Limited Liability Corporation is Bound by Election of Coverage for Members

The NJ Appellate Division ruled that the members of a Limited Liability Corporation had an affirmative responsibility to elect workers' compensation coverage. Since the corporation failed to do so, liability cannot be shifted to the Workers' Compensation insurance producer or the insurance company. 

The LLC specifically rejected coverage on the Notice of Election Form at the time of the purchase of the policy, and they incompletely enumerated the members of the LLC as employees, the injured corporate member was barred from asserting a claim for workers' compensation benefits. 

Additionally, the insurance producer testified that the LLC has not requested coverage of its members even though the policy producer informed the LLC of the consequences of not electing coverage for the corporation's members. 

The Court reasoned that even though the Workers' Compensation Act was to be liberally applied, the statutory language regarding coverage must be precisely adhered to. N.J.S.A. 34:15-36. 

Kearton v. E.W. Millwork, LLC, Docket No. A-1426-20, 2022 WL 244043, decided January 27, 2022. 

Dickie McCamey & Chilcote, PC, attorneys for appellant (Dorothy T. Daly, of counsel and on the briefs; Michelle D. Gasior, on the briefs).

Stephen D. Berryhill, attorney for respondent.

Before Judges Sumners and Vernoia.

By Jon L. Gelman

Courtesy of Workers' Compensation

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