Smith v. Weber
| Decision Date | 05 November 1986 |
| Docket Number | No. 0873-85,0873-85 |
| Parties | Eric C. SMITH t/a Eric Smith Construction v. Duane R. WEBER. Record |
| Court | Virginia Court of Appeals |
John H. Herbig (Allan M. Heyward, Jr., John H. Herbig, P.C., Richmond, on brief), for appellant.
J. Gray Lawrence, Jr. (Howell, Daugherty, Brown & Lawrence, Norfolk, Robert Bruce Kendall, Virginia Beach, on brief), for appellee.
Present: BARROW, BENTON and COLE, JJ.
This appeal from the Industrial Commission questions whether a contractor is responsible for workers' compensation benefits for a subcontractor's employee if the contractor has no employees but two of his subcontractors have a total of three employees between them. We agree with the Industrial Commission that the total number of persons employed by the subcontractors should be counted when calculating whether the contractor employs the minimum number of workers required for workers' compensation coverage. For this reason, we affirm the Commission's decision.
Eric C. Smith, an individual trading as Eric Smith Construction, contracted with the owner of a home in Virginia Beach to construct an addition to the home. Smith had no employees of his own but performed his work through subcontractors. He did not carry workers' compensation insurance.
For this job he subcontracted with Don McLawhorn to frame the addition; McLawhorn in turn subcontracted with Robert E. Gibson, Jr. to install the exterior siding. Both of these subcontractors also operated as sole proprietors and carried no workers' compensation insurance. The claimant, Duane R. Weber, an employee of Gibson's, was injured on this job when he fell from scaffolding during the course of his work.
None of the three contractors employed as many as three people. Smith had no employees; McLawhorn had only one regular employee; and Gibson had two regular employees.
Smith contended that he was not liable to the claimant under the Workers' Compensation Act because of the provision which exempts employers who have "less than three employees in the same business within this State." Code § 65.1-28. 1 The Commission rejected this contention, finding that Smith was subject to the Act and liable for compensation to the claimant. To reach this conclusion the Commission determined Gibson's two employees and McLawhorn's one employee were employees of Smith for the purpose of determining Smith's exemption claim.
To conclude that the employees of Smith's subcontractors should be considered employees of Smith under the Workers' Compensation Act, the Commission had only to look at another of the Act's provisions. Code § 65.1-30 imposes liability on a contractor to pay workers' compensation to a subcontractor's employee "which he would have been liable to pay if the workman had been immediately employed by him." Thus the subcontractor's employees are employees of the contractor for purposes of liability. Since they are the contractor's employees for purposes of determining liability, reason dictates that they should also be considered employees for determining applicability of the Act.
This construction of the Act is essential to prevent evasion of compensation liability. If the subcontractor's employees were not considered in determining the contractor's exemption under the Act, the work could simply be subdivided among different contracting entities to evade liability under the Act. Employees working on a project would not be protected even if their total number exceeded three. Accord Withers v. Black, 230 N.C. 428, 434, 53 S.E.2d 668, 673 (1949); Pruitt v. Harker, 328 Mo. 1200, 43 S.W.2d 769, 771 (1931); 1C A. Larson Workmen's Compensation Law § 52.32 (1986).
This case demonstrates how this result could be accomplished. Three separate employers with a collective total of three employees were engaged to complete the project. None of the employers regularly had three or more employees in service. If we accepted Smith's construction of the Act, none of these employees would be protected by the Workers' Compensation Act even though the project required three employees, the minimal amount required for coverage.
The Commission's interpretation of the Act also promotes another purpose of the statute, namely, the protection of "employees of irresponsible and uninsured subcontractors." See Greene v. Spivey, 236 N.C. 435, 443, 73 S.E.2d 488, 494 (1952). The principal contractors and subcontractors should be held financially responsible for all employees because they are able to assure compliance with the workers' compensation statute. Id.
Smith points to another provision in the Act which provides that "[n]othing in this Act contained shall be construed to make, for the...
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