Glossary Check: Pa. ‘Statutory Employer’ Doctrine 

Harrisburg, PA (WorkersCompensation.com) -- Under Pennsylvania’s exclusive remedy rule, employees who are injured on the job are generally limited to seeking compensation through the workers’ compensation act. If the employer has workers’ compensation coverage, the employee typically may not sue the employer for negligence. 

The exclusive remedy rule also sometimes applies to entities, such as contractors, which do not directly employ the worker. These entities, if they qualify as a statutory employer, may be able to avoid negligence lawsuits based on the basis that a workers’ compensation claim was the employee’s sole remedy. 

Statutory Employer Definition 

An employer who permits a laborer on its premises who has been hired by a contractor for the performance of a part of the employer's regular business entrusted to the contractor will be liable to the laborer to the same extent as if the laborer was its own employee. 

To be a statutory employer, an employer must satisfy all five of the following elements: 

1. An employer who is under contract with an owner or one in the position of an owner; 

2. Premises occupied by or under the control of such employer; 

3. A subcontract made by such employer; 

4. Part of the employer's regular business entrusted to such subcontractor; and 

5. An employee of such subcontractor 

Statutory Employer Example 

A typical statutory employer situation is in the construction industry, where a property owner hires the general contractor. The general contractor then hires a subcontractor to do specialized work on the jobsite. The employee of the subcontractor is injured in the course of his employment. 

Impact of Statutory Employer Status 

• The employer may be able to obtain dismissal of any negligence lawsuits by the contractor’s injured employee. 
   
• If the contractor failed to secure workers’ compensation coverage, a statutory employer is secondarily liable for workers’ compensation benefits to the injured employee. Thus, it’s important for employers to ensure that their contractors carry coverage and to obtain proof of that coverage.  

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