Longshore Act Question Number 13

What Is a Subdivision of a State Government?

This question concerns employees who may or who may not be covered by the Longshore and Harbor Workers’ Compensation Act, depending on who the employer is. As we know from previous discussions, the maritime employer must get its coverage right or face serious consequences, so this type of question is important.

Section 903(b) (33U.S.C. 903(b)) of the Longshore Act states:

“No compensation shall be payable in respect of the disability or death of an employee of the United States, or any agency thereof, or of any State or foreign government, or any subdivision thereof.”

You will not be surprised to learn that the Longshore Act does not define “subdivision” of a state government, and the U.S. Department of Labor’s Regulations at 20 C.F.R. 701 and following offer no help.

It’s usually self-evident who is an employee of a U.S. Government agency, or of a state government, or of cities and towns. Most of the time we even know who is working for foreign governments. But, not always, and like we’ve said many times, there are numerous instances where it depends on the facts of the case.

It can get tricky when you are talking about employees of a port authority, a state university, or of the wide variety of quasi-governmental operations.

So, in fact dependent cases like these, courts usually come up with a list of “quack like a duck” questions to help to determine the outcome.

The list of questions in a section 903(b) case usually involves some or all of the following in one form or another:

– Who directs the organization and how are these persons appointed and removed,
– Are required reports filed with the government and does the government have a veto over decisions,
– Does it operate on a profit or non-profit basis,
– How is its property and revenue taxed, or is it tax exempt,
– Does it have the power of eminent domain,
– Is money appropriated to it by the government,
– Who pays its employees, and provides fringe benefits,
– Does it have the power to assess or collect taxes,
– Are its operations subject to open, public hearings,
– Are its records open to the public,
– Does it have the power of subpoena,
– What is its status under state law?

Theoretically, the answers to a list of questions like this tell you everything you need to know. The answers don’t have to be consistent or unanimous one way or the other. The issue will be decided by analyzing the responses and determining which way a majority of the answers tend.

If the determination is that the organization is a subdivision of a state then under section 903(b) its employees are not covered by the Longshore Act because they are government employees. If the employees are not government employees then the employer must provide Longshore Act insurance if the status and situs requirements for coverage are met.

Longshore Act Question Number 3

What Is the Difference Between State Act Comp and the Longshore and Harbor Workers’ Compensation Act?

One is state and the other is federal.

Wow! That one was easy. Next!…..What? Not buying it? OK, I’ll try again.

But first, the shortest history in the history of history.

– The Industrial Revolution in the United States during the nineteenth century led to the social consciousness of the Progressive Era,

– Which led to the passage of the first workers’ compensation law in New York State (or Wisconsin, take your pick) in 1910,

– Which led to conflict with the uniformity principles of the Admiralty and Commerce clauses of the U.S. Constitution,

– Which led to the U.S. Supreme Court’s decision in 1917 that the states could not extend their workers’ compensation laws to land based maritime workers while the workers were over the navigable waters of the United States,

– Which led to the enactment of the Longshoremen’s and Harbor Workers’ Compensation Act in 1927 extending federal workers’ compensation protection to shore based workers injured while temporarily on navigable waters,

– Which led to the 1972 amendments to the Longshore Act extending coverage landward to adjoining areas customarily used for maritime purposes,

– Which led to the 1980 U.S. Supreme Court decision that the Longshore Act did not “supplant” state laws, but rather “supplemented” state laws,

– Which led to today. We’re still trying to sort out issues of overlapping and concurrent state/federal jurisdiction in the hundreds of occupations carried on in and around navigable waters that could be either state or Longshore or both simultaneously depending on the state in which the injury occurred and the facts of the case.

So we have workers’ compensation laws in each of the 50 states and the various territories coexisting alongside the Longshore Act.

In an earlier posting (September 9, 2009) I offered my unofficial lists of states with concurrent (dual) jurisdiction and states that have “exclusive” jurisdiction. I’ll repeat the lists here.

Concurrent states – Alabama, Alaska, California, Georgia, Illinois, Indiana, Kentucky, Minnesota, New York, Missouri, Pennsylvania, Rhode Island, South Carolina, Virginia, Wisconsin, West Virginia.

Exclusive states – Florida, Hawaii, Louisiana, Maine, Maryland, Mississippi, New Jersey, Ohio, Oklahoma, Oregon, Texas, Washington.

These lists are subject to change at any time as state insurance laws change.

Note: “Concurrent” in this context simply means that in some states there are some injuries that are covered by both the state’s workers’ compensation law and by the Longshore Act. A state that is listed as “exclusive” on the other hand has amended its workers’ compensation law with language to the effect that if you are covered by a federal workers’ compensation law then you are not covered by that state’s law.

So, the Longshore Act is a workers’ compensation law for the protection of injured workers, just like the laws in the 50 states and the territories. These state laws usually cover different workers, but there is frequent overlap and uncertainty, especially in the “concurrent” states, where injured workers routinely file claims under both state act and Longshore Act and employers face redundant administrative, legal, expense, and sometimes benefit costs.

Here are some differences:

– The Longshore Act usually costs more to insure (see Question Number 7);

– The Longshore Act was enacted by the U.S. Congress as opposed to the state legislatures;

– The Longshore Act is administered by the U.S. Department of Labor and not by state agencies;

– The Longshore Act is generally more liberally administered and pays higher benefits than the state acts;

– The Longshore Act covers “maritime” employees (and there’s a library of case law trying to decide what that means) as opposed to “local” workers covered by state law; and,

– The most important difference for employers is that state workers’ compensation laws and the Longshore Act are separate exposures. And because of the overlapping jurisdictions and coverage uncertainties an employer must be careful and make sure that he has the correct coverage.

Top Ten Longshore Questions

As I’ve said, over the years the same Longshore questions have been coming up again and again, and now with AEUs Longshore BLOG there’s a source where these questions can be answered. So here’s my list of the “Top Ten” recurring Longshore questions:

16. Does the Longshore Act apply only to U.S. citizens?

15. Does the Longshore Act apply overseas?

14. What are the “navigable waters of the United States”?

13. What is a subdivision of a state government?

12. Can you exclude corporate officers under the Longshore Act?

11. Can small employers opt out of the Longshore Act?

10. How do you measure the 10 day rule for paying Formal Awards under §914(f)?

9. Does the Longshore Act apply in Guam? In Puerto Rico? In the Virgin Islands? In

the Commonwealth of the Northern Marianas?

8. What does “joint and several” liability mean? And what does “several not joint”

liability mean? And why is this very important?

7. Why is Longshore Act insurance so expensive?

6. Is the Longshore Act fair to employers?

5. What’s the difference between the Longshore Act and the Jones Act?

4. What is a vessel? What is a crewmember?

3. What is the difference between state act comp and the Longshore Act?

2. Where can I buy Longshore Act insurance?

1. Do I need Longshore Act insurance?

The answers to these, and any other questions introduced by BLOG visitors, will be offered in upcoming postings. In the meantime, if there’s a particular question you are interested in please leave a comment with your question.

Pop Quiz

If you are self-insured for your state workers’ compensation exposure and your excess insurance policy is endorsed for coverage under the Longshore and Harbor Workers’ Compensation Act, have you satisfied the statutory insurance requirement for Longshore coverage?

The answer is “No”, and if you answered “Yes”, then you should call your insurance broker and your attorney in that order to correct a potentially very costly mistake.

Under the above scenario you are an uninsured employer under the Longshore Act. Uninsured employers are subject to criminal penalties and an election of remedies for injured workers, including suits in tort, with corporate officers having personal liability jointly and severally with the company. This could turn even a relatively minor injury into a legal quagmire.

Section 932 of the Longshore Act (33 U.S.C. 932) provides that a maritime employer has only two ways to satisfy the insurance requirement: 1) purchase first dollar insurance coverage from an insurance carrier authorized by the U.S. Department of Labor, or 2) become authorized by the U.S. Department of Labor as a self-insured employer (this includes membership in a DOL authorized group self-insured trust such as the American Longshore Mutual Association (ALMA)).

Don’t take any chances. If you think that you might have any federal Longshore Act exposure, or if you have any questions about the coverage you now have, talk to an expert and make sure that you are properly covered.