Attempt to Exempt Driver from WC Coverage Saddles Wash. Company with Attorney’s Fee Award

Seattle, WA (WorkersCompensation.com) -- A worker generally cannot waive his or her right to workers’ compensation benefits. For that reason, a company that sues a worker for breaching an agreement to waive such benefits is likely wasting its time, or worse.

The third-party administrator that tried to avoid having to join an action involving a delivery driver’s workers’ compensation action likely took a wrong turn in Subcontracting Concepts CT, Inc. v. Manzi, No. 83748-6-I (Wash. Ct. App. 05/22/23), when it sued the driver for breach of an owner-operator agreement.

The worker signed up to work as a delivery driver for a company called Axis-Nexus. Subcontracting Concepts, Inc., the third-party administrator, forwarded the driver an employment contract purportedly stating that she would be considered an independent contractor and that she was waiving her right to worker’s compensation benefits.

The driver was subsequently injured while making a delivery. She filed a worker’s compensation claim, naming Axis-Nexus as her employer. The workers’ compensation board allowed her claim. She then sought to join SCI to her claim.

In response, SCI filed a breach of contract action. It argued that the driver was breaching a provision in the owner-operator agreement waiving her right to workers’ compensation benefits.
The trial court ruled against SCI, stating that the contract was void. Holding that the lawsuit was frivolous, the court awarded the driver $6,145 in attorney’s fees.

SCI appealed those decisions.

The appeals court explained that RCW 51.04.060 prohibits workers or employers from executing a contract that waives benefits under the Industrial Insurance Act.

Workers' Comp 101: What does RCW 51.04.060 say? The statute, which is titled "No evasion of benefits or burdens," details that "no employer or worker shall exempt himself or herself from the burden or waive the benefits of [Washington workers' compensation law] by any contract, agreement, rule or regulation, and any such contract, agreement, rule or regulation shall be pro tanto void." What does "pro tanto" mean? Black's Law Dictionary points out that the Latin phrase means "to that extent; for so much; as far as it goes."

The court pointed out that the owner-operator agreement, which was five pages long and typed in small font, stated that the driver understands and agrees that she is not covered by a workers’ compensation insurance policy. Also, the driver signed an independent contractor acknowledgment form that stated: "You are not entitled to workers' compensation.”

"While there was no employment relationship between SCI and the driver, nothing in RCW 51.04.060 requires that there be an employment relationship for the statute to apply,” the court stated. Moreover, there was no dispute that the driver was a worker for purposes of the IIA.

“Under a plain reading of RCW 51.04.060, [the driver] was a worker and could not exempt herself from the burdens or benefits of the IIA,” the court. Thus, any contract purporting to exempt her from the IIA was void.

Accordingly, the court held that the trial court did not err when it dismissed SCI’s lawsuit.
Further, because the contract provision was void under the law, SCI’s breach of contract lawsuit was frivolous, the court held. Because Washington permits attorney’s fee awards to defendants facing a frivolous lawsuit, the trial court did not err in awarding the driver her legal fees.

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