Last Updated on Tuesday, 28 April 2009 12:06 Written by Bryan Ramos Tuesday, 28 April 2009 11:41

The Applicability Of Statutory Employment On Owner-Operator's Employees

A threshold question in workers’ compensation is whether an “employment relationship” existed between the injured person and the employer. The burden is on the claimant to prove he or she was an employee at the time of the injury. Cash v. American Sur. Co., 101 Ga.App. 379 (1960). It is clear that the law favors the existence of the employment relationship and most judges will lean toward this conclusion. However, if it is determined that the injured person is not an “employee,” then workers’ compensation benefits are generally not owed by the employer. While this concept seems relatively straightforward, the application can get rather confusing at times, especially when dealing with the statutory employer provisions of the Act.

A case on point is the recent Georgia Court of Appeals decision, C. Brown Trucking, Inc. v. Rushing, A03A2311, February 18, 2004. In that case, the Court clarified that employees of owner-operators are not considered independent contractors, but are protected by the statutory employer provisions of the Code. See, O.C.G.A. § 34-9-8.

In this case, Norfolk Southern Corporation (Norfolk) contracted with C. Brown Trucking (Brown), a motor common carrier, to provide trucking services. In turn, Brown Trucking engaged Carlos Garza, an independent owner-operator of a commercial truck, to assist with the completion of the contractual services with Norfolk. Similarly, Garza hired Rushing as his employee. Unfortunately for Rushing, he was injured when a train struck the truck he was driving.

As required by O.C.G.A. § 34-9-8, Rushing initially filed a claim against Garza since he was the immediate employer. However, Garza was not insured. Rushing then filed a claim against Brown claiming that it was his statutory employer under the Act. Brown resisted the claim by arguing that Rushing was not its “employee”, but rather an “independent contractor”.

The basis of Brown’s argument rests in O.C.G.A. §34-9-1(2) and §40-2-87 (19) which provide that owner-operators shall be deemed independent contractors, who are not protected by the Act. See also, Upshaw v. Hale Intermodial Transport Company, 224 Ga. App. 239 (1997). However, the presiding ALJ agreed with Rushing and ordered Brown to pay workers’ compensation benefits. Additionally, the ALJ noted that Rushing’s injury occurred on the premises on which Brown had undertaken to execute work through Garza and that Garza’s trucks carried placards labeled “C. Brown Trucking, Inc.” on the side of the truck’s cab.

The Appellate Division affirmed the Trial Division’s ruling. Ultimately, so did the Court of Appeals. In grounding its decision, the Court first relied upon O.C.G.A. § 34-9-1(2) which explicitly named which types of workers were excluded from the Act. These workers included firefighters, law enforcement personnel, certain government employees, and inmates. While the Code also listed “owner-operators”, it made no mention of the employees of owner-operators. Therefore, the Rushing Court found that these employees were deliberately meant to be protected since they were not specifically excluded. As a result, the statutory employer provisions were triggered.

The Rushing decision is in line with other cases dealing with statutory employers. Generally, those cases deal with construction matters, but the policy and legal application run the same. The classic statutory employer situation arises when the general contractor engages with a subcontractor to perform work. When one of the subcontractor’s employees becomes injured and he is unable to collect workers’ compensation benefits because the subcontractor was uninsured, that employee is potentially left without any relief. To avoid this inequitable outcome, the General Assembly promulgated the “statutory employer” provisions. It is evident that the policy attempts to motivate general contractors from subcontracting work to uninsured subcontractors. See, Aetna Cas. & Sur. Co. v. Barber, 128 Ga.App. 894 (1973).

From a practical standpoint, the employers and general contractors should require their subcontractors to carry their own workers’ compensation insurance. The employers or general contractors should also verify the validity of the purported coverage. This verification process can be accomplished by a simple phone call to the State Board’s coverage department. Additionally, the contract for subcontracting services should explicitly outline the subcontractor’s “independent contractor” status in no uncertain terms. Moreover, the contact should address who has the right of control and method of operation. As evidenced by the Rushing decision, the treatment of the subcontractors employees should be considered and addressed in writing.

Given the interplay between the “owner-operator” and “independent contractor” provisions in conjunction with the federal law controlling trucking, there was some grey area involving the treatment of employees of uninsured owner-operators. However, in light of the Rushing decision, the issue has been clarified in “that the exclusion does not apply to the owner-operator’s employees.”

There should be little doubt now.

Originally published in Drew, Eckl & Farnham Journal: Volume 17, No. 92 March 2004