Monday, February 09, 2009

Court of Appeals Rules in Snook case Feb 5, 2009

Snook was an independent contractor and sole proprietor who was hired by a subcontractor working on residential homes for Joyce Homes in the Highlands Ranch area of Denver. He was hurt on some scaffolding and sued Joyce Homes for negligence. Snook was supposed to have workers compensation insurance but did not. Joyce Home said it was a statutory employer under the workers comp act and as such its exposure was limited to $15000.00 The appellate court agreed that the point of this statutory employer law is to encourage you to obtain workers compensation insurance when you are a independent contractor. Thus when you don't have it you are limited to $15000.00. Snook tried all the arguments such as it is too low a figure to be stuck with and that it is a denial of due process and more. All the arguments failed. The lesson here is to always have workers comp insurance even if you are a small business if you want to be safe. If not your claim for injury, no matter how valid, may be limited no matter how serious your injury. The workers comp law is designed to protect employees and not independent contractors who really should have insurance because liability is limited to $15000.00. Unfortunately some small businesses in construction try to get by and save money on workers comp insurance. Often they are one man operations and in many ways are like employees but this is the way construction works. The plaintiff may seek to appeal this to the Colorado Supreme Court. Of all his arguments the one that strikes me as sad is that any claim he has is limited to $15000.00. That amount was placed in the law over 20 years ago and you have to wonder if it is so outdated and low that it is now unacceptable. In any event the case is here. One additional point...the Treasury Department is concerned about misclassifying workers as independent contractors to save money as noted here.


Terence O'Riain said...

The law is very tough. I don't understand a law that fixes a sum for indemnity but does not index it. Negligent legislation. In Australia many employers can get out of taxation and superannuation (pension) obligations if they use contractors but the definition of worker is very, very broad for workers compensation purposes. It catches everyone and generally that is good because the biggest fraud in workers compensation is employers under stating their payroll to get the premiums down. The so called contractors are often employees of many years standing who are forced to switch to contracts. These employers get a rude shock because a claim where the contractor/worker is uninsured leads to the state workers compensation authority investigating. The employer ends up repaying uninsured worker scheme (no one misses out) and being charged fines and back premiums. Perhaps you should lobby for that in Colorado.

Jean said...

As an employer in the construction industy-I see this all of the time. In fact-a few years ago-the State Legislature tried to pass a bill that would force all independent contractors & sole proprietors to carry workman's compensation on themselves. This in order to level the competitive playing field for all of the employers that do cover themselves & their employees. Unfortunately, the bill did not pass.