Worker strikes out twice pursuing contractor for unpaid benefits
Pettit v. Country Life Homes, Inc., No. 219, 2009 (Del. 10/30/09).
The Delaware Supreme Court held that an injured worker was not a third-party beneficiary of a contract between a subcontractor and general contractor. It also held that the worker was not entitled to benefits from the general contractor for unpaid wages under the Wage Payment and Collection Act.
What it means: In Delaware, a subcontractor's employee cannot pursue an action as a third-party beneficiary against the general contractor where the subcontractor promised but failed to obtain workers' compensation insurance.
A worker was injured working for a subcontractor on a construction site. The worker was awarded benefits, but the subcontractor declared bankruptcy. The subcontractor's contract with the general contractor required it to obtain liability and workers' compensation insurance. It failed to obtain the required insurance. The worker argued he was an intended third-party beneficiary of the contract. He also argued he was entitled to pursue the general contractor for unpaid benefits under the Wage Payment and Collection Act, which makes a general contractor liable for unpaid wages owed to a subcontractor's employees.
The Supreme Court rejected both arguments. It determined that the worker ignored the fact that the subcontractor promised to purchase the insurance, not the general contractor. It reasoned the contractual promise created a duty in the subcontractor to the intended beneficiary to obtain insurance, and the worker's only recourse was against the subcontractor that had promised but failed to perform.
The court determined the worker misinterpreted the language of the Workers' Compensation Act in conjunction with the WPCA. Even though the Workers' Compensation Act authorizes an employee to recover unpaid workers' compensation benefits from his employer in the same manner as a claim for wages, it only authorizes recovery from the worker's employer, which was the subcontractor. The court also determined the WPCA does not convert workers' compensation benefits into wages or automatically entitle the worker to pursue the general contractor. It only provides a mechanism for collection of those benefits under the WPCA.
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December 21, 2009
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