"SB 323 encourages parties participating in a project to identify and enforce strict safety standards for the benefit of all employees rather than deflecting responsibility through the use of indemnity agreements as is common practice currently."
- Sen. Seekins
"An Act relating to a subcontractor's, contractor's and project owner's liability for workers' compensation, to sole proprietors and partnerships without employees, and managers or managing members of limited liability companies, and to the exclusiveness of liability for workers' compensation."
Senate Bill 323 revises the Workers' Compensation Act as it applies to subcontractors, contractors and project owners. The two principal modifications are as follows:
Responsibility for payment of compensation is extended up the chain of contracts to include project owners; and,
Injured parties in receipt of benefits under the Workers' Compensation Act would be barred from "double dipping" via a tort liability claim.
Under AS 23.30.045(a), an injured employee has recourse for workers' compensation benefits only against his immediate employer and if the employer is a subcontractor, against the contractor who retained the subcontractor. The proposed legislation allows recourse for the payment of compensation benefits against project owners, as well as contractors and subcontractors.
This extension of the rights of injured employees is sensible inasmuch as the project owner is the beneficial user of the work performed by the injured employee. It should be noted that a project owner does not include individuals who have engaged the services of contractors to build or renovate a residential home.
Additionally, the proposed legislation extends the exclusivity protection set forth in AS 23.30.055 to all parties in the contracting chain relating to a project. This includes the employer of the injured employee, and those parties, which are upstream in the chain of contracts from the employer of the injured employee.
It is important to note that sole proprietors and members of a partnership or Limited Liability Company will not fall within the scope of this Act provided upstream contractors are held harmless, through written agreement, from payment of compensation benefits and claims of tort liability. However, this only applies where these entities have no employees.
Senate Bill 323 encourages parties participating in a project to identify and enforce strict safety standards for the benefit of all employees rather than deflecting responsibility through the use of indemnity agreements as is common practice currently. At the same time, it ensures that injured employees receive all benefits available under the Alaska Workers' Compensation Act.