July 25, 2018
The Alaska Workers’ Compensation Act is an insurance policy. This policy provides medical, compensation, and retraining benefits.
Whenever there is a job related injury, some or all these benefits can come into play. With few exceptions, every employer who hires employees must have this insurance. The insurance premium is based on the classification of the employment, the employer’s history, and the payroll.
The benefit of the insurance is that the employer cannot be sued for his or an employee’s negligence. The employee is expected to receive his benefits quickly and get back to work as soon as possible. From 1996 through 2001, employee injuries in Alaska averaged 28,000 per year. For fiscal year 2010 the number of reported injuries dropped to 20,776. In fiscal year 2011 the total number of reported injuries increased to 21, 213. The vast majority were handled quickly without any formal claims. This demonstrates that the system works.
If the employer cannot obtain the insurance then he gets it from the pool. There are strict sanctions if the employer does not have insurance. Failure to provide workers’ compensation insurance is a crime.1 Should this occur, the employee can sue the employer under a personal injury case and the employer is left with few defenses to that suit.2 The Alaska Workers’ Compensation Board can even issue a stop order prohibiting the use of employee labor until the employer provides proof of insurance. If the employer continues to be in violation of the statute following issuance of the order, the Board can fine the employer $1,000.00 a day.3
The Division of Workers’ Compensation cross checks its files to determine which employers do not have insurance. There are presently five full time investigators whom follow up on the cross checks and files complaints with the Board against the employers who have not complied with the law.
The Alaska Workers’ Compensation Board has issuedseveral public decisions against uninsured employers. Why take the risk of not being insured? Most cases come as a result of accounting errors. The bookkeeper never paid the premium. There was not enough money to pay the premium at the time. The average cost of paying benefits for an injured employee can be $50,000 or more. That is quite a risk. A back surgery costs at least $50,000. This does not include the time loss compensation and the costs of retraining if the employee cannot return to work. Failure to insure is not worth the risk.
I. Who is An Employer.
It is necessary to have workers’ compensation insurance if you are an employer. The question is “who is an employer”. The answer is that most every business is an employer. AS 23.30.395 (13) defines employer as follows: “employer” means the state or its political subdivision or a person employing one or more persons in connection with a business or industry coming within the scope of this chapter and carried on in the state.
Employee is defined as employee employed by an employer.4 The definition above defines employer. Therefore, just about every business is an employer.
There are some exceptions. Part-time babysitters, cleaning person, harvest help and other similar part-time or transient help are excluded. Some individuals contracted as a sport official and officiates only at sports events in which the players are not compensated are not covered. A person employed as an entertainer on a contractual basis is not covered. Some taxi cab drivers who meet certain qualifications are not covered as well as professional players and coaches of professional hockey team.5
Sole proprietors and partners are employees are not covered unless they elect coverage as employees. Normally this is a good idea.6 Executive officers elected or appointed are covered as employees unless they waive coverage. Municipal, charitable, religious, educational, or other nonprofit corporation officers are not employees unless they specifically are included in the contract of insurance.7 Members of state boards and commissions are employees while the member
11 For purposes of [former] AS 23.30.265(12) and this chapter, the board will determine whether a person is an “employee” based on the relative-nature-of-the-work test. The test will include a determination under (1) – (6) of this section. Paragraph (1) of this section is the most important factor and is interdependent with (2) of this section, and at least one of these factors must be resolved in favor of an “employee” status for the board to find that a person is an employee. The board will consider whether the work
(1) is a separate calling of business; if the person performing the services has the right to hire or terminate others to assist in the performance of the service for which the person was hired, there is an inference that the person is not an employee; if the employer (A) has the right to exercise control of the manner and means to accomplish the desired results, there is a strong inference of employee status;
(B) and the person performing the services have the right to terminate the relationship at will, without cause, there is a strong inference of employee status;
(C) has the right to extensive supervision of the work then there is a strong inference of employee status; is actually traveling or working as a member of the board or commission.8 Firefighters are covered when training, fighting fires or rescuing people.9
C. Independent Contractors.
Independent contractors are not covered as employees. However, very few employees can actually fit the definition of an independent contractor thus avoiding coverage. The Alaska Workers’ Compensation Board looks at the nature of the claimant’s work in relation to the regular business of the employer.10 8AAC 45.890 codifies the test for an independent contractor.11
(D) provides the tools, instruments, and facilities to accomplish the work and they are of substantial value, there is an inference of employee status; if the tools, instruments, and facilities to accomplish the work are not significant, no inference is created regarding the employment status;
(E) pays for the work on an hourly or piece rate wage rather than by the job, there is an inference of employee status; and
(F) the person performing the services entered into either a written or oral contract, the employment status the parties believed they were creating in the contract will be given deference; however, the contract will be construed in view of the circumstances under which it was made and the conduct of the parties while the job is being performed;
(2) is a regular part of the employer’s business or service; if it is a regular part of the employer’s business, there is an inference of employee status;
(3) can be expected to carry its own accident burden; this element is more important that
(4) – (6) of this section; if the person performing the services is unlikely to be able to meet the costs of industrial accidents out of the payment for the services, there is a strong inference of employee status;
(4) involves little or no skill or experience; if so, there is an inference of employee status;
(5) is sufficient to amount to the hiring of continuous services, as distinguished from contracting for the completion of a particular job; if the work amounts to hiring of continuous services, there is an inference of employee status; is intermittent, as opposed to continuous; if the work is intermittent, there is a weak inference of no employee status.
It is easy to see that a repairman working on your copier is not an employee. However, having someone working three days a week at the office looks more like an employment relationship than an independent contractor relationship. It is not possible to make everyone in the office independent contractors to avoid workers’ compensation.
D. Employees of Subcontractors.
It is always important to ensure that all subcontractors have workers’ compensation\ insurance. It often happens that this is not the case. If an employee is injured working for an uninsured subcontractor, the contractor is responsible for the workers’ compensation benefits.12 A contractor is a person who undertakes by contract performance of certain work for another. The subcontractor is a person to whom a contractor sublets all or part of the initial undertaking.13 The contractor can sue the subcontractor for reimbursement of the benefits paid but the chances of recovery are slim in most cases.
In one particular case an employee of a contractor was injured while repairing the a building. The contractor did not have insurance. He employee filed claim against the contractor and the owners of the building. The owners of the building argued that the place was a home which didn’t apply to AS 23.30.045.
In 2004 the Alaska Legislature amended AS 23.30.045(f)214 The changes provided for workers’ compensation protection against all contractors on a project. This included the project owner. Therefore if an employee of a subcontractor is insured his remedy would be workers’ compensation. He could not sue the project owner. However he could get workers’ compensation from the project owner. The Supreme Court held that an owner of a building which serve both as a home, and business was a project owner under the act and liable for workers’ compensation for the employees of the contractors, and subcontractors. 15
An injury is defined in part as: means accidental injury or death arising out of and in the course of employment and an occupational disease or infection which arises naturally out of the employment or which naturally or unavoidably results from an accidental injury...16 The important terminology is “arising out of and in the course of employment”. This is defined as: includes employer-required or supplied travel to and from a remote job site; activities performed at the direction or under the control of the employer; and employer-sanctioned activities at employer provided facilities; but excludes recreational league activities sponsored by the employer, unless participation is required as a condition of employment, and activities of a personal nature away from employer-provided facilities.17
The general rule is that employees going to and from the job are not covered. However, there are many exceptions. If the employee is paid mileage to and from the job or is compensated for his time while going to and from the job, there is coverage. A person doing a special errand for the employer during off hours is covered.18
A person injured while working at a remote site during off hours may be covered. The remote site doctrine is that: every day activities that are normally considered non-work-related are deemed a part of a remote site employee’s job for workers’ compensation purposes because the requirement of living at the remote site limits the employee’s activity choices.19
Therefore, normal activities on the remote site may be covered whether the activity has anything to do with work. For example, an employee who suffered an injury from the food he ate was covered as a work related injury.20
It is easy to see that most injuries are covered. Broken bones, cuts and bruises are covered. Back injuries are covered. However, it becomes difficult when a person has a pre existing condition which contributes to an injury on the job. The test is whether the employment aggravated, accelerated, or combined with the preexisting condition to produce the death or the disability.21 If the work injury was a substantial factor in the cause of the condition than the injury is compensable.
In November 2005 the law changed to provide that the job injury must be the substantial cause of the condition. It is still too early to see what effects if any this change has on the law of Workers’ Compensation.22 The main question is whether the 2005 amendments include aggravation of pre existing conditions . The Alaska Supreme Court had included within the term of aggravation “aggravation of symptoms” in the case of DeYonge v. NANA/Marriott.. 23 In Rivera v. Wal-Mart Stores, the
3 AS 23.30.080 (d)
4As 23.30.395 (12)
10Searfus v. Nothern Gas Co., 472 P.2d 966 (Alaska 1970); Ostrem v. Alaska Workmen’s Comp Bd, 511 P.2d 1061.
13 AS 23.30.145 (f)(1) & (2)
14AS 23.30.045 (a) An employer is liable for and shall secure the payment to employees of compensation payable under As 23.30.041, 23.30.050, 23.30.095, 23.30.145, and 23.30.180- 23.30.215. If the employer is a subcontractor and fails to secure the payment of compensation to its employees, the contractor is liable for and shall secure the payment of compensation to employees of the subcontractor. If the employer is a contractor and fails to secure the payment of compensation to its employees or the employees of a subcontractor, the project owner is liable for and shall secure the payment of compensation to employees of the contractor and employees of a subcontractor, as applicable. (f) In this section, (1) “contractor “ means a person who undertakes by contract performance of certain work for another but does not include a vendor whole primary business is the sale or leasing of tools, equipment , other goods, or property; (2) “project owner “ means a person who, in the course of the person’s business engages the services of a contractor and who enjoys the beneficial use of the work; (3) “subcontractor” means a person to whom a contractor sublets all or part of the initial undertaking.
15 Trudel v. Hibbert 272 P.3d 332 (Alaska 2012)
16 AS 20.30. 395 (17)
17AS 23.30.395 (2)
18State, Dep’t of Hwys v. Johns, 422 P.2d 855 (Alaska 1967) aff’d, 431 P.2d 148 (Alaska
19Doyon Universal Servs. & Alaska Nat’l Ins. Co. v. Allen, 999 P.2d 764 (Alaska 2000)
20Doyon Universal Servs. & Alaska Nat’l Ins. Co. v. Allen, 999 P.2d 764 (Alaska 2000)
21Thornton v. Alaska Workmen’s Compensation Board, 411 P.2d 209 (Alaska 1966)
22 AS 23.30.010(a)
23DeYonge v. NANA/Marriott, 1 P.3d 90, 94 (Alaska 2000)>>
24. Rivera v. Wal-Mart Stores, 247 P.3d 957 Footnote 19.
25Callie Olsen v. City and Borough of Juneau AWCB Decision No.: 11-0162 (November 17, 2011)
26Ketchikan Gateway Borough v. Saling, 604 P.2d 590 (Alaska 1979)
28 AS 23.30.100
29 AS 23.30.105