Workers’ compensation insurance, as mandated by state law, is essential on any construction project. The failure to insist on compliance can be catastrophic. One inexperienced project owner narrowly avoided liability, thanks to a recent ruling by the Virginia Supreme Court.
The nonprofit organization embarked on the restoration of an historic school building. The project owner contracted with an unlicensed, uninsured contractor. An employee of the contractor was seriously injured at the job site. The Court ruled that the project owner was not liable for the individual’s workers’ compensation benefits. The owner maintained no presence at the job site and exercised no control over conditions there, so the owner was not a direct employer. And, the one-time project by a nonprofit organization indicated that the owner was not a “statutory employer.” The owner was not in the trade or business of construction or real estate development.
Another case in this issue involves the protection of engineering firms by a three-year statute of limitation. The claim limitation period started to run as soon as a contractor discovered the damage and had reason to know the cause of the damage. The fact that the engineering firms disputed causation did not suspend the running of the limitation period. The contractor’s professional negligence claim against the engineers was time barred.
The third case addresses the anti-bid shopping statute in California. The statute speaks only of a prime contractor seeking consent for substitution for a poorly performing, listed subcontractor. But public project owners may also initiate the procedure and demand substitution. This furthers the statute’s policy of protecting the public through owner control over subcontractors.