Ohio law allows a general contractor on certain large projects to “self-insure” and provide workers’ compensation coverage for its own employees and for the employees of subcontractors that are enrolled in the general contractor’s self-insurance program. Under Ohio law, an injured employee may not pursue a negligence claim against the general contractor or the enrolled subcontractor in the general contractor’s self-insured plan. Instead, the injured employee must seek compensation pursuant to Ohio workers’ compensation laws.
Ohio R.C. sections 4123.35 and 4123.74 provide that a self-insuring general contractor for a construction project is a single employer, for workers’ compensation purposes, for employees working for the enrolled subcontractor on the project. R.C. 4123.35(O) furthers the purpose of the workers’ compensation law by putting a general contractor and multiple subcontractors on the same footing as a large construction project undertaken by a single contractor. This encourages subcontractors to engage in large-scale construction projects that they might otherwise shy away from because of accident-related litigation concerns.
This system provides a quicker and more certain recourse for injured employees. In return, the self-insuring employer gains protection against claims by its own employees as well as the claims of the enrolled subcontractor employees. Additionally, the enrolled subcontractor also receives protection against claims by employees of another enrolled subcontractor.
As recently determined by the Ohio Supreme Court in Stolz v. J & B Steel Erectors, 155 Ohio St. 3d 567 (2018), this system of self-insurance for contractors and sub-contractors does not violate the Ohio Constitution’s right-to-remedy, right to jury, or equal-provisions for injured employees while working for on a self-insured construction project.
Subcontractors should consider whether to be insured under the general contractor’s self-insurance workers’ compensation policy and general contractors should consider the benefits, risks and costs of providing the self-insurance coverage to the subcontractor.