"Many Business Owners Unaware of the Personal Liability Exposure Relating to Workers Compensation Insurance"

“Many Business Owners Unaware of the Personal Liability Exposure Relating to Workers Compensation Insurance”

If you have employees who work on or near “navigable waters” as defined by the Long Shoreman’s Act, failure to secure the proper Longshoreman’s Coverage under your NY or NJ Workers Compensation Insurance policy can leave the business owners personal liable , piercing the corporate veil should there workers become injured on or near navigable waters. A example would be a plumber who boards a vessel or a dock, and repairs a bathroom fixture. Should they become injured, even though it’s a one off scenario, that plumbing or electrical operation can be denied Workman’s Compensation Insurance due to the location of the injury. The resulting damages can and will pierce the corporate veil, making the business owners personal liable.

The Longshore and Harbor Workers Compensation Act (the Longshore Act or LHWCA) provides a no-fault compensation remedy, in lieu of the common law remedy of damages, to employees other than members of the crew of a vessel who are injured or suffer an occupational disease while engaged in maritime employment on navigable waters. The Act applies to any person engaged in maritime employment, including any longshoreman or other person engaged in long shoring operations. It also applies to any harbor worker, including a ship repairman, shipbuilder, or shipbreaker, whose employer is engaged in maritime activity, in whole or in part, upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or adjoining area customarily used by such employer in loading, unloading, repairing, dismantling, or building a vessel).

It is critical that company executives assure that any potential exposure under the Act is insured (or self-insured) since the penalties that may be assessed against them are onerous. When an employer fails to secure coverage and a claim arises, the employer will be subject to a fine up to $10,000 or imprisonment of up to 1 year, or both. Furthermore, when the employer is a corporation, the officers of the corporation are each subject to this fine and/or imprisonment in addition to any fine levied against the corporation itself. These officers are also personally liable, jointly and severally, with the corporation for any compensation or benefit that any accrue under the Act to an employee for a covered injury. The fact that no exposure under the Act was anticipated is not an excuse for the failure to secure compensation under the Act.

If you have employees that occasionally work on , or near “navigable waters” such as ships, pier, wharfs , dry dock,terminal, building way, marine railway, or adjoining area customarily used by such employer in loading, unloading, repairing, dismantling, or building a vessel please check with your insurance broker or RISK ADVISOR on the applicability of this law , a potential employee and your liability. We suggest purchasing or adding an endorsement to the policy that will contemplate such an event.