Mass. Court Rules on Joint Employers’ Responsibility for Workers’ Comp

Two employers can be held jointly responsible for workers’ compensation benefits for an injured worker whom they both classified as an independent contractor, a Massachusetts appeals court has ruled.

The Massachusetts Appeals Court said the case presented the first appellate opportunity for deciding on joint employers’ responsibility under the state’s workers’ compensation system.

In ruling that the claimant was an employee, not an independent contractor, for both of the businesses he was working for on a joint project at the time of his injury, the appeals court affirmed a decision by the Industrial Accident Reviewing Board within the Department of Industrial Accidents.

For about three years, Leo Whitman, a construction worker with expertise in drywall installation, had been working for two businessmen, Stephen Sarcia and John Citrano, who were engaged in the purchase, rehabilitation, and resale of distressed residential properties. The two men also introduced Whitman to Anthony Pace, the owner of PPM, a company also engaged in redevelopment of distressed properties as condominium residences, for additional work.

During this period, Whitman continued to receive work from Sarcia and Citrano, whom he regarded as partners, and from PPM. Whitman viewed them collectively as ‘a group’ because of their continuous supply of full-time work for him, according to the court papers.

Throughout 2004 and 2005, Whitman worked for them at 10 different sites. At the rate of $250 per day for five to seven days per week, Whitman was given day-to-day assignments and was paid weekly by checks addressed to him individually. The payments were his sole income and Whitman did not submit a bid or sign a contract related to his work.

On Dec. 20, 2006, while Whitman was working on a project in Ipswich, Mass. for both Sarcia and PPM, a scaffold collapsed, causing him to fall about 16 feet. He suffered serious fractures in his left leg, and underwent two surgeries and the implantation of two plates and multiple orthopedic screws. He was completely incapacitated for three months, and has been partially disabled ever since.

Whitman brought his claim for benefits as an employee of Sarcia and/or PPM. Neither had maintained statutory workers’ compensation coverage for him; they both characterized him as an independent contractor.

The administrative judge concluded that Whitman was a covered employee of both firms. In judging whether Whitman was an independent contractor or an employee, this judge calculated that seven criteria favored independent contractor status and five favored an employment relationship. However, he assigned greater weight to factors supporting employee status, especially the duration, continuity, near exclusivity of the working relationship, the absence of any contract and the resulting exposure of Whitman to at-will termination, and the payments to him as an individual.

The administrative judge further described the two entities as ‘a consortium for which [Whitman] worked exclusively during the two years prior to his industrial injury.’ This finding rested on the facts that Whitman had suffered his injury at the Ipswich job site planned for purchase by PPM and Sarcia; that PPM and Sarcia were sharing the expenses of the rehabilitation project; and that PPM and Sarcia each would own a designated half of the completed renovation. The administrative judge found specifically that ‘Pace, Sarcia and Citran[o] worked cooperatively throughout the claimant’s tenure’ of two or more years of assigned work.

The employers disputed the finding that they were joint employers by arguing that there was no evidence that PM and Sarcia operated as a single employer with common management, ownership, and financial controls.

But the appeals court said that state law doe snot require that joint employers must be integrated or single by ownership, management, and finances. ‘Workers’ compensation law in Massachusetts allows separate entities to constitute joint employers,’ the court said.

The appeals court also cited a previous ruling in which it held that workers’ compensation coverage provided two employers with immunity from liability. In Whitman’s case, joint employment worked conversely, meaning that since Whitman worked jointly without coverage for two employers, both employers ‘must bear the burden or detriment of non-coverage.’

The court noted that PPM (through Pace) and Sarcia controlled the assignment of Whitman’s work and were receiving the benefit of it at the time and place of his injury. PPM and Sarcia were undertaking the Ipswich project jointly.

The court said joint employment is characterized by elements of shared control and benefit and that such relationships are common ‘because there is nothing unusual about the coinciding of both control by two employers and the advancement of the interests of two employers in a single piece of work.’

In instances of such business arrangements, the trend of courts is ‘to dispose of close cases, not by insisting on an all-or-nothing choice between two employers both bearing a close relation to the employee, but by finding a joint employment on the theory that the employee is continuously serving both employers under the control of both.’

The case is Leo Whitman’s Case, No. 10-P-71, Sept. 6, 2011.