I was somewhat surprised recently to read the headline State says Massie campaign appears to lack workers’ comp insurance in the Boston Globe. Massie is seeking to be the Governor of Massachusetts. The Globe notes that if successful, Massie would "oversee a sprawling 43,000-employee bureaucracy." That is a great many employees in any context.
The story reports that the Office of Labor and Workforce Development concluded that the campaign "does not currently appear to have a workers’ compensation policy in place. " Upon that conclusion, the Office referred the campaign for investigation and "further inquiry.” According to the Globe, the Office "averages about 6,800 workers comp investigations every month that typically result in about 170 stop work orders."
The Globe further reports that “all employers in Massachusetts must have workers’ compensation insurance to cover their employees,” according to a state website. Another website clarifies that in Massachusetts:
The (insurance coverage) requirement applies no matter the number of hours worked or the number of employees.
The only exception is for domestic employees who must work at least 16 hours a week to be covered under a workers’ compensation policy.
That is an interesting point. As noted in The Gig Economy - Can It Be Socialized (March 2018), many states have coverage requirements that are dependent upon the size of the employer. In Florida, participation in workers' compensation is mandatory when an employer has four employees (or one employee in the construction industry). Some states have a variety of specific exceptions that list occupations that are not an "employee." Florida lists the following among those exempt from participation in workers' compensation:
"independent contractors," “real estate licensee,” “musical and theatrical performers,” owner-operator of a motor vehicle” “person whose employment is both casual and not in the course of the trade, business, profession, or occupation of the employer,” “a volunteer,”persons who serve in private nonprofit agencies and who receive no compensation,” “exercise rider,” “taxicab, limousine, or other passenger vehicle-for-hire driver,” “a sports official for an entity sponsoring an interscholastic sports event."
Thus, one might conclude that the coverage requirement in Massachusetts is more pervasive than in Florida. Massachusetts appears to offer only very limited exceptions, for domestic help working part-time, to the broad requirement that workers' compensation coverage must be provided for all employees regardless of the "hours worked or the number of employees."
Thus, in Massachusetts, it may be easier for an employer to determine when coverage is required. However, in other states it may be a more difficult analysis dependent upon understanding the actual role and function of those performing work, and conclusions as to whether each is or is not an "employee" contributing to that "four or more" parameter upon which the requirement of coverage depends.
In this context, it is important to remember that workers' compensation is a subject of state law, explained in Territorial Jurisdiction in Comp (May 20. In the course of the 2016 National Conversation (January 2018) on workers' compensation, there were multiple references to the challenges that are encountered because state systems have different requirements. That group noted "regulatory complexity," "system failures," "misclassification" "federalization" and "competition between states" as challenges that complicate the workers' compensation world.
Returning to Massachusetts, the Massie campaign contends that volunteers are not employees. The Globe reports that a Massie email explains the absence of coverage stating that "his campaign has taken steps to transition from a 'largely all-volunteer campaign staff to our current state of operations.'” The implication was that workers' compensation coverage was not a requirement for volunteers, but became an issue when the campaign transitioned to a team of fourteen paid staff.
That conclusion regarding employees was seemingly echoed by another candidate, Scott Lively. Mr. Lively noted that "his campaign does not have any employees," and that in Massachusetts, "a sole proprietor is not required to carry workers’ comp insurance, so long as they work alone."
Thus, the requirements and parameters are seemingly somewhat more extensive than reflected on the Massachusetts website:
"The (insurance coverage) requirement applies no matter the number of hours worked or the number of employees."
It appears instead that the "number of employees" is relevant, in that businesses with only one (sole proprietor) employee need not have coverage. And, it appears that "volunteers" are not counted as employees in Massachusetts.
The complications are potentially more pervasive. Candidate Massie also told the Globe that he believed he had procured workers' compensation coverage. He claims to have hired a "payroll processor" to handle all of the complexities of compliance, tax withholding, etc. His comments suggest he may have believed that the contractual relationship included workers' compensation coverage. There are arrangements referred to as "employee leasing" in which such coverage is in fact included in the contractual relationship.
The end result is illustrative. Employers face the challenge of determining whether their business is required to have workers' compensation coverage. The requirement to provide compensation is generally on the employer, as is the obligation to "secure" that obligation through insurance. An employer who fails to "secure" coverage may nonetheless find itself liable to an injured employee. The absence of insurance will not be a shield to liability. That is an important point for employers to note and remember.
Employers may require expert advice and assistance in the process of these questions, considerations, and decisions. Generally, insurance brokers and agents are reasonably prepared to offer advice on the "if" and "how" questions of workers' compensation coverage. Generally, employee leasing companies are as prepared to offer employers advice regarding various options. However, there are potential situations in which an employer might be well advised to seek competent legal counsel before proceeding.
A certainty is that "I did not know" is a poor answer when caught without coverage. Further, "I thought someone else was taking care of it" will be of little assistance. Interestingly, this subject makes the news in this instance because it involves a high-profile candidate for public office. But, it is useful to learn from this headline. Workers' compensation is there to protect and care for employees when the unexpected happens. Employers have the obligation to seek advice, become knowledgeable, and to comply with the law.
This remains true regardless of the nature of the employment, the public profile (or lack) of the employer or its principals, and the complexity of the law involved. Regardless of any of this, it is the employer's obligation to understand and comply with the mandatory participation requirements of the jurisdictions in which they provide work.
