BISMARCK, N.D. (Legal Newsline) - General contractors are “deemed” to be employers under one section of North Dakota’s workers compensation law but they don’t get immunity from lawsuits by employees of their subcontractors, the state’s highest court ruled.
Citing precedent going back as far as 1953, the North Dakota Supreme Court rejected arguments by Gateway Building Systems that it shouldn’t be liable for an accident on a work site that killed one worker and injured another. North Dakota’s workers comp law, like laws in other states, prohibits workers from suing their employers over injuries in exchange for a guaranteed payout established by statute.
David Kutcka was injured and Austin Dejno was killed in 2019 after a crane operated by a Gateway employee fell on them. The men worked for MC Mill Workers, which was under contract to Gateway.
Section 65-04-26.2(1) of the North Dakota Civil Code says anyone employed by a subcontractor is “deemed to be an employee of the general contractor” and liable for paying workers comp insurance premiums. Gateway argued that meant it was also an employer under Section 65-04-28, which provides immunity from suit.
The North Dakota Supreme Court disagreed, in a May 9 decision allowing lawsuits by Kutcka and Dejno’s heirs to proceed. As early as 1953, the North Dakota Supreme Court ruled an “employer” for purposes of paying premiums didn’t get the liability protection of the law. In 2006, the high court stated that only the entity that pays the workers comp premium receives immunity.
Gateway argued that 2006 decision actually extended immunity to a subsidiary, not the company that paid the premiums, but the Supreme Court said the two were essentially one firm.
“Absent one notable exception for a parent-subsidiary relationship, our case law has consistently shown that only the premium-paying employer is entitled to immunity,” the court ruled.
Gateway also argued a 2019 amendment deleted “if” from the sentence “if the subcontractor or independent contractor does not secure coverage,” implying general contractors were employers regardless of who paid the premium. That language only created a “legal fiction,” the Supreme Court said, without changing the fact only “real employers” get immunity. Legislators had the chance to alter the immunity section to make it clear subcontractors were covered, the court added, but didn’t.