COURT SLAPS SCOFFLAW EMPLOYERS:

March 7, 2005

New York State’s highest court has ruled that employers that fail to purchase workers’ compensation coverage cannot use the workers’ comp law as protection against being sued. In reversing a lower court ruling, the New York Court of Appeals said that extending the protections of the workers’ comp law to employers who do not buy coverage makes no sense and could undermine the law’s intent of encouraging businesses to buy coverage. “Employers that do not secure workers’ compensation for their employees are not holding up their end of the bargain between business and labor” that undergirds the workers’ compensation law, the court stated. “The Legislature can not have intended to extend the statute’s heavily negotiated protections from third party liability to scofflaws, which would be unfair to law-abiding employers and might discourage compliance …,” the decision noted.

New York State’s highest court has ruled that employers that fail to purchase workers’ compensation coverage cannot use the workers’ comp law as protection against being sued. In reversing a lower court ruling, the New York Court of Appeals said that extending the protections of the workers’ comp law to employers who do not buy coverage makes no sense and could undermine the law’s intent of encouraging businesses to buy coverage. “Employers that do not secure workers’ compensation for their employees are not holding up their end of the bargain between business and labor” that undergirds the workers’ compensation law, the court stated. “The Legislature can not have intended to extend the statute’s heavily negotiated protections from third party liability to scofflaws, which would be unfair to law-abiding employers and might discourage compliance …,” the decision noted.

General contractor Dormer Giant had subcontracted work to Personal Touch Home Improvements, the company the plaintiff was working for at the time of his accident. Personal Touch argued that Dormer Giant’s claim against it was barred under the workers’ comp law. But Dormer Giant argued that the workers’ comp restriction against employee suits did not apply because Personal Touch had never secured workers’ comp coverage. The case is Douglas Boles, et al. v. Dormer Giant Inc., d/b/a Dormers Are Us.

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Insurance Journal West March 7, 2005
March 7, 2005
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