Invalid Indemnification Clause Negates Statutory Employer Defense

builders-building-construction-159306-1024x683The Louisiana statutory employer defense grants statutory employers the exclusive remedy protections of the Louisiana Workers’ Compensation Act. La. R.S. 23:1061. To become a statutory employer, a principal must enter into a written contract with a contractor for work to be performed in furtherance of the principal’s “trade, business, or occupation.” La. R.S. 23:1061 Moreover, where the principal pays compensation, it is entitled to indemnification from the contractor. La. R.S. 9:2780.1. Once an employer shows that they are a statutory employer under the law, they are entitled to immunity for tort liability that occurred in the course of the agreement with a contractor. The Louisiana Court of Appeal addressed the issue of whether a statute enacted in 2010 negates the statutory employer defense when a construction contract contains an indemnification clause or a hold harmless clause without paying for any of the cost of insurance. La. R.S. 9:2780.1.

In 2013, Christopher Michael Blanks (“Mr. Blanks”), was an employee of Wastewater Specialties, Inc. (“Wastewater”), the contractor, when he and some co-workers were assigned to perform repairs to a broiler at Entergy Gulf States Louisiana, LLC (“Entergy”), the statutory employer. Entergy issued a permit indicating the work area was safe for entry; however, they allegedly failed to inform Mr. Blanks and his co-workers of an unprotected open hole in a confined space where Mr. Blanks was working. Unfortunately, Mr. Blanks unknowingly stepped into the hole, causing him to fall approximately thirty (30) feet to the ground. He sustained serious injuries, and subsequently sued Entergy and its insurance.

Prior to the commencement of work at the Entergy facility, Wastewater and Entergy entered into an agreement that Entergy would be indemnified for personal injury claims brought by Wastewater employees. The trial court granted summary judgment on the grounds that the contract between Wastewater and Entergy was invalid and unenforceable because it provided an indemnity clause irrespective of fault. Additionally, the court noted Wastewater did not recover the cost of any insurance required under the contract.

On appeal, Mr. Blanks argued that Entergy was not entitled to the statutory employer defense because the contract between Entergy and Wastewater was invalid as it contained an indemnification clause irrespective of fault. He stated that La. R.S. 9:2780.1 provides that such provisions are invalid when an indemnified party is negligent. Therefore, Mr. Blanks argued that Entergy was not a statutory employer, because there was not a valid written contract, and therefore, could not fulfill all the requirements for the statutory employer defense.

The Louisiana Court of Appeal, on the other hand, held that the legislature could have easily included language within La. R.S. 9:2780.1 holding that it was to be read in conjunction with La. R.S. 23:1061, but it did not, which means that the legislature intended for the two statutes to be distinct and separate from each other in all aspects.

When dealing with a confusing topic like statutory employers, make sure to hire an excellent attorney who will be able to walk you through the meaning of statutory employer and the statutory employer defense and the process of suing such an employer.

Additional Sources: Blanks v. Entergy Gulf States Louisiana, LLC

Written by Berniard Law Firm Blog Writer: Lyndsey Fuller

Additional Berniard Law Firm Articles on Personal Injuries: The Effect of Statutory Employee Status on a Claim for Injury on the Job