February 15, 2006

Death of an "Independent Contractor"

Here is a brief article from the Metro West Daily News, a small newspaper in Massachusetts:

MARLBOROUGH -- A Leominster man was killed yesterday after he fell nearly 40 feet from a condominium building while roofing with three other workers, authorities said.

James Stacy, 40, of 180 Johnson St., was killed instantly, police said, after falling more than three stories from the Spring Hill Condominium building at 35 High St., according to Police Sgt. Thomas Bryant.

Bryant said police received a 911 call around 9:15 a.m. reporting that a man had fallen from the building onto the concrete parking lot below.

Stacy was pronounced dead at the scene from extensive head injuries, police said.

According to one of the co-workers and witnesses, Stacy was tearing off patches of the existing roof moments before he fell, Bryant said.

Officials from the federal Occupational Safety and Health Administration were called to investigate, which is a standard procedure for workplace fatalities, police said.

Stacy was working for North Star Sheet Metal Roofing, although a representative of that company who was at the Marlborough condo unit yesterday said he was an outside contractor hired for that particular job.

The contractor, and Stacy’s two other co-workers, were too distraught to comment.

A Compensable Death
I do not know the deceased worker or the company involved. But what strikes me is how this sad event exemplifies the problems we have been tracking concerning "independent contractors." Note the statement of the roofing company. The deceased was not an employee, but "an outside contractor hired for the particular job." They will quickly learn that in Massachusetts, the deceased worker was indeed their employee and their comp carrier will almost certainly be responsible for his workers comp death benefits, including any applicable payments to dependents. (If Stacy has a number of dependents, this could be a very costly claim.) It's unlikely that the insurance company collected any premiums on Mr. Stacy. Perhaps at audit they will add his payroll, along with all the other independent contractors, to the North Star payroll. It certainly won't make up for the loss, even at the hefty manual rates for roofers. As for North Star, not only will they owe substantial additional premiums at audit for the current year, they will see their experience rating go up for the three years of the rating period.

Through the relatively new requirements of MGL 149 Section 148B, Massachusetts appears to have over-engineered a solution to a very difficult problem. The statute creates a presumption of employment for virtually any subcontractor. In doing so, the state has extended the reach of workers comp benefits deep into the workforce. That is the good news. On the other hand, the new statute has created rampant confusion, because it now appears that almost any "independent contractors" -- from part-time bookeepers to attorneys -- are actually working under someone else's control and would thus be added to the payroll for calculating workers comp premiums. The MA rules hold that because both North Star and Stacy worked in the roofing business, it is impossible to establish Stacy's independence. Any sub operating in the same trade as the GC is by definition an employee.

The Solution as the Problem
We have yet to see the ramifications of the new law in the courts. This will take some time to play out. Meanwhile, North Star's owners and workers comp carrier may be in for a shock. They are likely to own this one, pure and simple. You could certainly argue that the MA reforms have done their job in this particular situation. How well the new laws and regulations function in the overall Massachusetts workforce is another question altogether. We will continue to follow this issue with great interest.

| 2 Comments

2 Comments

I have tried to follow this "independant contractor" stuff for a long time. I did a quick search on NCCI's website. Under North Star Sheet Metal Roofing NCCI says "No Records Found". There may be many scenerios for this but one unfortunate possibility is North Star Sheet Metal Roofing does not have WC and this claim will end up on the condo association.

Thanks for your insightful and timely publications.

Rudy

Note to Rudy - You won't find North Star in the NCCI's website database, because Massachusetts is a Bureau state (Massachusetts Workers' Compensation Rating & Inspection Bureau). The WCRIB would maintain North Star's data, if there is any.

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About this Entry

This page contains a single entry by Jon Coppelman published on February 15, 2006 3:20 PM.

Just Say Noe: The Fall of a Wheeler-Dealer in Ohio was the previous entry in this blog.

A terrible burden: the death of a coworker is the next entry in this blog.

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