When is an Owner Also A Statutory Employer?

Written by: Lissa F. Klein, Esq.

We often think of O.C.G.A. §34-9-8 as a statute that addresses the liability of principal contractors as “statutory employers” in the context of construction; however, this Code Section is not limited to just such a scenario.  Instead, Georgia courts have addressed claims where O.C.G.A. §34-9-8 works to bar tort claims against owners on the grounds that the owner also qualifies as a statutory employer under O.C.G.A. §34-9-8 and is thus granted immunity from tort liability.

The Georgia Supreme Court has held that as a general rule, an owner who is simply in possession or control of the premises is not a statutory employer and is not immune from tort liability.  However, an owner can obtain “contractor” status where he also serves as a contractor for another entity and hires another contractor to perform the work on the premises.  Thus, an owner who owes a secondary duty to another to perform a contractual duty is a “contractor” within the meaning of §34-9-8(a).

The Court of Appeals addressed this matter further in Holton v. Georgia Power Company, 228 Ga. App. 135 (1997).  The Court of Appeals noted that Georgia Power, which held a majority ownership of nuclear facility Plant Hatch, had previously agreed to contracts and operating agreements wherein it assumed “sole responsibility” for the “planning, licensing, design, construction, operation, maintenance, and disposal” of Plant Hatch.  Furthermore, by contractual agreement with its fellow owners, Georgia Power had sole authority “to manage, control, maintain, and operate Plant Hatch.”  Thus, the Court of Appeals held that Georgia Power was both the majority owner of Plant Hatch and the principal contractor.  The Court of Appeals further held that when Georgia Power fulfilled its obligations as principal contractor in hiring another company to perform maintenance services, and that company’s employee sustained a work-related injury, Georgia Power was that employee’s statutory employer pursuant to O.C.G.A. §34-9-8 and was entitled to statutory immunity from the employee’s tort claims.

The Court of Appeals’ decision in Holton indicates that other owners/operators, such as franchisee owners of gas stations, restaurants and the like, could use similar arguments to defend against claims of tort liability on the grounds that they are statutory employers and subject to potential liability under the Workers’ Compensation Act.  While it appears that each case would depend on the terms of operating agreements, including who, if any, maintained responsibility for the operation, maintenance, etc. of a business or jobsite, these arguments could be addressed in both the tort and workers’ compensation claims to limit the liability of owners.