Understanding the Limits of Workers' Compensation Damages

Recent California appellate cases have rendered decisions covering injured employees and their ability to sue third parties. These cases provide a good understanding and treatment of California's workers' compensation law and that injured employees are sometimes limited in their recovery of damages.

In one case, Zamudio v. City and County of San Francisco, the court held that a subcontractor's employee could not successfully sue the prime contractor under a theory of vicarious liability if that employee already received workers' compensation benefits for his injury. That is to say, the general contractor would not be responsible for the subcontractor's employee's injuries unless the employee could prove that the general contractor actually did something wrong such as providing unsafe conditions, etc. Note that the employee could recover from his or her employer without showing that the employer did anything wrong. If the injury arose during employment, the employee can recover compensation benefits.

Zamudio, a construction worker of Largo Concrete Inc., was injured while working on a construction site owned and managed by the city and county of San Francisco. Zamudio stepped on a piece of plywood resting between two flying forms, which gave way and caused his injury. Zamudio received compensation benefits for his injury. He then filed suit for his personal injury claims against San Francisco and Largo Concrete, as well as the project manager. Zamudio argued that Largo was negligent and that CCSF (City and County of San Francisco) and Tudor-Saliba were liable for Largo's negligence. All three named defendants were dismissed by the court.

First, Largo was dismissed because its negligence was covered under the Workers' Compensation Act. When Zamudio was injured during the course and scope of his employment, the exclusive remedy for the negligence of the employer is workers' compensation. San Francisco and Tudor also were dismissed by the court because they did not assume any responsibilities to any subcontractor or supplier.

In order to hold the prime contractor and the owner liable, Zamudio would have to show that they actually directed and controlled the details of the contract work that was done by Largo. This control of the manner and means by which something is done and the detail by which it is done is what classifies someone as an employer for these purposes. In that the city and Tudor were only in the vicinity at the time of the fall, and in that they did not control the details of how the work was done, they could not be held liable.

The reason Zamudio sued for negligence is clear. The damages awarded in a civil suit arising out of negligence is greater than what one would get from a workers' compensation recovery.

In another more recent case from the California Supreme Court, Camargo v, Tjaarda Dairy, the hirer of an independent contractor was held not to be liable for injuries to that independent contractor's employees.

Alberto Camargo was killed when his tractor rolled over as he was driving over a large mound of manure in a corral belonging to Tjaarda Diary. Camargo was an employee of Golden Cal Trucking, which itself was an independent contractor to the dairy. Camargo's wife and five children sued the dairy on the theory that it was negligent in hiring Golden Cal Trucking because it failed to determine that Camargo was qualified to operate the tractor safely. The trial court dismissed the dairy from the action.

The Supreme Court accepted the case to determine whether the line of cases holding that the hirer of an independent contractor is not liable to that contractor's damages where there is a peculiar risk of harm inherent in the work also applied in the present case which was alleged to be negligent hiring.

The Supreme Court analyzed the history of several cases previously decided in the courts. It stated that the rationale is that "the hirer should not have to pay for injuries caused by the contractor's negligent performance because the workers' compensation system already covers those injuries." It held that the hirer indirectly paid for such coverage as it was presumably calculated into the contract price, and that allowing a separate recovery would provide a windfall, something denied to other workers--the right to recover damages under other theories of liability.

Two more recent cases hold that the hirer of an independent contractor could be held responsible if he affirmatively contributes to the employee's injury. For example, if the dairy in the Camargo case had provided an unsafe tractor, it could have been liable.

Abdulaziz, an attorney with North Hollywood-based Abdulaziz & Grossbart, is a frequent contributor to california constructionlink.com.