Does your company have a LSHW Act or USL&H exposure? If so, you may not have coverage and may be held responsible for Longshore and Harbor Worker Compensation Act benefits even if you have a state workers compensation policy!
I’d venture to say most insurance agents and company underwriters have very little knowledge of this federal workers compensation act, its requirements or effects on an employer. When thinking about Longshore and Harbor Workers Compensation forget what you know about NCCI or other state advisory organizations because it’s a different animal all together. It falls under the direction of the United States Department of Labor and was enacted in 1927 to provide compensation benefits for those with a maritime employment and who are injured on the navigable waterways of the United States.
Similar to state coverage, Longshore and Harbor Workers Compensation Act benefits are payable to the employee and/or the employee’s dependents for disability or death. USL&H benefits typically run about 2 to 3 times of those normal to state workers compensation and include lifetime benefits. The increased rewards found under this act are significant. A similar state work comp claim that runs $100,000 may run $250,000 under the Longshore and Harbor Workers Compensation Act and you’ll find that it’s the injured employee who can escalate a claim from state benefits to LSHW or USL&H benefits.
State workers compensation and employers liability policies exclude “federal workers or workers compensation law, and federal occupational disease law or the provisions of any law that provide non-occupational disability benefits; and any person subject to the Longshore and Harbor Workers Compensation Act, the Outer Continental Shelf Lands Act, the Defense Base Act, the Federal Coal Mine Health and Safety Act of 1969 any other federal workers compensation law or other federal occupational disease law or any amendments; and to any master of member of crew of any vessel.” So it’s pretty clear that any standard state workers compensation policy will not cover or provide coverage for any federal workers compensation requirement.
This is significant! Even if you have a standard state workers comp policy that will provide coverage for your injured employee, if that employee qualifies for coverage under USL&H act benefits and escalates the claim from state benefits to federal, your state policy will not respond! Yes it is possible to have multi jurisdictional issues when dealing with state and USL&H act. That is, an employee may typically perform non-USL&H type of work most of the time, but even one act may make them eligible for Longshore coverage. Lets take a look at a couple of examples:
- A land based plumbing contractor has been awarded the plumbing part of a remodel job at a harbor warehouse facility. The facility is located near a navigable waterway. The plumber will provide all the parts required to plumb the remodel of the facility. His crew will not step foot on any vessel and the work they will perform will be no different than they do everyday for other small commercial and residential jobs. His crew for this job is eligible for USL&H coverage.
- A land based janitorial contractor has been hired and is sending a crew to clean the living quarters of members of a vessel located on navigable water. They normally clean residences and small offices. The cleaning crew is eligible for USL&H coverage.
- A restaurant has been hired to provide food and service for an on-board dinner party. They cook the food at their restaurant, deliver it, load it onto the boat, set up the tables and begin serving dinner. After the party is over the clear the boat and return to the restaurant. The restaurant employees are not eligible for Longshore coverage! Individuals employed by a restaurant are specifically excluded from the act.
There are two tests the Department of Labor applies to determine Longshore and Harbor Workers Compensation Act eligibility. They are:
- Status – Employment: Is it a covered type of work or job;
- Situs – Location: Did the injury occur in the right location.
Both tests must be passed independently of each other in order to establish eligibility to the act. As mentioned above, certain employments are excluded from the act, but don’t be fooled!
It’s important to gain an understanding of the unknown exposure an employer may have to USL&H. In the above examples you can see how easily a land based employer may unknowingly become subject to the act. Think of this, our plumbing contractor, who only had a standard state workers compensation policy, has an employee injured on the warehouse job. The employee files his claim under the USL&H Act. Our plumbing contractor turns the claim into his state work comp carrier and finds the claim is denied because Longshore is excluded under his standard policy. Who pays for the employee’s injuries? Right…the employer!
Failure for an employer to provide proper coverage may result in:
- Fines of not more than $10,000 per claim;
- Imprisonment for not more than one year;
- Or Both;
- Loss of Corporate protection for the president, secretary and treasurer resulting in personal liability for fines, imprisonment and benefit compensation to the injured employee.
If, as an employer, your operations take you anywhere near a navigable waterway or your work could in any way be subject to the Longshore and Harbor Workers Compensation Act, make sure you seek out an insurance agent knowledgable in USL&H coverage! Most standard policies in NCCI states can be endorsed using WC 00 01 06 A to pick up the exposure.
Here’s a few helpful links:
A good website that may help you identify USL&H exposure: Longshoretoolbox
Use this link to look up the: The Department of Labor Compliance Section
Use this link to look up the: Department of Labor Authorized Insurance Carriers
Hope this helps you out!