Wright v. Excel Parlubes – Statutory Employer Status in Workers’ Comp Cases

Worker classification is central to the validity of a workers’ compensation claim. While those designated “employees” are protected by workers’ compensation law, those who are independent contractors are not. Independent contractors can sue the employer for negligence, but employees can’t. Similarly, certain companies may clearly be “employers” while others may simply be general contractors. boiler

However, in contract situations, there may be circumstances in which workers can be “employees” and companies “statutory employers” – even if that label was never affixed. That’s because courts consider many variables in determining whether a worker was an employee. The analysis considers much more than simply how the company labeled the relationship. It considers the level of control the company had over the work and the schedule, the way workers were paid and whether the worker performed this type of work exclusively for this one company.

In the recent case of Wright v. Excel Paralubes, the U.S. District Court of Appeals for the Fifth Circuit was asked to determine whether a defendant company was a “statutory employer,” even though a master service agreement in a joint venture never expressly uses that terminology. The court ruled that in fact the company was an employer, as is the presumption.

In this particular case, it was bad news for the worker because he was trying to sue the company for negligence relating to his personal injuries.

According to court records, defendant Excel and another firm agreed to construct and jointly own an oil plant in Louisiana. Partner “CP” had authority to choose and contract engineers and other professionals to help construct the facilities and arrange for support services during the operation. CP contracted with a company called “Wyatt” to do work on a vacuum tower, and a contract between the two was signed.

Plaintiff was an employee at Wyatt who worked as a boilermaker.

While performing work at defendant’s construction site, he was injured. He sought and collected workers’ compensation benefits from his immediate employer, Wyatt. After that, he filed a lawsuit against both CP and Excel. Defendants sought removal of the case to federal court and then moved for summary judgment, arguing they couldn’t be held liable for the accident because they were statutory employers and thus, under workers’ compensation law, he couldn’t sue them.

At that point, plaintiff amended his claim to assert “gross negligence” – which is the only way in most jurisdictions that employees can overcome the exclusive remedy provision of workers’ compensation law to sue an employer for a work-related injury. He argued this newly alleged gross negligence opened the door for tort liability.

The district court dismissed the case with prejudice, rejecting plaintiff’s stance that he wasn’t a statutory employer and that even if he was, gross negligence allowed him to seek damages.

Plaintiff appealed.

The 5th Circuit Court of Appeals affirmed. The sole question for the court’s review was whether that master service agreement between Wyatt and CP made CP and Excel statutory employers of plaintiff. The court noted two circumstances under which statutory employee status is established:

  • Through a written contract that recognizes it;
  • Through a contract to perform work and then a subcontract of all or a portion of work to another.

This was the latter situation.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:

Wright v. Excel Paralubes, Dec. 8, 2015, U.S. District Court of Appeals for the Fifth Circuit

More Blog Entries:

OSHA: Lumber Mills Repeatedly Expose Workers to Danger, Dec. 13, 2015, Greensboro Work Injury Lawyer Blog

Contact Information