The Texas Workers’ Compensation Act is legislation that provides reciprocal benefits to covered employees and their subscribed employees. When an employer provides coverage governed by the Act, they guarantee their employees prompt payment of their medical bills and lost wages, regardless of who is at fault. At the same time, the subscribing employer is provided an exclusive remedy defense in the event that their employee sues them for their injuries. The defense provides that the workers’ compensation benefits are the exclusive remedy of an employee covered by workers’ compensation insurance coverage for any work-related injuries sustained by an employee.
However, what if the injured worker is not an employee of the subscribing employer, but instead of a subcontractor? Does the subcontractor employee have a right to receive benefits, and can the employer utilize the exclusive remedy position?
- Texas Worker’s Compensation Act: Coverage Generally
The Texas Worker’s Compensation Act provides benefits for both subscribing employers and their employees. The employees receive coverage for injuries when they sustain a workplace injury, regardless of who caused the injury, and the subscribing employer receives a bar from common law negligence claims.[1]
A Plaintiff’s claims are barred under the Texas Worker’s Compensation Act if:
- The Plaintiff was an employee under the meaning of the Texas Worker’s Compensation Act; and
- The Plaintiff was covered under the Texas Worker’s Compensation policy.[2]
- Texas Worker’s Compensation for Subcontractors
A general contractor may be deemed the employer of a subcontractor’s employees if there is “a written agreement under which a general contractor providers workers’ compensation insurance coverage to the subcontractor and the employees of the subcontractor.”[3] Recently, the Fourteenth Court of Appeals provided clarification on exactly when a general contractor may utilize this remedy and how this is established.
- ExxonMobil Corp v. Alvarez: Establish the exclusive remedy defense against claims from subcontractors.
ExxonMobil Corp v. Alvarez[4] is a personal injury case that arose from a fire at ExxonMobil’s Baytown Olefins Plant in 2019. The Plaintiffs are 23 individuals who worked at the plant as employees of 1 of 4 subcontractors. They sued the general contractor, ExxonMobil, ExxonMobil for injuries related to this accident. ExxonMobil motioned for summary judgment under the exclusive-remedy defense, and the trial court denied all three motions but allowed ExxonMobil to seek a permissive appeal.
The Fourteenth Court of Appeals recognized that a general contractor may be deemed the employer for the purposes of the Act if there was a written agreement under which the general contractor provides workers’ compensation insurance coverage to the subcontractor and the subcontractor’s employees. Thus, if ExxonMobil had such an agreement, then the coverage was provided to the Plaintiffs in this case.
ExxonMobil proved the existence of such an agreement through a “Standard Procurement Agreement.” Under the terms of this agreement, the subcontractor was the “supplier,” and Exxon Mobile was an “affiliate.” Under this SPA, it stated that the “purchaser may furnish worker’s compensation insurance for services performed by supplier at the covered sites.”
Even though the language is permissive, the Court found that ExxonMobil had satisfied the first requirement to the exclusive remedy.
The Court found that the second requirement that ExxonMobil show it had provided the coverage was satisfied by an e-mail from ExxonMobil’s insurance agent informing the subcontractors of their enrollment in the workers’ compensation program.
- The Response of the Plaintiffs
The Plaintiffs’ arguments focused on the timing of the documents. The insurance documents that provided coverage to the subcontractors were dated several months before the SPA was executed. This means that coverage was not made in consideration of the SPA, so there was no written agreement at the time coverage was provided.
The Court found that no requirement in the Act dictated a particular sequence of documentation. Instead, the Act merely requires a written agreement that the general contractor would provide workers’ compensation for such an agreement. The Court found ExxonMobil had established the existence of such a document.
The Plaintiffs also focused on missing secondary documents that they claim would apply to their specific worksite and that the missing document indicated that ExxonMobil did not meet its burden. The Court found this unpersuasive. The exclusive-remedy defense does not depend on secondary documents.
- Additional arguments made by the Plaintiffs.
The first additional argument made by some of the Plaintiffs was that ExxonMobil did not provide evidence they had paid their insurance premiums. The Court rejected this argument, pointing to prior Court holdings that premiums are an issue between the employer and the insurer, and do not affect the issue of whether the employee was considered covered under the Act.
Finally, the Plaintiffs relied on language in the SPA, which stated that subcontractors “may not participate in or receive benefits from any employee benefit plan sponsored by Exxon Mobile Corporation. The Court held that workers’ compensation benefits are not employee benefit plans under ERISA and would not affect the employees’ benefits.
- Key Takeaways for Employers from ExxonMobil v. Alvarez
- An employer’s exclusive remedy defense can apply to subcontractors if (1) there was a written agreement to provide workers’ compensation coverage under the Act and (2) the coverage was provided.
- An employer can establish this for the purposes of summary judgment by providing the written agreement and providing evidence that the coverage was provided by their carrier.
- There are no secondary documents that need to be provided beyond the written agreement and evidence that coverage was provided.
- The language in the written agreement may be permissive to satisfy the requirement of a written agreement.
- The employer does not need to provide evidence of any additional steps that were taken, including whether premiums were paid.
- Any restrictions in the written agreement related to ERISA benefits do not restrict coverage for coverage provided under the Act.
[1] HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 350 (Tex. 2009).
[2] W. Steel Co. v. Altenburg, 206 S.W.3d 121, 123 (Tex. 2006).
[3] Tex. Lab. Code §406.123(a), (e).
[4] See ExxonMobil Corp. v. Alvarez, No. 14-22-00863-CV, 2024 WL 847701 (Tex. App.—Houston [14th Dist.] Feb. 29, 2024, no pet. h.).
