.
McDonald v. Levinson Steel Co., 153 A 424 (Pa. 1930).
In Patton, all parties, including the trial judge, agreed Worthington was a statutory employer, however the judge insisted that it must be first determined if Patton was an independent contractor, or an employee with respect to Worthington. The issue was sent to the jury and Patton was found to be an independent contractor and damages were awarded.
Worthington argued before the Supreme Court that they were the statutory employer and therefore immune to tort liability. Unanimously, the Supreme Court agreed, finding that the trial court erred by having the jury determine whether Patton was an independent contractor when the facts clearly established that Worthington was a statutory employer, making them immune to the suit. Further, the Supreme Court emphasized that under the Act, an independent contractor is defined differently than in common law. The term ‘independent contractor’ refers only to contractors that do not have a derivative relationship with the general contractor, ie: Worthington (except for subcontractors).
The Court accentuated that the general contractor and subcontractor relationship, when the general contractor maintains the worksite, implicates the very reasons behind the establishment of the statutory employer concept. The purpose of doctrine is to ensure the payment of compensation by a financially responsible party in the injured employee's employment chain from subcontractor to general contractor.
The Supreme Court was very clear in its analysis, and unanimous decision, that this governing law should have been applied before the case even went to trial, and was merely vindicating the matter.
What does this mean for employers?
Statutory employers are still immune for tort liability from their injured employees. Employers still need to consider the implications under the Pennsylvania Workers’ Compensation Act. Statutory employers are treated like conventional employers, and injured employees may be entitled to compensation benefits available under the Act.
The case is Patton v. Worthington Assoc. Inc., No. 32 MAP 2013, (Pa. 2014).