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Legal Matters: Workers Compensation and Associations

By Richard Beskin, President, Beskin & Associates

In literature, a “rose is a rose is a rose” …but in the eyes of worker’s compensation law, an employee may or not be an employee and a non employee may end up being an employee.

Workers Compensation insurance is a state regulated mandatory coverage, found in all fifty states, that is required when an employer employs three or more employees. In most states, Workers Compensation is legislated to be the sole source of remedy for an injured worker.

So, the question arises….is the association required to have workers compensation insurance? From all practical perspectives, the answer is…yes… based on the following:

1. executive officers of an association are considered “employees” under most state statues regarding workers compensation. These officers can reject coverage by signing the applicable rejection of coverage.
2. regarding those to do work on common areas for the association, there is so much confusion, uncertainty and inconsistency in case law in determining if such individuals will be defined as independent contractors, sub-contractors, or statutory employees at the time of a serious injury to said person(s).
Based on the above, it is proper and prudent risk management protocol for workers compensation insurance to be purchased for the association.

Failure to have workers compensation insurance in place at the time of a loss to an injured “employee” can end up costing the association a lot of money. Since workers compensation insurance was not in effect, workers compensation statutes no longer become the exclusive remedy for settling a claim. The injured person(s) is free to bring a tort action (sue for damages) against those parties they feel are responsible for their injury(s). and as we all know, leaving the decision to a jury of “your peers” can be dangerous.

In addition, the association should always require a certificate of insurance (COI) from any person(s), company(s), contractor(s) performing any service on behalf of the association. Such COI should reflect that the person/entity has in effect:
Statutory Workers Compensation Insurance including a waiver of subrogation endorsement.
Commercial General Liability Insurance with no less then:
per occurrence $1,000,000
general aggregate $2,000,000
products/Co-ops $2,000,000
personal – adv injury $1,000,000

COI should also stat that:
the association is to be named as an additional insured; the contractor’s insurance is to be primary and non-contributory; policy includes a waiver of subrogation
Auto Insurance for any owned, non-owned or hire vehicles with limits of $1,000,000 Combined Single Limit
Failure to have any of these coverages in place may end up triggering the association’s policy(s) to respond and if a claim is paid, renewal premiums rise…and then association dues increase.

by: Richard A. Beskin, CPCU, CIC
Beskin and Associates, Inc
August 2014

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