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Posted by: Steven J. Picardi, Esq.
Date: February 11, 2013

In an effort to expand workers’ compensation coverage to employees of uninsured subcontractors or lessees injured while performing services for an insured general contractor, § 8-41-401(1)(a)(I) of the Workers’ Compensation Act of Colorado provides that any person, company or corporation which conducts any business by leasing or contracting out any part of its work to any lessee, sublessee, contractor or subcontractor shall be construed to be an employer and liable for workers’ compensation benefits to the employees of an uninsured employer. Since almost every business subcontracts at least some part of its business to a subcontractor (e.g. janitorial services, copy services, office plant services, etc), the statute long has been used to hold the contracting employer liable for workers’ compensation benefits if the subcontracting employer did not have workers’ compensation insurance for its employees. Example: ABC, Inc., hires Plant Company to water and trim the office plants onsite at ABC, Inc.. Employee of Plant Company sustains an injury while watering plants at ABC, Inc. Plant Company does not have workers’ compensation insurance. Under § 8-41-401(1)(a)(I), ABC, Inc., is deemed to be the “statutory employer” of the injured employee and, therefore, liable for workers’ compensation benefits to Employee of Plant Company.

The Colorado House of Representatives has introduced House Bill 13-147, which proposes to “clarify” that an employer is not liable as a statutory employer when the subcontractor’s employee is injured while not on the employer’s premises. This limitation at first may seem simple and straightforward. However, by limiting liability of the statutory employer to injuries occurring only on the employer’s premises, the General Assembly may preclude statutory employer liability against the very class of businesses which the statutory employer concept was designed to cover – general contractors hiring subcontractors on a construction site. If an employer cannot be liable as a statutory employer unless the injury occurs on the employer’s premises, then a general contractor cannot be found liable for an injury to an uninsured subcontractor’s on a construction site, since the construction site is not the general contractor’s “premises.” House Bill 13-147 can be found here.