Appeal from the Order of Commonwealth Court entered on 07/23/2010 No. 686 C.D. 2009, affirming the Order entered on 03/17/2009 by the WCAB at No. A07-: 0437
The opinion of the court was delivered by: Mr. Justice Saylor
CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.
The questions presented center on whether Appellant bears liability for workers' compensation benefits as a statutory employer of an injured truck driver employed by an independent contractor.
Pursuant to Section 302(a) of the Workers' Compensation Act,*fn1 certain "contractors" bear secondary liability for compensation to injured workers employed by their "subcontractors," as follows:
A contractor who subcontracts all or any part of a contract and his insurer shall be liable for the payment of compensation to the employes of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured its payment as provided for in this act.
77 P.S. Â§461. See generally McDonald v. Levinson Steel Co., 302 Pa. 287, 292, 153 A. 424, 425 (1930) ("A statutory employer is a master who is not a contractual or common-law one, but is made one by the Act."). As is relevant to the present case, Section 302(a) also specifies that one who contracts with another to have certain work performed -- including work "of a kind which is a regular or recurrent part of the business . . . of such person" -- is deemed a "contractor," for purposes of the aforementioned prescription conferring statutory employer status. 77 P.S. Â§461. In the same vein, the other party to the agreement is deemed a "subcontractor." See id. Other work implicating a contractor-subcontractor relationship under Section 302(a) includes removal, excavation, or drilling of soil, rocks, or minerals and the cutting or removal of timber from lands. See id.*fn2
Appellant, Six L's Packing Company, Inc., (now Lipman Produce) grows, harvests, processes, and distributes tomatoes and other produce. The company owns and leases various farms and distribution and processing facilities in North America.
In April 2002, Appellant contracted with F. Garcia & Sons ("Garcia") to perform various services, including transporting tomatoes between a warehouse in Shickshinny, Pennsylvania, and a processing facility in Crisfield, Maryland. Claimant, who was employed by Garcia as a truck driver, suffered injuries in a vehicle accident on a Pennsylvania roadway while transporting Appellant's tomatoes between the above locations. Claimant filed claim petitions against Garcia and against Appellant, and it was determined during the course of the ensuing litigation that Garcia did not maintain workers' compensation insurance. The present proceedings are centered on the claim against Appellant, pursued, inter alia, on the theory that Appellant was Claimant's statutory employer, per Section 302(a) of the WCA, and, accordingly, is secondarily liable for the payment of workers' compensation benefits.
In the proceedings before a workers' compensation judge (the "WCJ"), Appellant submitted evidence to establish that it did not own trucks or employ drivers, but, rather, utilized independent contractors, such as Garcia, to supply transportation services. Appellant thus took the position that it was not Claimant's employer. With regard to Claimant's assertion that Appellant was a statutory employer per Section 302 of the WCA, Appellant asserted that Section 302 liability on the part of an entity may be established only where a Claimant proves the following five elements set forth in McDonald:
(1) the entity is under contract with an owner or one in position of an owner; (2) the entity occupies or is in control of the premises [where the injury occurred]; (3) the entity entered into a subcontract; (4) the entity entrusted a part of its regular business to the subcontractor; and (5) the injured party is an employee of such subcontractor.
Gann v. WCAB (MBS Mgmt./Wellington East Dev.), 792 A.2d 701, 705 (Pa. Cmwlth. 2002) (citing McDonald, 302 Pa. at 295, 153 A. at 426). Since Claimant was injured on a public highway, and not on premises occupied or controlled by Appellant, the company took the position that McDonald was not satisfied, and, therefore, it could not be deemed a statutory employer. Nevertheless, the WCJ summarily opined that the McDonald test was met and found Appellant liable for payment of workers' compensation benefits per Section 302(a).*fn3
The Workers' Compensation Appeal Board (the "WCAB" or the "Board") affirmed, although, given that Claimant's injury occurred off premises, the Board did not agree that the McDonald test was met. Rather, the Board reasoned that McDonald simply does not pertain to statutory employer status under Section 302(a). See Williamson v. Six L's Packing Co., No. A07-0437, slip op. (WCAB Mar. 17, 2009).
In this regard, the WCAB explained that McDonald concerned Section 203 of the WCA, see 77 P.S. Â§52, a provision which confirms that certain entities deemed to be statutory employers enjoy the same immunity from liability in tort as one who is an employer in fact. In this regard, Section 203 prescribes:
An employer who permits the entry upon premises occupied by him or under his control of a laborer or an assistant hired by an employe or contractor, for the performance upon such premises of a part of the employer's regular business entrusted to such employe or contractor, shall be liable to such laborer ...