‘Statutory Employer’ Immunity in Jeopardy in Pennsylvania

Pennsylvania's general contractor classification protections are under scrutiny as a case involving a construction company is working its way through the courts. NAHB and the Pennsylvania Builders Association are engaged in the case.

Under Pennsylvania's Worker's Compensation Act Section 302(b), if subcontractors do not pay an injured worker’s compensation claim, the general contractor must then pay those benefits to the subcontractor-employee, thus creating a tier of secondary liability where the general contractor becomes a surety of worker compensation or “statutory employer” of the injured worker.

Being named a “statutory employer” exempts the general contractor from all actions brought by the subcontractor-employee.

In Yoder v. McCarthy Construction, Inc., a jury ordered McCarthy Construction, a general contractor, to pay $5.6 million to the plaintiff for injuries that occurred from a fall on a job site.

On appeal, the Pennsylvania Superior Court reversed and remanded Yoder's award, finding that McCarthy Construction was not liable for a worker’s compensation payout under the “statutory employer” requirement.

Pennsylvania’s Supreme Court has now taken the Yoder case for review and is expected to hear oral arguments early next year.

NAHB has joined the Pennsylvania Builders Association to file an amicus brief in the case. The brief argues that if “statutory employer” protections are removed, general contractors and subcontractors could face significant cost increases at every construction project in the Commonwealth of Pennsylvania. NAHB will closely monitor the case and similar issues in other jurisdictions.