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An individual who was employee of Company X, a firm that contracted with the project owner to perform electrical work at a construction site, fell from a forklift being operated by a project superintendant employed by a Construction Manager (Company Y) who was under separate contract to the project owner. The CM hired an individual, Greg Beaver, employed by yet another firm (Company Z) to supervise the construction site, including the work performed by the electrical contractor, and to make regular progress reports to the CM firm. There was no written contract between the CM and this superintendant, but they had an oral contract and the CM paid the superintendent weekly — but not as part of payroll. Neither the superintendant nor the CM had any contract with the electrical contractor.

When the electrician fell and was injured, he filed a personal injury suit against Mr. Beaver, alleging that his negligence in operating the forklift caused the laborer’s injuries. Beaver moved for summary judgment on the basis that the CM for whom he was working functioned as the general contractor on the site and that he was merely acting as the CM’s employee or representative, thereby entitling him to “up-the-ladder immunity.” The trial court granted the summary judgment, agreeing that that Mr. Beaver was the CM’s representative on the jobsite and as such was immune from liability due to the workers compensation statute.

The summary judgment was reversed on appeal to the intermediate appellate court, with the court finding that was no contractor/subcontractor relationship existed between the electrical contractor for whom the injured laborer worked and the CM or Mr. Beaver. This was reversed by the Supreme Court of Kentucky – reinstating the summary judgment in the case of Beaver v. Oakley and Crawford Electric, 279 S.W.3d 527 (Kentucky 2009). The key to the decision was whether Mr. Beaver was acting as a “construction manager” rather than a “constructor” who would be protected by the workers compensation act. Under the law of the State of Kentucky an injured worker is not entitled to tort damages from his employer or his employer’s employees for work related injuries. Instead, the injured worker must rely exclusively upon workers compensation. The term “employer” is broadly construed under the state law to cover not only the worker’s direct employer but also a contractor utilizing the worker’s direct employer as a subcontractor. The issue then for the court to decide was whether the evidence established Mr. Beaver as a representative of the injured laborer’s statutory employer such that Mr. Beaver would be entitled to up-the-ladder immunity.

Factors that the court considered in deciding that the CM firm and Mr. Beaver functioned as a “constructor” during the construction phase of the project included the fact that they had responsibilities of management, coordinating the work of various parties, making sure that tasks were completed in accordance with plans and specifications and actual day-to-day supervision of the construction project. The court stated that it recognized that a firm can function as the contractor on a construction site “as a practical matter” despite “the lack of a direct written contract between subcontractor and contractor.” Based on deposition testimony the court stated the evidence “demonstrates that [CM] actually functioned as the contractor and Beaver as [CMs’] representative even though they may not have established the type of written contract with [injured worker’s] direct employer that was customarily expected in a contractor-subcontractor relationship.” The court found that the statutory language of the workers compensation act “does not demand evidence of formal written contracts between a defendant and the plaintiff’s direct employer for the defendant to have up-the-ladder immunity but, rather, shows, that contracts might be found in this context when the facts show that the defendant is effectively functioning as a contractor.”

About the author: J. Kent Holland is a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is also founder and president of ConstructionRisk, LLC, a consulting firm providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 12 No. 3 (March 2010).