"Statutory Employer" And Its Impact On The Employee

by Jack Cannon

Healy Scanlon Law Firm has for many years represented Irish and Irish-Americans in matters involving personal injury and work-related injury. There are fact situations that reoccur which can be avoided if the individuals are aware of their rights and remedies under our legal systems. The following fact situation is one that we have seen often.

Michael arrives in Chicago from Ireland looking for work. Like many new arrivals Michael initially takes whatever work he finds, floating from job to job. Michael runs into a friend who tells him that he has been hired by a general contractor to do some subcontracting work and asks if Michael will work for him as a laborer. Michael is pleased to get the job. During the course of the construction of a house, he slips and falls from a roof and is severely injured. Michael is rushed to the emergency room by ambulance, undergoes surgery and is advised by his treating physicians that he will be unable to work for six months or more. Following the receipt of this bad news, Michael learns that insult has been added to injury. Michael's friend does not have workers' compensation insurance. Michael is facing the responsibility for thousands of dollars in bills, and a minimum of six months loss of income, not to mention the prospect of his future work capacity being seriously restricted due to his injuries. What can he do?

The Irish community to its credit often rallies around the Michael's of this world. The community provides him with a place to stay, holds fundraisers to help pay his medical bills and supports him while he is unable to work. However, there may also be some legal options. Under Section 820 ILCS 305/1(a)3 of the Illinois Workers' Compensation Act, anyone who hires a subcontractor to do work, may become liable to pay compensation to the employees of any such contractor or subcontractor if such contractor or subcontractor doesn't have insurance.

This section of the Workers' Compensation Act provides for what is known in the industry as the "statutory employer." Essentially, if a contractor hires a subcontractor to work on his job and that subcontractor turns out not to have insurance for his injured employee, then the general contractor may become liable to pay for the workers' compensation benefits of that injured employee.

The general contractor may be deriving a financial benefit by hiring a subcontractor who is uninsured. Without the cost of insurance premiums, the subcontractor may be able to make a lower bid for his work. For many reasons, as a matter of public policy, the general contractor steps into the shoes of the subcontractor in terms of his responsibility for his injured worker. Section 820 ILCS 305/1(a)3 specifically states that this provision of the Act automatically applies to employers performing work defined as being extra hazardous and enumerates as extra hazardous activity (1) the erection, maintaining, removing, remodeling, alteration or demolishing of any structure; and (2) construction, excavating or electrical work. Under the terms of the statutory provisions of the Act, Michael would receive all of the benefits provided under the Workers' Compensation Act including, but not limited to, the right to unlimited medical care, the right to two-thirds of his wages tax free for the duration of time he is unable to work, vocational training if he is unable to return to his prior employment and a lump sum settlement.

This fact situation is not uncommon and, with the summer coming, more likely to happen, due to the influx of temporary workers from Ireland. If you know of anyone who is injured while working and there is a problem with insurance coverage, advise them to seek counsel immediately.