Office of Sen. Mike JohnstonColorado General Assembly | 200 E. Colfax Avenue | Denver, CO 80203 | 303.866.4864

FACT SHEET MEMORANDUMSB 13-147

Workers Compensation Liability Statutory EmployerSen. Jahn & Rep. Gardner

Staff Name: Michael Cox

What the Bill Does: The bill clarifies that an employer is not liable to pay workers’ compensation as a statutory employer when a lessee, sublessee, contractor, or subcontractor, or their employee, is injured while not on the employer's premises.

Colorado Context:An employer who uses leased or subcontracted employees is responsible for providing workers' compensation coverage for those employees. This bill clarifies that an employer is notliable for a workers' compensation claim if a leased or subcontracted employee is injured while not on the employer's premises. Those claims will be the responsibility of the direct employer.

National Context:In the United States, most employees who are injured on the job have an absolute right to medical care for any injury, and in many cases, monetary payments to compensate for resulting temporary or permanent disabilities. Workers' compensation is administered on a state-by-state basis, with a state governing board overseeing varying public/private combinations of workers compensation systems.

Laws covering types and numbers of employees vary. Some states, such as South Carolina, require that an employer provide workers compensation only when he or she employs four or more workers, either full or part-time. Other states have different variations of this type of law when it comes to independent contractors, subcontractors, employees, and lessees. Delaware, Rhode Island, and Mississippi worker compensation laws, for example, do not cover independent contractors.

Injuries sustained off the employer’s premises are dealt with different state-by-state, as well. Wisconsin, for instance, does not usually require that employers pay compensation for injuries sustained off the employer’s premises. Compensation is required, however, if the employee is performing a service for the employer, even if off the employer’s premises. Ohio and Missouri also do not always require compensation for injuries sustained while off the employer’s premises.

Bill Provisions: Any person, company, or corporation operating or engaged in or conducting any business by

leasing or contracting out any part or all of the work thereof to any lessee, sublessee, contractor, or sub contractor, irrespective of the number of employees engaged in such work shall be construed to be an employer and shall be liable to pay compensation for injury or death.

4/11/2023 5:07 PM For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.

An employer is not liable as a statutory employer when a lessee, sublessee, contractor, or subcontractor, or their employee, injures themselves while not on the employer’s premises.

A “statutory employer” is an employer who is responsible to pay worker’s compensation benefits pursuant to this bill.

Fiscal Impact:This bill may result in an increase in workers' compensation claims denied. Denials are investigated by the Division of Workers' Compensation (DWC) and settled by the Office of Administrative Courts in the Colorado Department of Labor and Employment. Because the DWC does not track whether a work-related accident occurred on or off the employer's premises or whether the injured worker is a regular or leased employee, the prevalence of claims that fall under this provision is unknown. Because the bill limits this exception to only leased or subcontracted employees, the fiscal note assumes that any increase in the number of claims can be addressed within existing appropriations. If necessary, additional staffing will be requested through the annual budget process. The state is also an employer that provides workers' compensation coverage, but, due to monitoring the workers' compensation coverage of contractors, has no history of this type of claim. If such a claim is filed, the state's liability will be reduced as a result of this bill.

Local Government Impact As an employer, a local government may also see a reduction in workers' compensation claim costs if it is no longer liable for work-related accidents that occur off premises by leased or subcontracted employees.

4/11/2023 5:07 PM For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.