NWCDN Members regularly post articles and summary judgements in workers’ compensations law in your state.
Select a state from the dropdown menu below to scroll through the state specific archives for updates and opinions on various workers’ compensation laws in your state.
Contact information for NWCDN members is also located on the state specific links in the event you have additional questions or your company is seeking a workers’ compensation lawyer in your state.
The “statutory employee doctrine was included in the initial 1936 draft of the Workers’ Compensation Act and is now found in S.C. Code Ann. § 42-1-400 and -410. For decades, the appellate Courts have relied upon the following three factor test to determine a claimant’s statutory employment status:
1. Is the worker’s activity an important part of the owner’s business;
2. Is the worker’s activity a necessary, essential or integral part of the owner’s business; and
3. Has the identical activity been performed by the employees of the principal owner.
Glass v. Dow Chemical Co., 325 S.C. 198, 482 S.E.2d 49 (1997). However, in an August 2021 decision by the South Carolina Supreme Court in Keene v. CNA Holdings, LLC, the Supreme Court seemingly abandoned these three tests, and replaced them with a much more employer-centric approach. Keene v. CNA Holdings, LLC, 2021 WL 3521085 (SC 2021).
In Keene, the estate of a deceased worker brought a survival and wrongful death action against the manufacturer (CNA Holdings) that hired the claimant’s employer (Daniel Construction Co.), a sophisticated international construction company, based on the claimant’s asbestos exposure while maintaining and repairing pumps, valves, and other equipment in the piping network of a CNA plant. The Circuit Court and Court of Appeals found CNA was not a statutory employer of deceased claimant and therefore found the claimant’s estate was not limited to the exclusive remedy of the Workers’ Compensation Act. In affirming the lower courts’ decisions, the South Caroline Supreme Court acknowledged a shift from the previous three tests of “importance,” “necessity,” and “identical activity,” and recognized the importance of “corporate decision making” in allowing “owners” to contract out work when such outsourcing is economically beneficial, instead of holding the owner accountable regardless of the purpose.
In redefining what is considered part of an owner’s trade, business, or occupation for statutory employment issues, the Court in Keene stated,
[W]hat is or is not part of the owner’s business is a question of business judgment, not law. If a business manager reasonably believes her workforce is not equipped to handle a certain job, or the financial or other business interests of her company are served by outsourcing the work, and if the decision to do so is not driven by a desire to avoid the cost of insuring workers, then the business manager has legitimately defined the scope of her company’s business to not include that particular work.
Under this new rule, the Court found the deceased claimant was not a statutory employee of CNA Holdings, LLC, because: (1) only employees with the claimant’s company performed maintenance and repairs on the equipment in the plant; (2) none of the CNA Holdings employees performed maintenance and repair work; (3) CNA Holdings contracted with claimant’s company because it was a “qualified, capable contractor that can do the expert work that CNA needed done;” and (4) there was no evidence presented that proved that CNA’s corporate purpose included equipment maintenance.” Id. at 7.
The Court further concluded that this decision did not run afoul of the original purpose of the statutory employee doctrine because the deceased claimant presumably received Workers’ Compensation benefits through his employer (Daniel Construction) since the contract between CNA Holdings and Daniel Construction required Daniel to provided workers’ compensation benefits to its workers. Id. The Court found that “it is not the role of the court to second-guess a legitimate business decision whose effect – far from the improper purposes the statutory employee doctrine was designed to prevent – was actually to guarantee that the workers affected by the decision would be insured against work-related injuries. Id.
This Opinion of the Court, for which a Petition for Reconsideration is pending, could create a more subjective “business judgment” analysis as to the intent of the business owner as opposed to the traditional objective analysis of the actual activities of the business. Any shift in how these cases are adjudicated will have far-reaching consequences particularly as it pertains to the protections afforded business by the exclusive remedy doctrine. Further updates on this issue will undoubtedly be forthcoming in the next few months.