by Frank Wasser, Esq.

Too often, general contractors and other businesses who hire or “sub-contract” work out to another company find themselves “on the hook” when an employee of the subcontractor gets hurt on the job; this is in spite of the fact that the subcontractor signed a contract or provided information stating the subcontractor had workers’ compensation coverage. When this happens, the general contractor is deemed the “statutory employer,” which typically occurs in instances when the subcontractor’s insurance turns out to have lapsed, has limitations as to which states are covered or the subcontractor turns out not to have a policy at all. If the subcontractor is found not to have insurance that covers the claim, the statutory employer is then responsible, pursuant to O.C.G.A. § 34-9-8(a).

Given the potential for substantial exposure, there are a few steps which all general contractors should take to avoid liability as a statutory employer. These include:

• Never hire a subcontractor without first obtaining a valid certificate of insurance.

• Before starting any new project with a subcontractor, always check the coverage verification tool on the State Board of Workers’ Compensation website here.

• Have a written contract with all subcontractors requiring the subcontractor have workers’ compensation insurance at all times regardless as to whether insurance is legally required.

• In the contract, include indemnification language stating that if the general contractor is found responsible for workers’ compensation claims due to any failure by the subcontractor to obtain or keep insurance, then the subcontractor shall be responsible for reimbursing the general contractor for all workers’ compensation benefits, including attorneys’ fees.

These simple precautionary measures can go a long way in reducing a general contractor’s financial exposure should the employee of a subcontractor sustain an injury.