Friday, October 12, 2007, 9:03 PM

NC SCT Splits Over Case Using Lease And Purchase Agreements To Reach Workers' Comp. Coverage

The NC Supreme Court split in Masood v. Erwin Oil Co. and thereby affirmed without precedential value a COA opinion applying workers' comp. law to purchase and lease agreements.

At the COA, now Justice, then Judge, Hudson held that broad marketing language in a gas purchase contract made a gas wholesaler a contractor regarding the purchased gas, that maintenance and hours requirements in a lease between the gas wholesaler, which also leased stations, and its tenant made the tenant the gas wholesaler/lessor's subcontractor, and therefore the gas wholesaler/lessor was the statutory employer of the tenant's injured worker and liable for workers' comp. benefits under N.C. Gen. Stat. sec. 97-19. Judge Bob Hunter dissented, indicating that the majority was expanding section 97-19 and the definition of statutory employers (who are subject to workers' comp. when then don't ensure that their subcontractors have workers' comp. insurance) beyond their intended scope.

Seems like a good idea to check contracts up and down to see if, whatever the contracts' primary purposes, they could conceivable make one a contractor and a subcontractor. If so, checking for others' workers' comp. certificates would also seem like a good idea.

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